The development of effective, efficient, well-targeted, and timely infrastructure plays a crucial and strategic role in accelerating economic growth to achieve societal well-being. Therefore, coordination among stakeholders is essential to ensure the ...
The development of effective, efficient, well-targeted, and timely infrastructure plays a crucial and strategic role in accelerating economic growth to achieve societal well-being. Therefore, coordination among stakeholders is essential to ensure the accuracy of infrastructure development implementation.
The financing system for infrastructure development is not solely sourced from the State Revenue and Expenditure Budget (APBN) but can also be facilitated through the Public-Private Partnership (PPP) scheme, in which the government involves business entities related to infrastructure to actively participate in the development process. Presidential Regulation No. 38 of 2015 on Cooperation between the Government and Business Entities in Infrastructure Provision serves as a legal framework to support infrastructure development.
Infrastructure development is a key driver of economic growth. Given its significance, funding sources for infrastructure projects should not be limited to the State Budget but can also come from government collaboration with private entities. Infrastructure investment requires substantial funding, as per the rule of thumb that infrastructure investment should constitute at least 5% of GDP. However, in 2014, Indonesia's infrastructure budget in the State Revenue and Expenditure Budget (APBN) was IDR 177.9 trillion, accounting for only 1.68% of the country's GDP, which stood at IDR 10,583 trillion. Consequently, the government requires support from the private sector and State-Owned Enterprises (BUMN).
Indonesia's infrastructure investment lags significantly behind China and India. Since 2009, India's infrastructure investment has exceeded 7% of GDP, while China has maintained an investment level of 9–11% of GDP since 2005. In contrast, Indonesia's total infrastructure investment—comprising funding from the State Revenue and Expenditure Budget (APBN), Regional Revenue and Expenditure Budget (APBD), State-Owned Enterprises (BUMN), Regional-Owned Enterprises (BUMD), and private sector—has only reached approximately 4.5% to 5% of GDP. In 2013, Indonesia’s total infrastructure investment amounted to IDR 438.1 trillion, or 4.71% of GDP.