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Private sector infrastructure partnerships help save state budget

November, 21 2017 | 01:15 am Aktivitas pekerja menyelesaikan pengerjaan proyek pengeboran terowongan untuk angkutan massal cepat (Mass Rapid Transit/MRT) di Stasiun Dukuh Atas, Jakarta Pusat, Kamis (24/11/2016). Pengerjaan proyek MRT fase pertama ini diperkirakan rampung pada tahun 2018.
Aktivitas pekerja menyelesaikan pengerjaan proyek pengeboran terowongan untuk angkutan massal cepat (Mass Rapid Transit/MRT) di Stasiun Dukuh Atas, Jakarta Pusat, Kamis (24/11/2016). Pengerjaan proyek MRT fase pertama ini diperkirakan rampung pada tahun 2018.

Transportation Minister Budi Karya Sumadi pointed out during the Forum Merdeka Barat 9 media gathering on Nov. 17 that the budgetary needs of the transportation sector reached Rp 1.5 quadrillion annually.

Of this amount, some Rp 250 trillion comes from the state budget. “There is a gap between demand and existing budgets. As such partnerships with the private sector are required,” Budi said.

He added that the Transportation Ministry was committed to pushing for partnerships between state-owned enterprises and the private sector to manage state assets in the ministry’s jurisdictional areas, such as airports and harbors.

These partnerships serve to improve services, increase economic competitiveness and boost capital participation for asset development.

The government has classified its infrastructure projects into three different types. First, if a project is not economically feasible, then it will be built solely using state-owned enterprises.

The second category is for projects that are between feasible and not feasible. These will be funded through operational partnerships between provincial governments or state-owned enterprises on the one hand and the private sector on the other.

The last category is for projects that have the potential to benefit the entire economy. These can allow for private sector participation. Managing assets has its own set of guarantees for the public sector from the government.

So far, according to Budi, there are 10 airports and 20 harbors that will have their managements offered to the private sector. The management offers for these airports and harbors will certainly benefit the entire economy.

These airports include Labuan Bajo, Sentani, Radin Inten, Tarakan, Palu, Sabang, Sibolga, and Bengkulu, while the harbors include Bitung, Ternate, Manokwari, Kendari and Biak.

Partnerships of this nature would use asset management schemes for state property. The maximum period of operational cooperation is established at 30 years. In addition, all assets are still owned by the state.

It is through these partnerships with the private sector that up to Rp 1 trillion in state budget funds can be conserved

The conserved funds can certainly be channeled to other productive needs, such as building infrastructure in the frontier, outermost and remote regions.