Sign up | Log in



Home  >>   Daily News  >>ฺIndonesia>>Infrastructure>>Projects in limbo after state budget cuts
NEWS UPDATES Asean Affairs     September 5,  2016  

Projects in limbo after state budget cuts

The second round of state budget cuts may lead to delayed infrastructure projects and lower economic growth, although priority projects will not be affected as the country struggles to fill in a huge infrastructure funding gap.

Construction of non-priority infrastructure projects will be disrupted and delayed following the state budget cuts, according to the Public Works and Public Housing Ministry, which is responsible for state infrastructure projects.

“Following the Rp 6.9 trillion [US$517.5 million] cut, we’ll have to adjust projects that have not been tendered and single-year packages whose progress is unsatisfactory and reschedule multi-year projects,” the ministry’s secretary-general Taufik Widjoyono said recently. It previously suffered from an 8.4 trillion budget cut in the first round earlier this year.

Priority projects scheduled for completion this year, such as the trans-Papua and trans-Java toll roads, will not be affected, he added.

President Joko “Jokowi” Widodo cut the revised 2016 state budget for the second time recently in a Presidential Instruction (Inpres) that shaved Rp 137 trillion off spending because of a Rp 219 trillion revenue shortfall as the government admitted it had previously set tax targets too high.

“I predict that there will be a lot of projects on which construction has yet to be started that will be postponed to next year,” said Kenta Institute senior economist Eric Sugandi, predicting the budget cuts would reduce the multiplier effects on economic growth from government spending.

Bank Central Asia (BCA) chief economist David Sumual said a cut in infrastructure spending would affect economic growth, more so than a reduction in routine expenditure, so that the government should carefully pick components to reduce.

Finance Minister Sri Mulyani Indrawati on Thursday evening further slashed the economic growth forecast for this year to between 5 and 5.1 percent, from previous expectations of 5.2 percent, on the back of the budget cuts.

Jokowi’s “Jokowinomics” puts infrastructure development high on top of the nation’s economic agenda as bottlenecks have hindered Indonesia from growing at its fullest potential of 7 percent, having scrapped a multi-billion rupiah fuel subsidy to direct the saved money toward capital expenditure.

The infrastructure funding gap in Indonesia is the biggest in ASEAN as current spending plans projected $441 billion, while the projected total requirement reached $1,162 billion, according to data from HSBC Global Research.

“Indonesia’s large funding gap is unlikely to be filled without a much more aggressive policy by the government to attract private funds,” HSBC Global Research wrote in its latest “ASEAN Perspectives” report.

To ensure steady infrastructure projects in the future, construction business groups expected the government to keep priority projects intact this year and instead slash funding for projects that face difficulties in land procurement, said Indonesian Construction Association (AKI) secretary-general Zali Yahya.

“We hope steel usage for major projects won’t be disturbed and done based on the President’s initial vision, so national steel products will be prioritized,” Indonesian Iron and Steel Industry Association (IISIA) executive director Hidayat Triseputro said.

The Public Works and Public Housing Ministry’s director general of water resources Mudjiadi made assurances that the ministry would prioritize cutting the budgets that were related to procurement and work travel.

“But we are also reviewing contracts that may get delayed for completion because of land acquisition issues. The guidance is that the cuts will not occur in strategic projects,” he said. As of Wednesday, the ministry has only disbursed 46 percent of the Rp 90.2 trillion earmarked in the revised 2016 state budget.

Reach Southeast Asia!
10- Nations, 560- Million Consumers
And $1 -Trillion Market
We are the Voice of Southeast Asia Media Kit
The only Media Dedicated to Southeast Asia Advertising Rates for Magazine
Online Ad Rates

Comment on this Article. Send them to

Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below

Today's  Stories                          September 5, 2016 Subsribe Now !
• Number of foreign visitors hits all-time high Subcribe: Asean Affairs Global Magazine
• Partnerships will develop local tourism industry
• Singapore's manufacturing economy improves in August
Research Reports
on Thailand 2007-2008

• Textiles and Garments Industry
• Coffee industry
• Leather and footwear industry
• Shrimp industry

• Projects in limbo after state budget cuts
• FDI in hotel and tourism projects hits US$2,918.5252 million
Asean Analysis                  September 2, 2016
• Asean Analysis  September 2, 2016
Cementing a New Normal in U.S.-Myanmar Relations
Advertise Your Brand

Asean Stock Watch   September 2, , 2016

• Asean Stock Watch-September 2, 2016
The Biweekly Update
• The Biweekly Update  September 2, 2016

ASEAN NEWS UPDATES      Updated: 04 January 2011

 • Women Shariah scholars see gender gap closing
• Bank Indonesia may hold key rate as inflation hits 7 percent
• Bursa Malaysia to revamp business rules
• Private property prices hit new high in Singapore • Bangkok moves on mass transport
• Thai retailers are upbeat
• Rice exports likely to decline • Vietnamese PM projects 10-year socioeconomic plan


This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


Indonesia  to launch 13th economic package this month

Coordinating Economic Minister Darmin Nasution said on Wednesday that the government would release its 13th economic policy package in August, adding that the draft had been completed.

Darmin said the 13th package was largely an extension of the previous one, but would expand its focus beyond industry. The 12th package focused on small and medium enterprises.

"We are just waiting to schedule a meeting with the president," Darmin told reporters at his office. He refused to give the exact date the new policy package would come into effect.

 The ministry team must meet with President Joko "Jokowi" Widodo one more time to finalize the details, Darmin said.




1.  Verifier

1. Verifier

For security purposes, we ask that you enter the security code that is shown in the graphic. Please enter the code exactly as it is shown in the graphic.
Your Code
Enter Code

Home | About Us | Contact Us | Special Feature | Features | News | Magazine | Events | TV | Press Release | Advertise With us

| Terms of Use | Site Map | Privacy Policy  | DISCLAIMER |

Version 5.0
Copyright © 2006-2017 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand