TEMPO.CO, Jakarta – Taufik Widjoyono, secretary general of the Public Works and Public Housing Ministry, said that the government had conducted a number of reforms in relation to regulations in a bid to encourage private involvement in infrastructure projects.
Among the regulation reforms were those related to land procurement for infrastructure projects and acceleration of permits under the Investment Coordinating Agency (BKPM).
Speaking during a discussion with Singaporean investors, held by the Deutsche Verdana Indonesia on Friday, August 5, 2016, Taufik said that foreign companies would be allowed to participate in project tenders without being required to establish a local branch in Indonesia. Taufik added that the requirement could be fulfilled after the tender winner announcement.
In order to improve the bankability of public-private partnership, the government had set up infrastructure financing guarantee agency PT Penjaminan Infrastruktur Indonesia (PII) and PT Sarana Multi Infrastruktur that will provide supports starting from the preparation to the financial close stages.
Meanwhile, foreign ownership in the construction and consulting sector will be limited up to 67 percent.
“Foreign company can set up a joint venture with its local partner with a maximum ownership of 67 percent,” Taufik explained.
In addition, foreign companies interested in construction and consulting projects can only participate in project tenders worth Rp 50 billion (US$3.8 million) and Rp 10 billion (US$769,000), respectively.
Taufik revealed that the financing requirement to develop infrastructures in the country in the period of 2015-2019 was estimated to reach US$261.2 billion. However, Taufik added, the government can only cover 27 percent of the cost or US$71.2 billion. Therefore, the government called on private investors to be involved in infrastructure projects in Indonesia.