Of these funding needs, the state revenue and expenditure budget can only meet 42 percent, while the rest will come from state-owned enterprises and the private sector.

Jakarta (Indonesia Window) – Indonesia needs funds of around 6,500 trillion rupiahs (some 434.4 billion U.S. dollars) to build infrastructures until 2024, Director General of Financing and Risk Management at the Ministry of Finance (DJPPR), Luky Alfirman, has said.

Of these funding needs, the state revenue and expenditure budget can only meet 42 percent, while the rest will come from state-owned enterprises and the private sector.

"Therefore, financing is one way to reduce these costs. How we can design financing in such a way," Luky said in the 23rd T20 Edition of the Infrastructure Roundtable (IIR) Seminar here on Friday as quoted from Antara news agency.

According to him, the government continues to invite financing from the private sector. This is also included in the discussion of the G20 Presidency in Indonesia, namely increasing the private sector’s participation because the government cannot bear all development costs alone.

Investing in infrastructures is a long-term investment, so there must be certainty in the projects being invested. Therefore, Luky said, the Ministry of Finance's Directorate General of Financing and Risk Management continues to provide certainty by managing existing risks so that investors, especially domestic ones, are interested in investing their capitals in infrastructure development projects.

As for foreign investors, he added, usually prospective investors would tend to look at the political conditions and Indonesia's economic prospects before deciding to invest in an infrastructure project.

Thus, he said, the stability of political conditions and improvement of the domestic economy are very important in order to attract investment from abroad.

Infrastructure projects

Previously, the Indonesian Ministry of Public Works and Public Housing (PUPR) has announced that it would build 26 infrastructure projects involving the private sector or business entities in 2023.

The Director General of Infrastructures and Housing Financing of the Ministry of Public Works and Public Housing, Herry Trisaputra Zuna, noted that that in 2023 there are indications of the construction of 26 projects through the government cooperation with business entity scheme, one of which is the construction of Indonesia’s new capital in East Kalimantan province.

Of the 26 projects, 10 are already in the preparation stage, and 16 are in the transaction stage, Herry Trisaputra pointed out in a joint hearing with Commission V of the Indonesian House of Representatives on June 4.

Projects currently in the preparation stage for 2023 include the construction of two roads and bridges with an estimated total investment of 22.87 trillion rupiahs (some 1.5 billion dollars).

The other PPP projects in 2023 are in the Water Resources sector as many as two projects with an estimated total investment of 6.71 trillion rupiahs (about 448.2 million dollars); one project in the housing sector with an estimated total investment of 1 trillion rupiahs (about 66.8 million dollars); and five projects in the housing sector with an estimated investment of 3.25 trillion rupiahs (about 217.1 million dollars).

Reporting by Indonesia Window