This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Lanjutkan Pembangunan Infrastruktur
27 February 2024
By Heru Febrianto and Arnoldus Kristianus
Jakarta, ID – Several parties are demanding the upcoming government to continue the massive infrastructure development programme of President Joko Widodo (Jokowi). Their rationale stems from the programme’s demonstrated ability to yield a substantial multiplier effect on the economy, enhance connectivity, and reduce logistics costs.
Between 2014 and 2024, approximately Rp3,600 trillion has been allocated from the State Budget (APBN) for infrastructure projects. This substantial funding has facilitated the construction of numerous dams, airports, ports, toll roads, and power plants during the period.
In 2014, operational toll roads covered a distance of 804 kilometres (km). By March 2023, the length of toll roads had exyended significantly to 2,687 km, and projections indicate it will surpass 3,000 km by the end of 2024. Additionally, the length of public roads grew from 517.75 thousand km in 2014 to 549.16 thousand km in 2022, marking an increase of 32.41 thousand km.
Next, the capacity of power plants increased from 53 gigawatts in 2014 to 81.2 gigawatts in 2022. The capacity of dams surged from 6.39 billion cubic metres in 2014 to 16.96 billion cubic metres in 2022. The number of airports increased from 237 in 2014 to 187 in 2022. Meanwhile, the number of ports also increased from 1,655 units in 2014 to 3,157 units in 2022.
Enhanced connectivity remains the driving force behind the reduction in logistics costs. According to the National Development Planning Agency (Bappenas), national logistics costs decreased significantly from 23.8% in 2018 to 14.29% in 2022. In the Global Competitiveness Index for the infrastructure sector by IMD, Indonesia's ranking has improved from 54 in 2014 to the current position of 51.
Infrastructure projects also create jobs. From 2016 to 2023, national strategic projects (PSNs), which include several major infrastructure projects, absorbed 2.71 million workers.
In the current 2024 presidential election, the duo of Prabowo Subianto-Gibran Rakabumi Raka maintains a lead over the pairs of Anies Baswedan-Muhaimin Iskandar and Ganjar Pranowo-Mahfud MD. According to the real count data provided by the General Elections Commission (KPU), with 77% of the total votes tallied, Prabowo secures 58.8%, Anies 24.4%, and Ganjar 16.7%.
This is in line with the quick counts of survey institutions where Prabowo secures 57%-59% of the votes. The inauguration of Prabowo-Gibran is set to be conducted in October 2024.
Eliza Mardian, an economist from Centre of Reform on Economics (Core) Indonesia, expressed that the new government is expected to continue the infrastructure programmes initiated during President Jokowi's administration with meticulous planning.
“It is expected to organise the national logistics system,” Eliza said when contacted by Investor Daily in Jakarta on Monday (26/2/2024).
Moreover, she stated that part of the infrastructure sector that must be improved was rail-based transportation. The rationale behind this lies in the efficiency of railway freight transportation compared to other land infrastructure, such as toll road construction.
“The government currently prefers constructing passenger railway infrastructure, such as Kereta Cepat Indonesia China (KCIC). The reality is, to suppress logistics costs, railway freight transportation is more efficient than toll roads,” she affirmed.
In the future, she said that railway infrastructure construction would be increasingly urgent, especially outside Java to suppress national logistics costs. Besides that, according to Eliza, the upcoming government must optimise multimodal infrastructure.
“Therefore, it is essential to establish connectivity across all modes of transportation, spanning from land-based trains to maritime ships. This necessitates the optimisation of small ports and regional roads, ensuring the revitalisation of trade within regions,” she stated.
Eliza suggests that future infrastructure development plans should be tailored to the specific needs of each region. Transparent and precise feasibility studies are crucial at this stage. A key initiative involves enhancing institutional governance to ensure reliability and optimisation.
“If they are not organised, no matter the infrastructure, the benefits will not be enjoyed by the public. For example, Kertajati Airport that was planned to open new areas has not drove the regional economy,” Eliza explained.
Core Indonesia Researcher Yusuf Redny Manilet said that one of the aspects that can be boosted in the 2025 APBN was infrastructure development that is related to the efforts of expediting industrialisation. Even though the government has been aggressively constructing infrastructure in the last 10 years, there is a notable absence of integration between infrastructure and industrial estates.
“This is the reason why logistics costs in the country remain relatively high. I believe that integrating infrastructure development with special economic zones should be a focal point for discussion and implementation in next year's fiscal policies,” Yusuf stated.
Yusuf said that special economic zones must be fitted by infrastructure from and to the area. Hence, infrastructure can drive industrialisation that is currently implemented by the government.
Yusuf emphasised that special economic zones must be equipped with comprehensive infrastructure connecting to and from the area. This way, infrastructure can effectively propel the ongoing industrialisation efforts of the government.
Besides that, Yusuf pointed out that one of the challenges lies in securing funding for infrastructure development. This issue must be collaboratively addressed by all relevant stakeholders.
“I believe it is a collective responsibility of stakeholders to identify available alternative funding options within the country,” he said.
