PPP scheme maintains infrastructure development momentum
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 - Skema KPBU jaga momentum pembangunan infrastruktur
8 November 2022
Alternative financing schemes such as public-private partnership (PPP) is the choice amid the global economic uncertainty to boost sustainable infrastructure construction in Indonesia.
“With PPP, we can continuously maintain the infrastructure construction momentum,” Director of Government Support Management and Infrastructure Financing of the Finance Ministry Brahmantio Isdijoso said during a sharing session on the implementation of the PPP financing scheme for the infrastructure project to install road lighting devices in Jakarta on Monday (7/11).
In infrastructure construction, he is asking regional governments, including provincial, regency, and local governments, to not rely on the state budget (APBN) nor the regional budget (APBD). The APBN is currently carrying a heavy load amid the global economic uncertainty due to the Covid-19 pandemic, the Russia-Ukraine geopolitical conflict, as well as the monetary policy tightening.
Besides that, he added that the APBN’s load is increasingly heavy due to inflation in various countries, including developed and developing countries. Inflation finally reaches Indonesia.
“The central and regional governments is trying not to worsen the social condition and the people’s economy,” Brahmantio said.
During this occasion, he appreciated the effort of Madiun Regent Ahmad Dawami for his initiative to implement PPP in the infrastructure project to install road lighting devices in his region. This is the first alternative financing for a road lighting device installation project that is implemented by a regional government in Indonesia.
“We believe that there will be many other regions that follow Madiun. The example is there, so there is a place to ask and discuss,” Brahmantio said.
In the future, he hopes that various regions in Indonesia will implement alternative financing schemes, such as PPP, to construct infrastructure as this scheme can reduce the load of the APBN and APBD.
On the same occasion, Construction Funding Development Director of the National Development Planning Ministry/Bappenas Sri Bagus Guritno said that the alternative financing scheme, PPP, is required to boost sustainable infrastructure construction in Indonesia. The APBN can no longer finance all sustainable infrastructure construction. At this point, alternative financing is desperately required.
He explained that the government requires a financing of Rp6,445 trillion to pursue the gross domestic product (GDP) target in the 2020-2024 National Medium-Term Development Plan (RPJMN). From that amount, the APBN will only provide 37%, state-owned enterprises (SOEs) 21%, and private companies 42%.
