World Bank Value of Jokowi Relying on BUMN for Infrastructure
PojokId. The World Bank report entitled Infrastructure Sector Assessment Program released in June 2018 stated that the Joko Widodo (Jokowi) Government was too reliant on state-owned companies to build infrastructure. This was reflected in the government's decision to provide direct assignments of a number of projects to SOEs.
Whereas, in fact, the projects given to SOEs are projects that are not in demand in the eyes of private sector investors. However, in fact, commercial projects were given to SOEs. For example, commercial port development projects are given directly to Pelindo III and Pelindo IV.
"The most feasible and making money is often assigned to SOEs," the report wrote.
According to the international institution, the Committee for the Acceleration of Priority Infrastructure Provision (KPPIP) should screen which projects are feasible and not for private investors. But unfortunately, until the report came out, there were no clear indicators which projects should be openly auctioned or that had to be given to SOEs.
Existing, direct assignments were confirmed in the Presidential Regulation (PP). Since 2014, the World Bank recorded seven PPs issued for PT PLN (Persero), PT Wijaya Karya (Persero) Tbk, PT Hutama Karya (Persero), PT Waskita Karya (Persero) Tbk, PT Adhi Karya (Persero) Tbk, and PT Pelindo II (Persero).
For electricity projects, for example, the government gave a large portion to the state-owned electricity company electricity stun, PLN. In 2015, PLN contributed 70 percent of the total installed electricity generation capacity. PLN is also the dominant party in terms of electricity transmission and distribution.
"The 2009 Electricity Law allows private powers outside the PLN service area to produce and sell electricity," explained the World Bank.
Meanwhile, for the toll road project, PT Jasa Marga (Persero) Tbk as a toll road operator, narrows 70 percent of the total toll roads operating in the country.
"Other important SOEs are Waskita Karya and Hutama Karya, which previously acquired six of the 19 parts of the Trans Java toll road and the last one was assigned to develop the Trans Sumatra toll road project," explained the World Bank.
Furthermore, airports in Indonesia are also operated more by SOEs, PT Angkasa Pura I (Persero) and PT Angkasa Pura II (Persero). Then, many water supply and sanitation services were taken over by Regional Water Companies (PDAMs).
Private investor access, continued the World Bank, is increasingly closed because BUMNs have the privilege of obtaining funding, so that they often get rid of the private sector in public offers.
"Easy access to government financing through subsidies, soft loans, and debt relief gives BUMNs a competitive advantage over their competitors," the report added.
Whereas, in fact, the projects given to SOEs are projects that are not in demand in the eyes of private sector investors. However, in fact, commercial projects were given to SOEs. For example, commercial port development projects are given directly to Pelindo III and Pelindo IV.
"The most feasible and making money is often assigned to SOEs," the report wrote.
According to the international institution, the Committee for the Acceleration of Priority Infrastructure Provision (KPPIP) should screen which projects are feasible and not for private investors. But unfortunately, until the report came out, there were no clear indicators which projects should be openly auctioned or that had to be given to SOEs.
Existing, direct assignments were confirmed in the Presidential Regulation (PP). Since 2014, the World Bank recorded seven PPs issued for PT PLN (Persero), PT Wijaya Karya (Persero) Tbk, PT Hutama Karya (Persero), PT Waskita Karya (Persero) Tbk, PT Adhi Karya (Persero) Tbk, and PT Pelindo II (Persero).
For electricity projects, for example, the government gave a large portion to the state-owned electricity company electricity stun, PLN. In 2015, PLN contributed 70 percent of the total installed electricity generation capacity. PLN is also the dominant party in terms of electricity transmission and distribution.
"The 2009 Electricity Law allows private powers outside the PLN service area to produce and sell electricity," explained the World Bank.
Meanwhile, for the toll road project, PT Jasa Marga (Persero) Tbk as a toll road operator, narrows 70 percent of the total toll roads operating in the country.
"Other important SOEs are Waskita Karya and Hutama Karya, which previously acquired six of the 19 parts of the Trans Java toll road and the last one was assigned to develop the Trans Sumatra toll road project," explained the World Bank.
Furthermore, airports in Indonesia are also operated more by SOEs, PT Angkasa Pura I (Persero) and PT Angkasa Pura II (Persero). Then, many water supply and sanitation services were taken over by Regional Water Companies (PDAMs).
Private investor access, continued the World Bank, is increasingly closed because BUMNs have the privilege of obtaining funding, so that they often get rid of the private sector in public offers.
"Easy access to government financing through subsidies, soft loans, and debt relief gives BUMNs a competitive advantage over their competitors," the report added.
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