Tuesday, 08 January 2019 00:00

State-Owned Enterprises Need Collaboration with Regional Companies in Infrastructure Development

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The World Bank provided clarification about a report entitled ‘Infrastructure Sector Assessment Program (InfraSAP) which was recently quoted by several media. The report states that infrastructure in Indonesia is of low quality and not well planned. The World Bank report released in June 2018 also mentions that the administration of Joko Widodo and Yusuf Kalla relies on State-Owned Enterprises SOEs in building infrastructure. This was reflected in the government's decision to provide direct assignments of a number of projects to the SOEs.

The World Bank immediately issued clarification regarding the news. In its release, the World Bank confirmed that the report had not been officially published and was still in the finalization stage. However, the World Bank did not deny the news.

In a written statement on Monday (7/1), the World Bank reported that in compiling the report, the World Bank collaborated closely and discussed with relevant parties in the government, such as the Ministry of Finance, Bappenas, various Coordinating Ministries, Ministry of State-Owned Enterprises (BUMN) and the Financial Services Authority (OJK).

InfraSAP is a comprehensive analysis related to various obstacles, which can reduce funding for commercial and private infrastructure. This report is one of the possible policy reforms that can be considered and carried out by Indonesia in the short and medium term.

The World Bank has started preparing the report since mid-2017. This is in accordance with the invitation of the Indonesian government to cooperate in finding solutions in a bid to be able to attract more private and commercial funding for infrastructure investment.

Apart from the clarification of the World Bank regarding the report, the Indonesian government has responded positively. Minister of Finance, Sri Mulyan assessed the World Bank report as a positive input for the government. The same statement was expressed by Minister of National Development Planning (PPN / Head of Bappenas), Bambang Brodjonegoro who claimed to have communicated with the World Bank regarding the InfraSAP report.

Indeed, the World Bank has not officially issued the InfraSAP report. But there is nothing wrong for the government to prepare itself for some improvements in infrastructure development planning. Take for example; one of the SOEs that will work on an infrastructure project can cooperate with the regional companies in the location. Thus, the project can have a direct double effect on the area; the infrastructure is built and regional companies can develop.

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