Editorial: Getting the Best of Both Worlds
From electricity, roads, airports to seaports, Indonesia’s existing infrastructure badly needs overhauling, while in many places across the archipelago such infrastructure is non-existent, and thus we need to massively build from scratch.
With 250 million people to serve, to say Indonesia has bad infrastructure is an understatement.
In addition to corruption, red tape and legal uncertainty, the country's underdeveloped or non-existent infrastructure is among the main complaints from foreigners who wish to invest here. Without adequate access to electricity and roads, it’s impossible for a company to set up its factory.
Investments then become centralized in areas where infrastructure has made more significant advancements, such as Java and several districts in Sumatra. This in turn only widens the wage gap among areas and people, creating even bigger political and economic deprivation and discontent.
Successive Indonesian presidents after the fall of Suharto in 1998 have failed to deliver their promises of developing the nation's infrastructure because of budget constraint and ̶ as infrastructure is a long-term investment ̶ lack of political willingness to sacrifice short term goals.
Without fixing this key aspect of further development, Indonesia can never advance and will be trapped forever as a middle-income nation. This is why, regardless of the real motives behind the establishment of the Asian Infrastructure Investment Bank, as a founding member, Indonesia must be able to capitalize from such an institution to help finance development of its infrastructure.
In this formation stage, President Joko Widodo and his negotiators must be able to take a role in shaping the structure and management of the bank to focus on helping developing the region’s infrastructure and avoid being politicized by major powers in the region.
While the AIIB is born out of discontent against the US-dominated World Bank, Indonesia can take advantage of both institutions. If we play our cards right, we can get the best of both worlds.
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