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7 January 2010
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Indonesia state projects get government guarantor

The government has set up a company to provide financial guarantees so that firms can access credit to finance infrastructure projects, requiring 1,923.7 trillion rupiah ($207.76 billion) in the next five years, the Jakarta Post reported.

The company, named PT Penjaminan Infrastruktur Indonesia (PII), is to help private sector firms working on infrastructure projects backed by public private partnerships by giving guarantees to increase their creditworthiness, Arif Baharudin, a director at the Finance Ministry said in a statement.

The government has injected 1 trillion rupiah from the 2009 budget to PII to provide initial capital, making the firm 100 percent state-owned. “Additional capital is expected to be provided in the coming years,” Arif said.

He also said that the World Bank had pledged to disburse up to 1.5 trillion rupiah in soft loans to support PII.

The government expects to be able in five years to spend 768 trillion rupiah from state funds to finance upcoming infrastructure projects, while the rest is expected to come from private firms.

Projects that will begin this year include the construction of roads and bridges, for which the government has earmarked 16.65 trillion rupiah from 2010 state budget.

Deputy Public Works  Minister Hermanto Dardak said recently that the 2010 allocation would be used to construct 1,477 kilometers of new roads and repair 1,161 kilometers of existing roads across the country.

The ministry aims to build 19,500 kilometers of national roads by the end of 2014. Most of this year’s 1.34 trillion rupiah budget for roads and bridges, is to maintain roads on the northern coast of Java.

Hermanto said government was also focusing on roads and bridges in eastern Indonesia, especially in Papua and West Papua. These provinces are to get 1.159 rupiah trillion and 560.2 trillion rupiah respectively from the 2010  budget for road construction and repairs, up by about 50 percent on 2009.


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