Indonesia s Update on Inter-sessional Work

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1 2015/FMP/PPP4/006 Session: 1 Indonesia s Update on Inter-sessional Work Submitted by: Indonesia 4 th Public Private Partnership Experts Advisory Panel Meeting Tagaytay City, Philippines 4 March 2015

2 APEC PPP Experts Advisory Panel Meeting Tagaytay, Philippines, 4 March 2015 Session 1 Update Report on the Last Panel Meeting and any Intersessional Work undertaken by the Panel By Parjiono Director of the Center for Regional and Bilateral Policy Ministry of Finance Possible Intervention Points Thank you Chair, Let me start this opportunity by sharing with you that one of the first actions of the new Indonesian Administration was to deliver its election commitment to reduce the size of inefficient fuel subsidy to create fiscal space and obviously devoted most of the proceeds to more strategic and productive use. In this regard, the Indonesian Government has announced that a significant proportion of the subsidy savings will be allocated towards fostering infrastructure development, especially basic infrastructure. Within this commitment, we will prioritize infrastructure program to support maritime development and food security, including agriculture 1

3 and fisheries sectors, as well as infrastructure to boost shared prosperity and eliminating poverty by increasing access to health and education. We will also utilize some of the subsidy savings to further stimulate local development through larger financial transfers to the regions, in particular through so called village funds (Dana Desa) that also can be used to support infrastructure development in the regions. Finally, I would like to share with you today some of the key infrastructure related priorities of the President Joko Widodo s administration. President Jokowi has sent a strong signal to the private sector that he considers infrastructure as a high policy priority of the new government. Given the challenges we face as the largest archipelago in the world, we are determined to press forward with an ambitious program of improving our maritime connections as a way to boost our productivity and the economy. Over the next five years, the Indonesian Government plans to make substantial investments into ports and port related infrastructure. These include the commissioning of more than twenty new seaports and enhance the capacity of a number of existing seaports as a way 2

4 to improve connectivity between islands, and to support the maritime reform agenda, particularly the sea toll from the west to the east. On the land connectivity, the Indonesian Government is planning to build railway networks to connect provinces and districts in different parts of the island of Sumatera, Kalimantan, Sulawesi, and Papua. While in the urban cities like Jakarta, Medan, and Surabaya, the focus will be on developing and improving the service delivery of our mass rapid transportation systems. In addition, the Government has announced its intention to build more dams to provide more water supplies and support food security program. This also aims to foster the development of energy related infrastructure as response to the growing energy needs and to increase access to electricity by households and industry. Obviously, we can see many opportunities for private sectors to work with the Indonesian Government as strategic partners to support the achievement of our ambitious objectives in this area. Therefore, we see this Panel and the APIP dialogue that follows this meeting as strategic forums not only to share our roadmaps to you, but also as an avenue for you stay informed with the Indonesian 3

5 Government about those things that you would like to see us focus our reform efforts on. Let me share with you the summary of the third panel meeting that was held on November 24 in Jakarta last year. The meeting was chaired by H.E. Mr. Donald Bobiash, Ambassador of Canada for Indonesia and Mr. Gong Feng, Director of the Ministry of Finance of the People s Republic of China as the 2014 APEC Chair and was attended by representatives from Advisory Panel members, including 9 APEC member economies (Australia, Canada, People s Republic of China, Chinese Taipei, Japan, New Zealand, Peru, Russian Federation, Singapore, and the United States), ADB, World Bank, IFC, OECD, ABAC/APIP, and APEC Secretariat. Representatives from JICA, JBIC, and relevant domestic stakeholders attended the meeting as observers. The Ministry of Finance acknowledged the supports received from Panel members, including from Canada, Australia, World Bank, ADB, and JICA. We also outlined the important role of the Panel in supporting the operational of the PPP Centre, including in assisting PPP Centre to (i) formulate the Standard Operating Procedure (SOP) of the Centre; (ii) 4

6 formulate international standard business case documents; (ii) develop the capacity of PPP Centre s staffs; and (iii) provide advice on project transactions. We also gave presentations on Soekarno-Hatta International Airport (SHIA) rail link and Trans-Sumatra toll road projects. Indonesia outlined key aspects of the projects and flagged a range of technical issues and challenges it is currently trying to address. The Panel was pleased to hear the current progress on the establishment of the centre and will continuously support Indonesia to develop its PPP Centre in the Ministry of Finance. Indonesia received some valuable insights and recommendations from the Panel members, among others: o the important for having a clear and specific PPP regulations; o the need for the Government to continue recent improvement of the institutional arrangements with clear roles and decision making among government agencies and also between government agencies and private sector; o the need for clear transportation strategy that robust for businesses; 5

7 o the important of government fiscal support through the viability gap fund and availability payment; and o the improvement of institutional capacity and expertise. Thank you. 6

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