The results of a 2014 study by the International Monetary Fund indicate that the rise of investment in public infrastructure will lead to greater economic growth, both in the short and long term.
A 1 percent increase in public infrastructure investment in a developing country can increase output by 0.1 percent in the same year and by 0.25 percent in the four years to come.
The government understands the importance of pushing for investment in public infrastructure.
That is why it has been hard at work innovating to arrange for more flexible payment schemes to fund infrastructural projects, with the private sector in particular being invited to take a more active role.
According to Robert Pakpahan, the Finance Ministry’s financing and risk management director general, innovative funding is required to accelerate infrastructural development.
Working together with the private sector, public private partnerships can be used as an alternative means for funding, aside from the state budget and tasking state-owned enterprises. That way, the government can spend more time focusing on developing infrastructure projects that are less attractive to investors, such as drinking water and irrigation projects.
“There are currently already a number of government projects partnered with the private sector, such as Palapa Ring and the Batam power plant,” Pakpahan said, during the recent Forum Merdeka Barat 9 ( FMB9 ) media gathering on infrastructure funding, held on Nov. 17 in Jakarta.
Transportation Minister Budi Karya Sumadi echoed Pakpahan’s thoughts. He said that the diversity of payment systems was good for accelerating transportation connectivity in the nation.
Budi pointed out that the budgetary needs of the transportation sector annually reached Rp 1.5 quadrillion. Of this amount, some Rp 250 trillion comes from State Budget funding.
“There is a gap between demand and existing budgets. As such partnerships with the private sector are required,” Budi said.