From Aceh to Papua: Jokowi’s Infrastructure Visions

Jakarta Globe, Yanto Soegiarto, Apr 19, 2015

Cyclists crossing the Kelok 9 flyover in Payakumbuh, West Sumatra on
 July 3, 2013. GlobeAsia Both local and international investors have turned
 their attention to President Joko Widodo’s ambitious plans. (JG Photo/Afriadi Hikmal)

The building of infrastructure in Indonesia is the key to understanding the extent of progress in the country.

During the World Economic Forum on East Asia, a question will be asked: Is Indonesia doing enough to show the public and investors they can trust that infrastructure development is moving ahead toward growth and becoming competitive in the region.

Indonesia, meanwhile, has been given the opportunity to showcase development and attract investment while playing host to the WEF event.

The administration of President Joko Widodo has set an infrastructure target, to be achieved by 2019, in which 24 seaports, 15 airports, power plants with a capacity of 35,000 megawatts and nine million hectares of agriculture land will be developed.

This was reiterated by WEF Indonesia committee member and Trade Minister Rachmat Gobel in a recent briefing to ambassadors and prominent business leaders.

The administration is confident in its programs to build dams, toll roads and railways to boost the local economy and raise the living standards of local communities.

Joko traveled to Aceh in March to inaugurate a number of projects in the area.

In North Aceh, he presided over the groundbreaking of the Keureuto dam — the largest to be built this year and expected to increase agricultural output in the region.

The construction of the dam will allow the irrigation of other regions which are in a deficit of rice production.

The dam is being built by state-owned construction companies Brantas Abipraya, Hutama Karya and Wijaya Karya.

It will hold 167 million cubic meters of water and irrigate 4,768 hectares of agricultural land. The reservoir will also prevent flooding in the downstream region.

Joko then moved on to Sabang, Indonesia’s most western tip, where he jump-started the construction of the Seunara reservoir, which has been stalled for more than nine years due to land clearance issues.

The issue was eventually solved as Joko negotiated with over 200 local residents who had been holding out for a larger compensation package.

“After talking to the residents, they have no problem. We have the budget, what’s important is the reservoir will be completed this year and function,” said Joko, who was accompanied by Aceh Governor Abdullah Zaini and Public Works and Housing Minister Basuki Hadimulyono.

The reservoir will provide water and help the local community boost income through the development of water tourism and aquaculture.

Veteran infrastructure expert Scott Younger says the president’s move to resolve the stalled Seunara project provides encouragement.

“He has quickly recognized the serious issue of lack of water storage across the country and acted on it. It is also positive that he has inaugurated the long-defined Keureuto project.

“With this early action it would seem that the president will certainly be trying to meet the target of 13 dam projects for this year,” Younger said.

But, he says, the longer-term concern is the lack of engineering and construction industry capacity to carry out all the work planned in the administration’s term, not just in water storage but across the infrastructure space as a whole.

Undaunted, the president pressed on to Lhokseumawe, the home of Kertas Kraft Aceh.

The company stopped production years ago, but the president has voiced he would like to see it running again as to contribute to the local economy.

“For more than 15 years I have wanted the company to be in operation again. There is adequate supply of raw materials from the forests which can be managed by the local people.

“We can plant fast-growing sub-tropical trees such as albizia or pine and we don’t have to wait 15, 20 or 30 years,” he said.

The president is no stranger to Aceh. He spent his early working years there and his first child was born in the province.

“Ibu Jokowi and I are very familiar with Aceh,” he said.

In Arun, just north of Lhokseumawe, the president launched the Arun regasification and storage terminal, marking a milestone in the country’s efforts to shift its energy consumption toward gas.

The plant sits on the now-depleted wells of Indonesia’s first natural gas resource, now run by Perta Arun Gas, a subsidiary of state-owned Pertamina Gas.

“The facility will regasify LNG sent from Kilang Tangguh in Papua,” Pertamina Gas president director Hendra Jaya explained, adding that the plant will provide the state electricity company with gas to power its generators in Belawan, Medan.

Joko’s initiative in Aceh marks a significant move in the nation’s infrastructure building, no president before him has had a similar strategy.

Dams and roads

This year, the administration is at work building at least 13 of the projected 49 dams it wants to construct over the next five years. The cost of the 13 dams will be at least Rp 12 trillion ($934 million), excluding land-clearance costs. The projects will be funded by the state budget.

Rising transportation and logistics costs have also won the attention of the government.

Many toll roads are to be constructed and work on the 2,700-kilometer Trans-Sumatra toll road, which will link Aceh and Lampung, is due to start this month.

The government has assigned Hutama Karya to undertake the project, as it is the only large state infrastructure firm not listed on the stock exchange.

Construction of the road has been estimated to cost Rp 300 trillion, with the government asking other state enterprises and local governments to cooperate without reservation.

The first stage of the project is to build 1,300 kilometers of road. Hutama Karya has been given an additional injection of funds by the government to get the job done.

Earlier Hutama Karya and other state enterprises, including banks, were ready to finance the project without relying on the state budget but the government deemed it would create too much of a burden.

During the previous administration of president Susilo Bambang Yudhoyono, the project was also to be managed by Hutama Kaya. The project proved difficult to get started due to financial concerns with investors reluctant to commit to such a long-term project.

The focus then turned to building the Medan-Binjai toll road, but that plan has also changed, with the focus now on the link between Bakaheuni in Lampung and Palembang, the capital of South Sumatra.

The April ground-breaking date was chosen at a limited cabinet session presided over by Joko, Vice President Jusuf Kalla, Public Works Minister Basuki Hadimulyono, State-owned Enterprises Minister Rini M. Soemarno and Finance Minister Bambang Brodjonegoro.

An important part of the decision was the revision of the previous presidential decree number 100/2014 which put an emphasis on land acquisition as a priority.

In a recent development, Rini revealed that four state enterprises — Hutama Karya, Jasa Marga, Waskita Karya and Wijaya Karya — will be tasked to jointly commission the project.

“The project will be done in sections. For instance Waskita Karya will do section 1, Wijaya Karya section 2 and so forth, Part of it will hopefully be completed in 2018,” she said, adding that some sections of the road will be commissioned by local governments involving the private sector.

Railway development

Following Joko’s pledge last year to develop railways in Papua, the Transportation Ministry will allocate at least Rp 105.6 trillion over the next five years to build railway networks beyond Java.

“We have evaluated the budget needs of the Directorate General of Railways at the ministry for the next five years and according to the new master plan pushed by the president, completion of the project is slated for 2019,” Director General for Railways Hermanto Dwiatmoko said.

In business terms, railway development beyond Java can be complex because of feasibility and financing, and as a result funding for railway development has to come either from the state budget or through public-private partnership, he said.

The plan may appear ambitious but Hermanto insisted that the project will begin in 2016.

It will contribute to what will become a total national railway network stretching 3,258 kilometers and be the longest railway project since the Dutch occupation of Indonesia.

Meanwhile, a feasibility study for the construction of the Trans Papua Railway has already begun. The new railway track will span 595 kilometers connecting Sorong and Jayapura.

Home Affairs Minister Tjahjo Kumolo said that development outside Java is one of the president’s priorities.

“There are many regions and border areas which are still untouched by infrastructure development.

“The president is committed to developing the eastern part of Indonesia where infrastructure is less developed.

“We at the Ministry of Home Affairs have reached a consensus with the Ministry of Public Works to support and develop infrastructure mainly in Papua, East Nusa Tenggara and the Kalimantan border areas,” he said.

House Commission V members who have visited Papua to see the prospective railway plan say they back the government’s initiative.

They have also encouraged the people of Papua to support it.

At the local level, regional officials have discussed the railway project with the central government but still have questions about the source of finance.

“We will have certainty on that in one or two months,” said regional secretary Ella Loupatty.

“We think that the project will begin from Sorong in West Papua and connect the Sarmi district in Papua province. If the project is realized, the distribution of goods will be easier and prices will go down in many areas.”

Hermanto added that he had asked regional officials to help in the process of land clearance, which poses one of the major hurdles to any infrastructure project.

He believes it is feasible to complete the Papua railway project within five years.

“We expect the project to be expedited although we note that any infrastructure development in Papua is not easy. But, we can’t delay it,” he said.

Higher commodity prices

Without the development of better infrastructure in the area, the price of cement could go as high as Rp 2 million for a 50 kilogram sack, while basic commodities such as sugar could cost between Rp 15,000 and Rp 50,000 a kilogram, many times over the price for such staples on Java.

Commenting on the rail plans, Younger, the infrastructure expert, says the target dates are highly optimistic.

“While railways must be part of the transportation infrastructure build-out, an emphasis for off-Java railway construction seems difficult to reconcile,” he says.

“There is still much to do in rail in Java and especially around the main urban centers, such as Jakarta and for fast rail links between the major cities. Railways make sense when there are many people and/or a large volume of commodities to transport.

“Java and off-Java highly-populated centers, such as Medan, fill the first criterion and off-Java in certain specific locations for the movement of commodities.”

And, he adds, the public-private partnership concept has been around for more than a decade, but a workable model is still to be found.

More needs to be done to encourage private investment.

Meanwhile, a number of countries in the East Asia region such as Singapore, Japan, and China have expressed interest to invest power plants projects in Indonesia, according to the Investment Coordination Board (BKPM).

The BKPM has received 12 new applications for investment permits from foreign investors to build power plants worth $8.9 billion, or around Rp 116 trillion.

It’s not just foreign investors looking towards Indonesian infrastructure — many domestic investors are interested as well.

BKPM chairman Franky Sibarani said that his office has also received applications for investment permits from 17 local investors.

GlobeAsia and the Jakarta Globe are media partners of the World Economic Forum on East Asia. Parts of this article originally appeared in the April issue of GlobeAsia.

GlobeAsia

Harbor Construction Permits in Only a Week

Tempo Interactive, Friday, 15 January, 2010 | 20:23 WIB

TEMPO Interactive, Makassar: The Transportation Department has shortened the permit issuance time of harbor construction from one year to one week.

“This no longer time enough to bribe people into issuing a permit,” said the Director General of Sea Transport Sunaryo yesterday.

Sunaryo said that the efficient working permit issuance will apply to private companies and regional government owned enterprises.

The effort will freshen up investors’ commitment to invest in port construction services.A member of the South Sulawesi Regional House of Representatives, Ajiep Padindang, welcomed the Transportation Minister intent’s to improve permit issuance efficiency. But he demanded that they impose a standard for harbors that can obtain permits.

He also demanded the government to submit a harbor management system to the region or to investors.

This is to prevent a state port operator Pelindo monopoly.

SULFAEDAR PAY

Historic, cultural buildings at risk of destruction

Nana Rukmana, The Jakarta Post, Cirebon | Tue, 12/15/2009 8:47 AM

Kasepuhan Palace Mosque, Cirebon

Dozens of historic buildings with important cultural heritage value in Cirebon city, West Java, are at risk of further damage because of a lack of maintenance, with some on the verge of collapse.

According to the head of Cirebon Legislature Commission B on construction, Tjipto, the city had listed 52 buildings it believes the government should preserve.

“[Cirebon councilors] are continually urging the government to take concrete measures to save the historic buildings. We don’t want them fall apart,” Tjipto said.

Local cultural observer Ahmad Syubhanuddin Alwy said most of the heritage buildings were in a vulnerable state. “I’m afraid they will be ruined if the government fails to take the necessary steps quickly,” he said.

“The old neglected buildings appear eerie. Many of them have corroded because of their old age,” Alwy said.

“If the heritage buildings are lost, the history of the city will be lost also. The government should take concrete steps to save them, because they are part of the history of the city as well as the country,” he said.

Most of the damaged historic buildings were built during the Dutch colonial period, while some are were part of the Cirebon sultanates when it was divided into the Kasepuhan and Kanoman sultanates.

Among the heritage buildings still standing is Kasepuhan Palace, built in 1529, and Kanoman Palace, built in 1588.

Always said the Kasepuhan Palace represents the Cirebon (Islamic) influences as well as that of the Chinese (Buddhist) and Indian (Hindu).

The three cultures are manifested in the Singa Barong carriage, which was the official vehicle of the Kasepuhan Palace ruler.

The Singa Barong carriage was made in 1549 by Panembahan Losari, assisted by Ki Notoguna and Kaliwulu. The carvings on the horse-drawn carriage show a mixture of influences from three cultures.

“A mix of three cultures is represented by a three-pointed spear in an elephant’s trunk, meaning the unity of three human strengths — creation, emotion and intention,” Alwy said.

One of the buildings from the colonial era still standing is the Kesambi penitentiary, built around 1910.

Warehouse (1918) in Cirebon Port

“Other colonial period buildings include the Bank Indonesia building, the PT BAT cigarette factory and the Santo Joseph church,” Alwy said.

Alwy urged the central government to be involved in preserving the cultural heritage buildings.

“The government should undertake clear and concrete measures to protect these buildings.”

New body to continue Aceh projects

Erwida Maulia, THE JAKARTA POST, JAKARTA | Sat, 02/14/2009 9:57 AM  

Helping Aceh and Nias: President Susilo Bambang Yudhoyono (right) talks with Canadian Ambassador to Indonesia John Holmes (left) and BRR chief Kuntoro Mangkusubroto (center) in Jakarta on Friday during an exhibition on recovery efforts. JP/R. Berto Wedhatama

The government has unveiled its plan to form a new agency to pick up where the post-tsunami Aceh and Nias reconstruction agency (BRR) left off. 

The government would also continue supervising Aceh reconstruction programs after the BRR ceases operations April 16. 

President Susilo Bambang Yudhoyono said Friday he had signed a decree ending the four-year term of the Agency for Reconstruction and Rehabilitation for Aceh and Nias. 

The decree also stipulates recovery programs in the two post-reconstruction areas would fall on the shoulders of state ministries and local authorities. 

“To guarantee the continuation of reconstruction and rehabilitation programs which have already been implemented, and to ensure the synchronization and harmonization of development  activities, the government will establish a new reconstruction agency for Aceh and Nias,” Yudhoyono told the opening ceremony of the two-day Coordination Forum for Aceh and Nias IV at the Jakarta Convention Center.  

“With this agency, we expect the next developments in the two areas will be integrated, rapidly implemented and sustainable,” he added. 

The President said the operation of the new body, due to be led by the  Aceh and North Sumatra governors, would have to maintain the principles of good governance as laid out by the BRR and its partners. 

“I am asking people who will run this body not to breach clean, transparent and accountable principles of management. We have spent a lot on these recovery programs – about Rp 22 trillion (US$1.85 billion) from the Indonesian government alone, before even mentioning financial support from donor countries. 

“It would be a pity if the continuation does not run well,” Yudhoyono warned. 

He said the central government would provide support for the Aceh and North Sumatra administrations to continue the recovery programs, while supervising the new body to ensure it stays on the right track. 

The President praised the BRR for “successfully” doing its job in Aceh and Nias in the four years since the two regions were ravaged by huge tsunami and an earthquake  in 2004 and 2005, respectively. 

He also said what the agency has done could set a good standard for the management of relief activities in other disaster-struck areas. 

BRR head Kuntoro Mangkusubroto reported his agency had collected $7.2 billion for recovery projects in Aceh and Nias, including $2.1 billion from the Indonesian government. 

He said 93 percent had been  channeled to many projects, including the construction of 134,000 housing units, 3,600 kilometers of roads, and 1,400 schools and training centers. 

Kuntoro ensured the accountability of the BRR management, citing good reviews by the Supreme Audit Agency for its 2007 financial report and by the State Ministry for Administrative Reforms for its work performance in 2006 and 2007. 

“If you visit Aceh and Nias now, you will see the significant progress we’ve made.... You will see that people’s lives are improving; they are far better off than they were before. 

“This would have been impossible without the hard work of over 500 national and international organizations representing more than 50 countries. Therefore, I bestow my highest appreciation on you all,” Kuntoro said at the same event.

Related Article:

Images of Aceh Earthquake 9.2 /Tsunami Disaster December 2004

President opens conference of Aceh and Nias coordination forum

Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono officially opened a conference of the Aceh and Nias Coordination Forum at the Jakarta Convention Center here on Friday. 

During the conference, the Aceh and Nias Reconstruction and Rehabilitation Agency (BRR) presented its accountability since its operation in the aftermath of the December 2004 tsunami. 

The mandate of the Aceh and Nias Rehabilitation and Reconstruction Agency will be over on April 16, 2009. 

BRR Chief Kuntoro Mangkusubroto in his speech said that in the Forum he would report all progresses achieved and programs prepared to support Aceh and Nias to enter a sustainable development stage. 

"We would like to report that out of all pledged funds amounting to US$7.2 billion, including US$2.1 billion from the Indonesian government, 93 percent or US$6.7 billion have been delivered to Aceh and Nias to finance various projects which have been completed currently," he said. 

BRR had completed the constructions of about 134,000 houses, and 3,600 km long roads, he said. 

In the economic field, a paddy harvesting was conducted in Bireun, Aceh, 15 months after the deadly tsunami. 

In the education sector, more than 1,400 school buildings had been constructed and some 40,000 teachers had joined training courses, he said. 

According to BRR`s data, the tsunami which devastated Aceh and Nias on December 26, 2004, destroyed 120,000 houses, damaged 70,000 others, and devastated 14 airports, 114 medical facilities, and 2,000 schools. 

The natural disaster also killed 2,500 teachers, and damaged 3,000 km long roads, 120 bridges, 20,000 hectares of fish ponds, 60,000 hectares of rice fields, and 1,052 government office buildings. 

During the reconstruction period, some 133,903 houses were built, 1,047 medical facilities were developed, and 1,488 school buildings were constructed. 

BRR had also coordinated training courses for 39,438 teachers, and constructions of 3,585 km long roads, 273 bridges, 12 airports, 20 seaports, 3,193 places of worship, and 987 government office buildings.

'Lack of coordination hampers growth'

The Jakarta Post, Jakarta

There is a visible lack of coordination between the central government and local administrations in the development of the real sector and micro, small and medium businesses, a minister says.

The government, through last year's policy package under Presidential Decree No. 6/2007, plans to accelerate growth in the real sector and strengthen small and medium enterprises, which is expected to boost the country's economy.

However, while most of the programs and measures in the policy package have been wrapped up according to the government's target, the implementation has not gone as planned.

"We acknowledge that there is an information gap between the national and local levels. For instance, when the central government finishes formulating a measure, local administrations still do not know the details," Coordinating Minister for the Economy Boediono said Thursday.

"We will soon address the issue. In this case, we will send a copy of each new measure to local administrations to solve the problem," he said.

Of the 159 measures in the policy package, the government had finished 109 of them as of December last year. It has wrapped up 40 out of 49 measures on investment, 28 out of 36 on the financial sector, 28 out of 34 on SMEs and 13 out of 40 on infrastructure development.

According to Jannes Hutagalung, an expert adviser to the coordinating minister, the government has not been able to finish formulating more measures on infrastructure development because it is waiting for several draft laws to be endorsed by the House of Representatives.

Some bills related to infrastructure, including those on income tax, shipping, public transportation, aviation, electricity and energy, are still being deliberated at the House.

Infrastructure development is seen as a key component of the country's economic growth, as infrastructure projects will create jobs and reduce transportation costs, which will lower the prices of goods.

This year, Jannes said, the government would discuss a new policy to further support the development of infrastructure and the growth of SMEs.

He also said the Finance Ministry hoped by the end of 2008 to roll out nationally the "national single window system" currently in use at Tanjung Priok Port in Jakarta.

Under this system, which was introduced in December, port officials can provide quicker customs service and cargo clearance because all documents are processes electronically.

The government expects the national single window system to be integrated in 2009 with the ASEAN single window system to facilitate trade between ASEAN countries. (adt)

Tangerang plans satellite city

TANGERANG (Jakarta Post) : The Tangerang regency administration is planning to transform three coastal districts in the northern part of the regency into a new satellite city which is expected to boost the regency's revenue.

"We have commenced the plan by revising the spatial layout and the master plan to develop Kosambi, Teluk Naga and Sukadiri districts into a new business center in the northern part of the regency," the head of the regency's planning body, Benyamin Davnie, said over the weekend.

He said the administration will build residential housing complexes, industry and service areas, trading and shopping centers and hotels, apartments and recreational resorts on eight hectares of land along the coast.

However, he said the construction of the new satellite city would need Rp 20 trillion (US$2.1 billion) in investment, including the construction of an export-import sea port, infrastructure and other supporting facilities.

"If we rely merely on the regency budget, such a plan is only a dream and therefore we are offering the plan and the development concepts to some foreign and domestic investors," he said.

Benyamin said several local companies as well as foreign investors from the Netherlands, Japan, Malaysia and Singapore had indicated an interest in the project.

Indonesia`s tsunami reconstruction chief lauds progress

Jakarta (ANTARA News) - When Kuntoro Mangkusubroto dashed in to lead reconstruction of Indonesia's Aceh in the wake of the 2004 Indian Ocean tsunami, it was with little immediate help from his own government.

Despite leading an organisation set up by presidential decree in May 2005, Mangkusubroto was forced to go cap in hand to Australia's aid agency for the money to fly his team out to the flattened provincial capital of Banda Aceh.

"We were so grateful to the Australians, but at the same time it was very shameful," Mangkusubroto told AFP in an interview at the modern Jakarta office of the Aceh-Nias reconstruction agency, known as BRR.

A former academic and one-time energy minister, Mangkusubroto has never shied away from robust criticism of his government.

With 168,000 dead in Aceh, and the added disaster of a massive earthquake on desperately poor Nias island, the grinding pace of Indonesia's bureaucracy was always going to hinder the channelling of billions of dollars of foreign aid.

A generation-long separatist war and an entrenched culture of what he calls "pathological" corruption throughout the Indonesian state were not going to help either.

And so it was with an obvious sense of satisfaction that Mangkusubroto ticked off his organisation's list of successes recently, three years after the December 26 tragedy, one of the worst natural disasters in modern history.

Of the BRR's target to build 120,000 new houses, Mangkusubroto said more than 100,000 have been completed and the remaining homes will be finished by April 2008, three months ahead of schedule.

A project to train teachers to replace the 2,500 who died in 2004 has seen startling success, with more than 20,000 trained. However, less than half the 2,000 schools planned have been built so far.

As of October, the BRR has overseen the building of 216 bridges, more than 2,000 kilometres (1,200 miles) of roads, 17 sea ports and 10 airports and air strips.

The key to BRR's success has been its full authority over reconstruction -- a fact bitterly resisted at the start by others in the Indonesian government, Mangkusubroto said.

"We didn't have that kind of organisation before in Indonesia," he said.

"We would have to explain this to Jakarta people, that this organisation has full authority, so don't try to block us."

This approach often irritated several ministers who could see their own power eroding, who would often shoot back with responses such as "Okay, Aceh is yours, Indonesia is mine," Mangkusubroto recounted.

Limited power supply hampering investment in RI

Surabaya, E. Java (ANTARA News) - Limited power supply has become a hindrance for investment in Indonesia`s industrial sector so that development of the country`s power generation capacity must be one of the government`s priorities, an investment official said.

"Limited power supply by state electricity company PLN during the past few years has become a problem. But PLN has done its best to meet domestic demand for electricity," Darmawan Djajusman, the Capital Investment Coordination Board (BKPM)`s deputy head for promotions, told the press on the sidelines of an investment expo here Wednesday.

National companies from 33 provinces are participating in the expo which is the second BKPM has organized after its first which it staged in Batam last September.

"Power supply is crucial for development of the industrial sector," he added.

But despite the power supply problem, BKPM had been able to attract foreign investment by simplifying bureaucratic procedures to obtain licenses and providing tax holidays to investors in certain industries.

"We hope the regulatons on the tax incentives can be put into force soon," Darmawan said.

During the January-October period in 2007, BKPM had approved domestic investment proposals worth Rp175.56 trillion and foreign investment proposals worth US$36.75 billion.

Some Rp32.98 trillion of the domestic investment and US$9.08 billion of the foreign investment proposals had been realized.

Meanwhile, BKPM Chief Muhammad Lutfi said recently the government would accelerate development of supporting infrastructure such as power generating plants, roads, ports, and clean water supply facilities to stimulate investment.

By 2009, the government would need US$123 billion or some Rp1,132 trillion in funds for development of infrastructure.

"Of the total amount of needed funds, the government will be able to provide only Rp220 trillion while the rest is expected to come from the private sector," he said.

Among the top priority infratructure projects the government had offered to the private sector were plants to produce a total of 13,500 MW of electricity, the building of 1,000 km of toll roads, port development and clean water supply facilities.