Indonesia $1 T Short in Infrastructure Budget: ADB
Jakarta. Indonesia needs to address a shortage in infrastructure by investing as much as $1.2 trillion by 2030 if it is serious about maintaining growth, eradicating poverty and responding to climate change, a report by the Asian Development Bank, or ADB, revealed.
The report, entitled "Meeting Asia's Infrastructure Needs" and published on Tuesday (28/02), estimates total infrastructure investment needed in the Asia-Pacific region between 2016 and 2030.
"The demand for infrastructure across Asia and the Pacific far outstrips the current supply," ADB President Takehiko Nakao said in a statement.
"Asia needs new and upgraded infrastructure that will set the standard for quality, encourage economic growth and which will respond to the pressing global challenge of climate change," he added.
However, Indonesia isn't the only country lacking in sufficient infrastructure. The report, which was based on a study involving ADB's 45 developing member countries, found that emerging Asian nations need $26.1 trillion in investments by 2030 or $1.7 trillion a year to provide diverse infrastructural demands including adequate electrical and clean water systems.
That number is more than double the $750 billion per year that the Manila-based lender predicted in 2009.
Of the total climate-adjusted investment needs over the period, $14.7 trillion will be allocated for power, $8.4 trillion for transport, $2.3 trillion for telecommunications and $802 billion for clean water and sanitation systems.
Indonesia is estimated to spend around $23 billion per year at the present rate noted in the report, meaning the gap between its actual and required spending stretches as far as $51 billion, or 5.1 percent of its gross domestic product (GDP).
In line with the ADB report, the Indonesian government is already recharging the country's cracking infrastructure by investing heavily in new projects throughout the archipelago.
President Joko "Jokowi" Widodo has begun allocating funds for several of his ambitious infrastructure projects, including a 35,000-megawatt power expansion across the archipelago and an uninterrupted toll road, which will connect various cities to the so-called sea toll road program.
The government budgeted Rp 387 trillion for infrastructure spending in 2017, almost a fifth of the country's budget. It plans to put these monies to use by constructing 10,198 meters of bridges, 13 airports, seaports in 61 locations, 710 kilometers of railways and a 836 kilometer highway that will connect several of the nation's islands.
According to the country's "Masterplan for Acceleration and Expansion of Indonesia's Economic Development (MP3EI)," the country's medium-term economic plan for the time period between 2011 to 2025, Indonesia aims to join the world's 10 largest economies and achieve an economic growth rate of about 7 percent to 9 percent annually.
Last year, Indonesia's economy grew 5 percent from 4.8 percent from the preceding year. ADB's projection of Indonesia's economic growth mirrored Jakarta's target of a 5.1 percent growth rate this year.
Still, the Manila-based lender emphasized that Jakarta's ambitions must be able to attract private investment. Enabling public-private sector partnerships and deepening the nation's bond market are critical to attracting long-term investors, the report claimed.
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