Tinkering with strategic projects
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 - Utak-atik proyek strategis
14 September 2023
By: Hendra Wibawa
Despite being overshadowed by various issues, the government is continuously completing various national strategic projects (PSNs) that are scattered across several regions. The priority scale is still being tinkered with so that the projects can be constructed smoothly and contribute to the national economy.
In the last 8 years, the government has tinkered with PSNs several times. Referring to the report from the Committee for Acceleration of Priority Infrastructure Delivery (KPPIP), from 2017 to 2022, there were 155 projects and seven programmes added to the PSN list.
During the period, KPPIP took out 53 projects and one programme. This year, several projects also have the potential to be taken off the PSN list, which include Jakarta-Surabaya semi high-speed railway that is funded by the Japanese government.
President Joko Widodo has also instructed ministries and institutions to accelerate the completion of the remaining PSNs by the first half of 2024 at the latest.
“Observe them again, check them again, seriously monitor the development. Do not let any be delayed or abandoned,” Jokowi said when he attended the Eight Years of National Strategic Projects event in Jakarta on Wednesday (13/9).
The Head of State said that land acquisitions continued to hinder the implementation of projects. The President specifically highlighted the conflict in the development of Rempang Eco City in Riau Islands Province that was included in the PSN list in 2023.
He reckoned that the conflict occurred due to miscommunication with the public, especially regarding land compensation. The Head of State has also instructed Investment Minister Bahlil Lahadalia to hold another dissemination regarding the project that is invested by China.
“PSNs are meant to benefit the public, not make them suffer.”
Jokowi said that the completion of 161 PSNs in the last 8 years has significantly contributed to the economy. One of the aspects that can be seen is workforce absorption that has reached 11 million people.
Moreover, the Head of State revealed that PSNs also boosted Indonesia’s competitiveness on the global level. Based on IMD’s Global Competitiveness Index 2023, Indonesia’s competitiveness rank increased from 44 to 34 out of 64 countries.
Coordinating Minister for Economic Affairs Airlangga Hartarto said that the PSN programme has realised equitable development. PSNs are constructed all over Indonesia with 45 PSNs located in Sumatra, 25 PSNs in Sulawesi, and 15 PSNs in Maluku-Papua.
According to him, the government is committed to completing several remaining PSNs next year. “The projects completed after 2024 will be stated as clean and clear. It means they will not rely on funding from the APBN (state budget),” Airlangga said.
Some of the strategic projects require a large funding, and one of the sources is the state’s finances. Other sources include expenditures from regions, state-owned enterprises, and private companies. According to the KPPIP, the number of PSNs reach 210 projects and 12 programmes. The total investment required reaches Rp5,746.4 trillion.
Business players do not want to sit still. Indonesia Chamber of Commerce and Industry (Kadin) Chairperson Arsjad Rasjid stated that the business world was still committed to supporting the government to accelerate PSNs.
According to him, the business world and the government must improve their synergy and collaboration, one of the ways is the public-private partnership (PPP) scheme.
Indonesia Kadin Vice Chairman Coordinator of Maritime, Investment, and Foreign Affairs Shinta Widjaja Kamdani said that there were challenges for the business world regarding PSNs. One of them is the business certainty of PSNs.
During the leadership transition period, the business world and potential investors need to be clarified about the continuity of PSNs. “I think that the aspect is crucial so that ongoing PSNs or PSNs that are recently offered can attract investment,” Shinta said.
Meanwhile, Centre of Reform on Economics (Core) Indonesia Executive Director Mohammad Faisal reckoned that PSN development would positively impact the economy. However, he also reckoned that there were PSNs that are still immature, so their construction tends to be delayed.
