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 - Memacu pembangunan proyek strategis nasional
15 May 2024
By Arnoldus Kristianus
Jakarta, ID – Infrastructure development is one of the government’s strategies to boost Indonesia’s economic growth, which could be realised through the construction of national strategic projects (PSNs). The government is targeting 41 PSNs worth Rp554 trillion to be completed this year.
To achieve the target, numerous strategic issues must be addressed, which requires support from various stakeholders. These issues encompass permits, preparations, forestry, land procurement, financing, and construction.
“If they do not use the APBN (state budget), they need permit acceleration, land facilities, and other amenities to expedite financing,” Coordinating Minister for Economic Affairs Airlangga Hartarto said at the National Strategic Project Acceleration and Pre-evaluation National Work Meeting in Jakarta on Tuesday (14/5/2024).
Airlangga said that President Joko Widodo gave directions to adjust the list of PSNs to be completed in 2024. The PSNs that will be continued in the next government period are PSNs that do not use the APBN.
Since 2016, a total of 198 projects have been completed with 32 projects and 10 programmes partially operating as well as 44 projects and 3 programmes currently under construction. These developments are anticipated to contribute approximately Rp3,344 trillion to the national economic output and employ 2.71 million workers. The estimated investment realisation of completed PSNs nationwide stands at Rp1,614 trillion.
The government is consistently evaluating every stage of the projects, including their preparation, transaction, construction, and operation. The comprehensive evaluation result will be reported to the President to adjust the list of PSNs, which can be an input for the development agenda of the next government. “I hope all stakeholders will provide strong support and commitment to ensure the timely completion of the PSNs in accordance with the set target,” Airlangga said.
The government is committed to realising balanced infrastructure development across various regions through numerous PSNs in multiple sectors. This effort aims to bolster connectivity, energy resilience, food independence, and industry downstreaming.
Conditions for Golden Indonesia
Infrastructure development is imperative to realise economic transformation. Moreover, the government is targeting an economic growth of 6%-7% to become a high-income country, which is one of the conditions to realise the 2045 Golden Indonesia vision.
In addition to PSN implementation, various efforts are underway to realise economic transformation. These include accelerating energy transition towards renewable energy, developing digital infrastructure to foster economic growth, ensuring IKN development continuity, enhancing the economic potential of the Java northern coast, and promoting regional independence.
“The PSNs are anticipated to serve as the backbone of economic transformation. The commitment of stakeholders to completing the programme on time is crucial for its success,” Airlangga stated.
Among the PSNs, there are 16 mineral smelters with an estimated investment value of Rp248.75 trillion. Implementing these projects is part of the government's efforts to develop critical minerals, which play a crucial role in supporting energy transition and resilience. They serve as essential raw materials for constructing solar panels, wind turbines, and batteries.
In the mineral processing sector, the government is developing PSN smelters. They include 9 nickel processing facilities with an estimated output of 2.5 million tonnes per year and 4 bauxite processing facilities with an estimated output of 3 million tonnes per year.
“To develop critical minerals, there are 16 projects with an investment value of Rp248.75 trillion. These projects focus on downstreaming nickel, copper, bauxite alumina, and sand to produce pig iron,” Airlangga explained.
Meanwhile, Transportation Minister Budi Karya Sumadi emphasised that PSN development would serve as the foundation for evaluation nearing the end of President Joko Widodo's administration. His ministry currently maintains ongoing coordination with the private sector, recognising numerous potential areas for collaboration within the transportation sector. “We are opening ourselves with ports, air [transportation], and even railways to attract the private sector,” Budi Karya added.
Efforts to involve the private sector include ease of doing business. Regarding this matter, a harmonisation of regulations is required to reduce obstacles in project implementation. Projects cannot be implemented optimally without synergy from all relevant stakeholders.
“One of the most important things is how we harmonise our regulations. We are reducing obstacles. Collaboration is also important,” Budi Karya explained.
During the occasion, Alue Dohong, a representative from the Ministry of Environment and Forestry, stated that the ministry supported PSN implementation through land provision and accelerated environmental approvals. Environmental approval is the core of the permit system in Indonesia. According to the Job Creation Law, a business permit cannot be issued without environmental approval. This approval is based on an analysis of the environmental impact prepared by the initiator and assessed by the environmental feasibility team. Environmental approval in a business permit serves as a tool to reduce pollution and environmental damage, thereby supporting environmental supervision.
Efforts to streamline environmental approvals can be realised through Environment and Forestry Minister Decree Number 136/2024 on Delegation of the Environmental Approval Process Authority from the Central Government to Provincial and Regional Governments to Support Business Licensing Implementation. This decree will expedite permits by delegating the provision of permits to governors, regents, and mayors.
“The regulation is a form of support from the Environment and Forestry Ministry in expediting PSNs,” he added.
