National Strategic Project completion: Getting the 'extravagant' projects in line
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 - Penyelesaian PSN: Bebenah di proyek ‘megah’
8 May 2023
By: Anitana W. Puspa & Rinaldi M. Azka
In early September last year, President Joko Widodo led an evaluation meeting regarding national strategic projects (PSNs). The President only gave one direction, all PSNs must be completed before his term of office ends in 2024.
President Joko Widodo’s term of office will end on 20 October 2024. It means that he will step down in around 17 more months.
Several routine infrastructure projects and PSNs are at stake. Moreover, the projects have cost the state budget thousands of trillions.
President Jokowi obviously wants to end his term of office on a sweet note. He does not want to leave hundreds of projects to be abandoned.
“The President asked all national projects to be physically completed before 2024,” Coordinating Minister for Economic Affairs Airlangga Hartarto said at the time.
Hence, extravagant projects such as Jakarta-Bandung High-Speed Railway, Nusantara Capital City development, and other projects must be completed this year or by 2024 at the latest.
The evaluation momentum towards PSNs is still open. Today, the government commemorates 8 years of PSNs since the programme was first initiated in 2016. Programmes continue to be included as PSNs.
Based on the data from the National Development Planning Agency (Bappenas), there are 312 projects and 12 programmes that are included as PSNs as of March 2023. Out of that total, 155 projects worth Rp1,033 trillion have been completed.
Then, 31 projects and 9 programmes have been stated as partially completed. Then, there are 79 projects in the construction stage, 4 projects in the transaction stage, and 43 projects as well as 9 programmes in the preparation process.
This year, there are at least 30 PSNs that will be completed. Out of the projects set to be completed, Jakarta-Bandung High-Speed Railway is one of them.
According to National Priority Infrastructure Project Planning and Development Director of the National Development Planning Ministry/Bappenas Sumedi Andono Mulyo, the earlier purpose of PSNs was to improve infrastructure stock, improve efficiency and productivity, and develop mass transportation by optimising the capacity of domestic resources.
“There are criteria for the PSNs. So, during the discussion process, projects needed to be dropped as they do not meet the criteria,” he said to Bisnis on Friday (5/5).
During the implementation of PSNs, 67 projects have been dropped out from the list. On the contrary, several new projects have also been included in the list.
Referring to the list of PSNs, there are at least 126 projects that are still in the construction process, in the transaction process, and in the preparation stage that need to be completed by the end of President Jokowi’s term of office in October 2024.
House of Representatives (DPR) Commission V Chairperson Lasarus stated that the list of PSNs in construction and preparation needed to be continued in the next government period.
According to him, whoever the next president is must continue the PSNs that have been initiated.
“We, at Commission V, see that PSNs, especially toll roads, dams, and bridges, must be continued as they are basic infrastructures. As they are basic infrastructures, whoever the President is must continue them as they are needed by the people,” he said to Bisnis on Friday (5/5).
For example, he mentioned that the construction of Surabaya-Madura (Suramadu) Bridge was initiated during the period of President Megawati Soekarnoputri, then it was continued and inaugurated by Susilo Bambang Yudhoyono (SBY). The same goes for several dam projects that were initiated by President SBY that were completed during the period of President Joko Widodo.
Lasarus affirmed that basic infrastructures do not concern certain groups, classes, or even parties, so it does not matter which party the president is from.
He continued that the Nusantara Capital City (IKN) programme that has been agreed on must be continued as it has been mutually agreed on and has a legal umbrella in the form of laws.
“Talking about consistency in politics is difficult. We must talk about the parties. However, we must say that the interest of the state is more important than the interest of certain classes, groups, races, and parties,” he said.
Commission V also appreciates the government during President Jokowi’s term that has completed a significant number of basic infrastructures, such as roads, bridges, toll roads, and dams.
“If the infrastructures are not good, production costs will be high, competitiveness will weaken, and Indonesia will find it difficult to run together with other countries in the world and Asia,” he stated.
Budget absorption
However, Commission V has provided a note for various PSNs that are carried out by the government, especially regarding budget absorption.
In budget evaluation, the parliament involves the Audit Board (BPK) and the Development Finance Comptroller (BPKP).
“We, from Commission V, want to see the realisation of the target. We will see how the government is absorbing the set budget. It has to be absorbed excellently and quickly so that the people can enjoy beneficial output and outcome, not just another monument with no use,” he said.
Indonesia Chamber of Commerce and Industry Deputy Chairperson for Agrarian, Spatial Planning, and Area Sanny Iskandar hopes that the portion of business players in PSNs will be larger.
“From the start, a PSN implementation has to be announced to several associations, including Indonesia Chamber of Commerce and Industry, the Indonesian Employers Association, as well as the sectoral businesses association. It includes new and existing [projects], they just need to be confirmed,” he said.
For example, he mentioned Kertajati Airport in Majalengka that was completed before Cileunyi-Sumedang-Dawuan toll road. Kertajati Airport has been included in masterplan for the acceleration and the expansion of Indonesian economic development in 2011-2015.
According to Sanny, the lack of connectivity makes access to Kertajati Airport difficult, so the use is not optimal.
He said that the PSNs must be evaluated to create optimal infrastructure integration.
Sanny mentioned another example, Kuala Tanjung Port in North Sumatra that he reckoned was less than effective. The construction has been completed and it has been included as a PSN, but the utilisation needs to be reviewed.
“It has to be reviewed to be determined if it can still be included as a priority strategic project or not. Several projects must also be reviewed as it must be determined what project the PSN is supporting. It must be seen if the initiator is serious or not. There are toll roads, dams, and power plants that are supporting a specific project.”
