Delivering the Government Policy and Regulatory

Framework Needed to Drive Infrastructure

Roadmap
Indonesia International Infrastructure 2011

Zulkifli Zaini
President Director of Bank Mandiri
12 April 2011
 There are several main issues of infrastructure in Indonesia
1
• 93,100-km of length in 2010, are partly legacy of Dutch colonial government growing only by 6.95%
Land p.a.
Transportation • Only 48% of the roads are in good condition – with others are in moderate state (30%), broken
(20%), and severely damaged (2%).

2 • In 2010, electrification ratio in Indonesia only reaches 66.28%, compared to 100% in Singapore, and
80% in Malaysia and Brunei
Power Plants • Price of PLN-produced electricity is also relatively expensive since it still uses oil and coal prices
whose prices continue to rise – where cheaper energy sources (such as gas, geothermal, or even
the wind and sunlight) while available, not exploited extensively.
3
• There are 81,000-kilometre of coasts in Indonesia but there are only 32 major seaports, or about 1
seaport every 2,500-kilometre of coasts – compared to Japan with 1 seaport every 11-kilometre of
Water coasts, or Thailand with 1 seaport every 50-kilometre of coasts.
Transportation • Majority of Indonesian seaports are less feasible due to over capacity condition, so that hamper the
flow of goods, leading to inefficiency, trigger a high cost economy, and creating a non-conducive
business climate.
4
The current airport facilities are no longer sufficient. Soekarno Hatta Airport, for example, designed
Air only to accommodate 18 million passengers every year (± 22 million passengers if taking into
Transportation account Terminal 3) – but it was forced to accommodate ± 43.7 million passengers, and the number
keeps growing by ± 15-20% per year.
5
Water and Until 2010, access to drinking water service only reaches 40.97% – while access to sanitation facilities
Sanitation only reaches the number of 53%.

Source: http://www.investor.co.id/home/tuntaskan-masalah-infrastruktur/6260; http://rulinh.blogspot.com/2010/12/aneka-masalah-

infrastruktur-indonesia.html; http://debuh.com/berita-keuangan/jalan-nasional-bertambah-panjang-19-500-km-di-2010/26348/ © PT Bank Mandiri (Persero) Tbk.
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Lack of financing, weak regulation, and complex bureaucracy are
considered as main causes of the infrastructure problems
Key Issues Description

• National infrastructure development requires large budget of investment. In 2011, the government
Financing has budgeted US$ 143 billion to support the development of national infrastructure.
Issues • However, the government could only provide 35% or US$ 51 billion of the total funding
requirements of such development.

• Keputusan Presiden (Keppres) No. 55/1993 as amended to Perpres No. 36/2005 concerning
Revoking of Rights on Land, deemed not capable of being a strong legal basis in the Land
Regulation Acquisition for Public Interest.
Issues • Spatial and Regional Planning (RTRW / Rencana Tata Ruang dan Wilayah) is set only for 20
provinces, 44 districts, and 17 cities, while the RTRW discussion of the other 13 provinces, 354
regencies and 76 cities has not been completed.

• Policies and regulations are less synchronized between central government and the local
Bureaucracy government. This caused barriers to investors in executing the infrastructure construction in many
Issues regions.
• Investors often collide with the necessary permits, which tend to take relatively long time.

• The need to educate the surrounding community related to infrastructure projects e.g. education
Environment of nuclear power plants development is estimated to cost Rp 2 Billion
Issues • Land mapping that is not optimal and there is no clear rules related to land acquisition likely to
cause a variety of repulsion from the surrounding community

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2 Sumber: Kompas, Kontan, Media Indonesia, Wartapedia
The government has made various efforts to solve these infrastructure
issues

1.
1 Master plan for Acceleration & Extensification of Indonesian Economic
Development 2011-2025

2.
2 Held several meeting that directly led by The President of Republic of
Indonesia

3.
3 Task force have collected information through bottom-up participation

and identify regulations that required to change

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3 Sumber: Berbagai sumber
However, to make the plan more concrete we need to focus on the
implementation
Led by an independent body centrally

• Nation wide (high) impact

• Cross ministries coordination required
• High complexity
• Wide scope of stakeholder support required

Led by local
governments Led by respective ministry
• Nation wide (high) impact
• Have local (low) impact
• Internal ministry coordination required
• Less coordination required
• Medium complexity
• Low complexity
• Medium-wide scope of stakeholder
• Local (limited) scope of support required
stakeholders support
required
Screening
Various initiative screened
based on impact and
complexity, so as to know the
scope of any initiative
Initiative Initiative
Initiative Initiative

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The implementation of each initiatives would be fully monitored by a
national committee
Cross Ministries
National Committee is directly
responsible for initiative
implementation
National Committee
• The committee is being coordinated by Vice President
RI office or specific Menko
National • Screening, prioritizing, and categorizing initiatives
Committee • Monitoring initiatives implementation through its PMO
• Coordinating debottlenecking efforts done by its PMO
• Coordinating stakeholder management efforts through
its PMO

Project Mgt Office

Project Mgt Office
Respective
Local Government
Ministry

LG LG LG IM IM IM
Initiative Initiative Initiative Initiative Initiative Initiative
1 2 x 1 2 x

Local Government Respective Ministry

• Local Government is
• Respective Ministry is responsible for
responsible for initiative
initiative implementation
implementation

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In addition, it is necessary for an effective stakeholder management in
order to produce positive perception in public and investors

For stakeholders with For the

active support, need to stakeholders with
be managed properly to no active support,
BENEFITTING THREATENED OR
spread the support to INCONVENIENCED need steps to
other stakeholders minimize their
Allies Opponents influence,
particularly if
Containment uncooperative
CURRENTLY ACTIVE Deployment

CURRENTLY
Mobilization Persuasion
INACTIVE

For stakeholders with no support,

For stakeholders with support but with not- need to approach these type of
active state, need to encourage these type stakeholders so as to provide
of stakeholders to provide optimum support in the future
support

Based on theory of Ian C. MacMillan

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Summary

11. The needs to solve infrastructure issues in Indonesia.

22. Government has started to address the infrastructure issues, by

designing and developing the Master Plan for acceleration and
extensification of Indonesia’s economic development 2011-
2015, and has also organized retreat led directly by the
President of the Republic of Indonesia.

33. The current effort should be strengthened by focusing on

Program Management aspect of those initiatives, including
screening, prioritizing, coordinating, monitoring, and
debottlenecking.

© PT Bank Mandiri (Persero) Tbk.

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End of Document

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