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Investor Daily - Pemerintah Baru Harus Selektif Bangun PSN
20 February 2024
By Arnoldus Kristianus and Heru Febrianto
Jakarta, ID – The President and Vice President for the 2024-2029 term must be selective in compiling the list of national strategic projects or PSNs. This ensures that the infrastructure projects undertaken will have a direct impact on the Indonesian economy.
The administration of President Joko Widodo (Jokowi) and Vice President Ma’ruf Amin that is coming to an end will be immediately replaced by the selected president and vice president who will be inaugurated in October 2024.
The new government is expected to boost the national economy through infrastructure development as one of the catalysts for equity and welfare. With infrastructure development in underdeveloped, frontier, and outermost (3T) areas, particularly outside Java, investments will not only be focused on major cities.
Based on the data from the Coordinating Ministry for Economic Affairs, the administration of President Jokowi completed 190 PSNs with a total investment value of Rp1,515.4 trillion from 2016 to 2023.
Besides the 190 PSNs completed from 2016 to 2023, there were also 30 projects and 9 programmes that achieved partial operation, boasting a cumulative investment value of Rp788.5 trillion. Additionally, there are currently 50 projects under construction with a combined investment value of Rp828 trillion, four projects in the transaction stage, as well as 37 projects and four programmes in the preparation stage.
Throughout 2023, the government completed 37 PSNs with an investment value of Rp475.4 trillion. The list of projects completed in 2023 include seven dam projects, three port projects, five toll road projects, four settlement projects, five railway projects, three airport projects, one energy project, one education project, one technology project, five cross-border posts, and two electricity projects.
The construction of PSNs creates jobs, increases added value, and boosts economic growth. Over the period from 2016 to 2023, a total of 2.71 million individuals were directly employed as part of the workforce for the 190 PSNs. The rise in the added value of industries and the creation of jobs are expected to yield benefits for the next five to seven years.
However, several parties reckoned that not all PSNs would directly impact national economic growth. There are several infrastructure projects that have completed construction but have not expedited economic growth in their region.
Institute for Development of Economics and Finance (Indef) Deputy Director Eko Listiyanto stated that many projects were listed in the current list of PSNs but not all of them have a direct impact on the economy. Hence, the incoming government must be selective in planning infrastructure development projects.
“So, they have to see which ones are urgent and which infrastructure development [projects] will have a direct impact on the economy. For example, road construction must be continued by the next government,” Eko said when contacted by Investor Daily in Jakarta on Monday (19/2/2024).
He hopes that the incoming government must be able to create new policies so that there will be more investors who invest in infrastructure projects. One of the policies required is a more transparent and efficient bureaucracy.
“PSNs cannot only focus on physical construction, but they must also have consider the economy. So, the quality of PSNs must be focused on. How is their impact on the economy? If they do not have a direct impact, they must at least empower locals,” he explained.
According to him, the involvement of investors in infrastructure projects could alleviate the burden on the state budget. Consequently, the allocation for infrastructure can be redirected to other sectors that may require it more urgently.
“Private investors must be encouraged. The APBN (State Budget) can only contribute 20%. It is imperative to avoid a situation where the state budget's portion increases to 80% as it is the share of the private sector. Hence, finding a solution is essential, particularly when the Return on Equity (ROE) is not yet evident,” he affirmed.
During another instance, Eliza Mardian, an economist from Centre of Reform on Economics (CORE) Indonesia, clarified that, according to quick counts by various survey institutions and the provisional calculation of the General Elections Commission (KPU), the presidential and vice-presidential candidate pair of Prabowo Subianto-Gibran Rakabuming Raka, outperforms other candidates. Furthermore, with this advantage, it is highly likely that the presidential election will be concluded in a single round.
“Based on the vision and mission of Prabowo-Gibran, they will continue several infrastructure projects of President Jokowi. This will provide certainty for investors to invest in ongoing projects,” Eliza said.
However, according to her, the incoming government must strengthen its governance to ensure that future infrastructure projects align with the potential of each region. The reality is that Indonesia still faces constraints with a limited fiscal budget.
“So, they must select which infrastructure project must be prioritised and continued. Do not carry out massive development with insufficient supporting infrastructure,” she added.
According to Eliza, several infrastructure projects that will be continued by Prabowo-Gibran include the Giant Sea Wall project and the Trans-Sumatra toll road project. There are also several infrastructure projects included in the list of PSNs that will be continued by Prabowo-Gibran after they are inaugurated as Indonesia’s president and vice president.
“However, it is essential to underscore that project tenders should not exclusively favour state-owned enterprises (SOEs); rather, everyone must have an equal opportunity. The existing debt levels of SOEs are already a cause for concern, and there is a need to prevent them from defaulting. The private sector should actively participate in these endeavours,” he explained.
Continued
Assistant to Deputy for Development Acceleration and Utilisation of the Coordinating Ministry for Economic Affairs Suroto said that his agency was targeting 41 PSNs to be completed in 2024. PSNs can continue as long as there is financing, land procurement, and permits in 2024.
“After 2024, will PSNs still exist? In the RPJMN, there are several PSNs that will still continue after 2024. They are most likely PSNs that will be continued in 2024 and included in the 2025-2029 RPJMN,” Suroto said in Jakarta recently.
He said that PSN construction would create new jobs, increase added value, and boost economic growth. From 2016 to 2023, there were 2.71 million people absorbed in 190 projects.
“An increase in the added value of industries and job creation will provide benefits in approximately five to seven years. So, it is not a short-term [endeavour],” Suroto added.
The government completed 190 PSNs with a total investment value of Rp1,515.4 trillion from 2016 to 2023. PSN construction is expected to have a multiplier effect on the national economy.
“The actual value surpasses Rp1,515.4 trillion, considering that some projects are already operational and others are currently under construction. Each project is expected to have a multiplier effect on the regional workforce and economy,” Regional Development and Spatial Planning Coordination Deputy of the Coordinating Ministry for Economic Affairs Wahyu Utomo said during the occasion.
Based on Coordinating Minister Regulation Number 8 of 2023, there are 204 projects and 13 programmes considered as PSNs with an estimated total investment value of Rp5,918.86 trillion. Besides the 190 PSNs completed from 2016 to 2023, there were also 30 projects and 9 programmes that achieved partial operation, boasting a cumulative investment value of Rp788.5 trillion. Additionally, there are currently 50 projects under construction with a combined investment value of Rp828 trillion, four projects in the transaction stage, as well as 37 projects and four programmes in the preparation stage.
Throughout 2023, the government completed 37 PSNs with an investment value of Rp475.4 trillion. The list of projects completed in 2023 include seven dam projects, three port projects, five toll road projects, four settlement projects, five railway projects, three airport projects, one energy project, one education project, one technology project, five cross-border posts, and two electricity projects.
“There were 37 PSNs completed in 2023, surpassing our target last year,” Wahyu explained.
