Eight years of National Strategic Projects: Classic issues need solution
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.
Bisnis Indonesia - Sewindu proyek strategis nasional: Isu klasik butuh solusi
9 May 2023
By: Annasa Rizki Kamalina, Affifah Rahmah Nurdifa, & Rinaldi M. Azka
Jakarta - Several classic issues that hinder the construction of national strategic projects or PSNs need a solution to ensure the completion of 30 projects this year.
Coordinating Minister for Economic Affairs Airlangga Hartarto revealed that there were two aspects that are classic challenges in realising PSNs, namely land acquisition and financing.
“If there are investments from the private sector. If the ARR (accounting rate of return) is met. If they progress. With the PSN programme of KPPIP (Committee for Acceleration of Priority Infrastructure Delivery), not everything is financially sound. So, for the programme, the government’s role is to complete various projects that are needed in the long term, not short term,” he explained on Monday (8/5).
KPPIP logged that there were at least five issues that hindered the completion of PSNs that would be continuously followed up in 2023, such as land procurement and spatial planning that affect 61 projects.
Besides that, there are also forestry and environmental issues, such as the discrepancy in the measurement of land size that hinders 13 priority projects.
Meanwhile, KPPIP logged that there were also permit and preparation issues due to the change in construction and design that affect 43 projects.
Funding and financing also hinder 48 projects as they need additional budget.
KPPIP also said that there were problems with bringing in foreign experts and a lack of contraction capacity in project construction, which are construction issues that affect 45 projects.
Land issues that hinder PSNs are also highlighted by House of Representatives (DPR) Commission V.
DPR Commission V Member Andi Iwan Darmawan Aras affirmed that, in principle, DPR was continuously boosting the construction of all PSNs so that they can be completed in 2024 at the latest. It is in line with the direction from President Joko Widodo who asked all PSNs to be completed physically before 2024.
“Land procurement for the projects must be completed. The permits have been obtained. We can see how the financing will be. So, in the future, there will be no stalled PSNs,” he said to Bisnis on Monday (8/5).
He logged that several PSNs were still in process and have not been completed. Most are hindered by land acquisition issues.
Hence, he sees that excellent synergy and cooperation is required among the central government (Public Works and Housing Ministry) and regional governments that have the authority for land acquisition.
“We, from DPR Commission V, appreciates all PSNs that have been completed. However, we are still overseeing PSNs that are still on progress and PSNs that are still in the planning process,” he said.
Moreover, the government revised the list of PSNs at the end of last year due to various considerations, which include unresolved land acquisitions.
“The government needs to evaluate PSNs that have not been completed, especially regarding land acquisition. They need to pay attention to the priority scale [of projects] that can be utilised by the people, such as Kertajati Airport that has yet to operate at the time,” he explained.
Hence, DPR Commission V as the government’s partner in the transportation infrastructure sector is asking the PUPR Ministry to prevent what happened in 2022 from occurring again.
On the other hand, Centre of Reform on Economics (Core) Indonesia Executive Director Mohammad Faisal explained that the government has sorted several PSNs that could be completed in 2024.
“It is not realistic to pursue projects that are still in the preparation stage. I do not know the latest development. There is a possibility that PSNs that are still in the early stage is included. So, possibly, they will not be completed even though we force them to be constructed in the next 1.5 years,” he explained on Monday (8/5).
According to him, there are two types of economic benefits from several PSNs that are worked on by the government. The first one is a direct benefit that can be felt at the time of construction in the form of workforce absorption.
The second one is in the post-construction period that is expected to provide a larger benefit. PSN infrastructures are expected to give a long-term economic impact and boost economic transformation.
“Those are what we expect. It is different between one PSN and the other,” he said.
