Jokowi's Infrastructure Was Critically Criticized by the World Bank
JurnalFakta. The World Bank highlights the development of infrastructure during the administration of President Joko Widodo. One of their highlights was related to the assignment given by the Jokowi government to SOEs in infrastructure development.
In the June 2018 edition of the report "Infrastructure Sector Assessment Program", the World Bank stated that to carry out the assignments given, the government often gave privileges to state-owned companies.
Privileges are given in several forms. First, giving capital injections in the form of State Capital Participation (PMN). It was recorded, in 2015 the government gave a capital injection of Rp.41.4 trillion for 36 state-owned enterprises, of which half were used for infrastructure development.
In 2016, capital injections were increased to Rp53.98 trillion, 83 percent of which was for infrastructure development. In addition to capital injections, BUMNs are also often given easier access to obtain loans from state-owned banks without clear feasibility tests with low interest rates.
The World Bank in the report stated that the assignment and incentives had caused problems. The problem is related to the increase in the number of BUMN debts.
To carry out assignments and finance infrastructure development, BUMNs that do not have operational funds must seek loans. World Bank data, the debt level of seven infrastructure BUMNs assigned by the government to build infrastructure, in September 2017 reached Rp200 trillion.
The number of SOE debts tripled from the previous three years or before getting assignments. Debt has the potential to increase continuously if they continue to carry out the assignment.
Another problem is the reduced opportunity for private sector investment in infrastructure development. The World Bank stated that capital injections, incentives and facilities provided to state-owned enterprises in carrying out assignments have made the state-owned company wind up in infrastructure project tenders and auctions.
These facilities have reduced the competitiveness of the private sector towards SOEs, thus limiting their opportunities to win projects.
In addition to the assignment of SOEs, the World Bank also pays attention to the implementation of infrastructure development with a government agency scheme (PPP). The World Bank in its 344-page report stated that in fact the government through Presidential Regulation No. 38 of 2015 concerning Government Cooperation Business Entities in Infrastructure Provision had made good progress in establishing institutions, instruments and processes so that projects with PPP schemes could be implemented.
With this progress, during 2015 to 2017, 13 projects with PPP schemes with a total investment of US $ 8.94 billion were successfully implemented. But according to them, there are still a number of obstacles that must be resolved by the government so that the scheme can be improved.
One obstacle relates to the quality of project preparation. They assess the willingness and capacity owned by government agents in planning projects is still lacking.
This problem was exacerbated by the reluctance of Bappenas in rejecting any proposals whose planning was still lacking. In addition to the quality of preparation, they also highlighted the poor coordination management in implementing PPP projects.
In providing support to the private sector wishing to enter into PPP projects, coordination between relevant ministries and institutions is quite weak. For the provision of support in the form of infrastructure cash support funds (Viability Gap Fund) as well as payment of availability services (availability payment) for example, often agencies that are heavily involved and have different voices.
VGF and AP Instruments are regulated and managed by different directorates general within the Ministry of Finance, as well as the Ministry of Home Affairs (Ministry of Home Affairs). Whereas the guarantee provisions for this support are managed primarily by IIGF.
Previously, while attending the East Java Dialogue and Gathering of East Java Figures and Entrepreneurs, Sandiaga said that infrastructure development is currently not on target. Clearly the World Bank has said that the planning and implementation of RI's infrastructure development is not done well, so that it is ultimately not on target and does not have a good impact on the community.
CNNIndonesia.com has contacted the World Bank regarding this publication. The World Bank finally issued an official statement on Monday, confirming that the report was prepared jointly with the government, but not final.
"These articles cite a World Bank report that is currently being finalized in collaboration with the Government of Indonesia. This report is titled Indonesia Infrastructure Financing Sector Assessment Program (InfraSAP)," wrote the World Bank.
Separately confirmed, Finance Minister Sri Mulyani and National Planning and Development Minister (PPN / Bappenas) Bambang Brodjonegoro also claimed to have discussed the World Bank report. The core of the report, according to Bambang, is to strengthen PPP (Government Cooperation with Business Entities) related to the provision of infrastructure.
"It was discussed with us at that time. So, what we got from the World Bank report is that we need to continue to strengthen the PPP scheme and give confidence to potential investors that the scheme in Indonesia has investment and provides certainty," Bambang said.
In the June 2018 edition of the report "Infrastructure Sector Assessment Program", the World Bank stated that to carry out the assignments given, the government often gave privileges to state-owned companies.
Privileges are given in several forms. First, giving capital injections in the form of State Capital Participation (PMN). It was recorded, in 2015 the government gave a capital injection of Rp.41.4 trillion for 36 state-owned enterprises, of which half were used for infrastructure development.
In 2016, capital injections were increased to Rp53.98 trillion, 83 percent of which was for infrastructure development. In addition to capital injections, BUMNs are also often given easier access to obtain loans from state-owned banks without clear feasibility tests with low interest rates.
The World Bank in the report stated that the assignment and incentives had caused problems. The problem is related to the increase in the number of BUMN debts.
To carry out assignments and finance infrastructure development, BUMNs that do not have operational funds must seek loans. World Bank data, the debt level of seven infrastructure BUMNs assigned by the government to build infrastructure, in September 2017 reached Rp200 trillion.
The number of SOE debts tripled from the previous three years or before getting assignments. Debt has the potential to increase continuously if they continue to carry out the assignment.
Another problem is the reduced opportunity for private sector investment in infrastructure development. The World Bank stated that capital injections, incentives and facilities provided to state-owned enterprises in carrying out assignments have made the state-owned company wind up in infrastructure project tenders and auctions.
These facilities have reduced the competitiveness of the private sector towards SOEs, thus limiting their opportunities to win projects.
In addition to the assignment of SOEs, the World Bank also pays attention to the implementation of infrastructure development with a government agency scheme (PPP). The World Bank in its 344-page report stated that in fact the government through Presidential Regulation No. 38 of 2015 concerning Government Cooperation Business Entities in Infrastructure Provision had made good progress in establishing institutions, instruments and processes so that projects with PPP schemes could be implemented.
With this progress, during 2015 to 2017, 13 projects with PPP schemes with a total investment of US $ 8.94 billion were successfully implemented. But according to them, there are still a number of obstacles that must be resolved by the government so that the scheme can be improved.
One obstacle relates to the quality of project preparation. They assess the willingness and capacity owned by government agents in planning projects is still lacking.
This problem was exacerbated by the reluctance of Bappenas in rejecting any proposals whose planning was still lacking. In addition to the quality of preparation, they also highlighted the poor coordination management in implementing PPP projects.
In providing support to the private sector wishing to enter into PPP projects, coordination between relevant ministries and institutions is quite weak. For the provision of support in the form of infrastructure cash support funds (Viability Gap Fund) as well as payment of availability services (availability payment) for example, often agencies that are heavily involved and have different voices.
VGF and AP Instruments are regulated and managed by different directorates general within the Ministry of Finance, as well as the Ministry of Home Affairs (Ministry of Home Affairs). Whereas the guarantee provisions for this support are managed primarily by IIGF.
Previously, while attending the East Java Dialogue and Gathering of East Java Figures and Entrepreneurs, Sandiaga said that infrastructure development is currently not on target. Clearly the World Bank has said that the planning and implementation of RI's infrastructure development is not done well, so that it is ultimately not on target and does not have a good impact on the community.
CNNIndonesia.com has contacted the World Bank regarding this publication. The World Bank finally issued an official statement on Monday, confirming that the report was prepared jointly with the government, but not final.
"These articles cite a World Bank report that is currently being finalized in collaboration with the Government of Indonesia. This report is titled Indonesia Infrastructure Financing Sector Assessment Program (InfraSAP)," wrote the World Bank.
Separately confirmed, Finance Minister Sri Mulyani and National Planning and Development Minister (PPN / Bappenas) Bambang Brodjonegoro also claimed to have discussed the World Bank report. The core of the report, according to Bambang, is to strengthen PPP (Government Cooperation with Business Entities) related to the provision of infrastructure.
"It was discussed with us at that time. So, what we got from the World Bank report is that we need to continue to strengthen the PPP scheme and give confidence to potential investors that the scheme in Indonesia has investment and provides certainty," Bambang said.
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