One of Indonesia's national strategic projects, the Citarum River Tunnel in Nanjung, West Java, in December 2019. (Antara Photo/Raisan Al Farisi)
Ten National Projects Miss Out on Strategic Status
BY :NUR YASMIN
APRIL 16, 2020
Jakarta. The government has decided to exclude nine projects and an aviation industry program worth billions of dollars from its national strategic project list, denying them a coveted status that comes with certain leeways in licensing process, government financial guarantee or privileges for foreign workers.
Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan said the projects and program will have a slim chance of being completed by 2024 when President Joko "Jokowi" Widodo's second term ends.
The projects denied strategic status involved six smelters, a coal-to-methanol facility in East Kalimantan, a methanol industrial site and the Kediri-Tulunggagung toll road.
The projects could still continue but without the strategic status.
Currently, a total of 232 new project proposals are on the government's table: 84 from ministries, 123 from regional governments, 17 from state-owned companies and eight from private companies.
"Until December 2019, around 88 percent of the projects had gone through the preparation phase – including the 35,000-megawatt power grid program and the equal economic distribution program. The rest are still in the preparation stage," Coordinating Minister for Economic Affairs Airlangga Hartarto said in a statement on Thursday.
Aside from an expedited licensing process, projects with strategic status can also enjoy financing or guarantee from two state-owned financing arms, Sarana Multi Infrastruktur and Penjaminan Infrastruktur Indonesia.
The strategic status also comes with privileges for foreign workers involved in the project.
Early this month, Indonesia closed its borders to foreigners to curb the Covid-19 pandemic, but foreign workers involved with national strategic projects would still be able to obtain entry.
Since its launch in 2016 until December 2019, a total of 92 national strategic projects have been completed with an investment value of Rp 467 trillion ($30 billion).
Now Luhut wants more projects from the private sector.
"We will see which projects can be privately-funded to avoid more burdens on the state budget," Luhut said in a press release issued on Thursday.
Among the projects in question is a high-pressure acid leaching smelter, which is almost completed and might start operating this year. The smelter costs around $1 billion to build.
Another project is the Weda Bay Industrial Park for mineral smelting. It should have started operation this month before the coronavirus crisis put a stop to the plan. The $5 billion development would generate at least $2 billion in export value by 2024.
Septian Hario Seto, Luhut's deputy for investment and mining coordination, said the two projects still lack some requirements to earn strategic status.