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Prospects of infrastructure sector, 2012.

This year, many infrastructure projects are expected to be implemented as the government has included 10 infrastructure projects in the Master Plan for Indonesian Economic Development Acceleration and Expansion (MP3EI) to be implemented this year. The projects are located in various areas in Sumatra, Java, Bali, Kalimantan, Sulawesi and Papua. In addition various other infrastructure projects such as toll roads, carried over from previous years or delayed on difficulty in land clearing and other causes, are expected to be implemented this year.

The economic growth of 6.5% recorded by Indonesia in 2011 was a success amid the global slump. A number of European countries such as Greece, Ireland, Italy, Portugal and Spain are still struggling to wriggle out of debt repayment problem.

However, in order to maintain the healthy growth, the government needs to revamp the country's crumbling infrastructure that it could fully utilize the opportunity brought about by the upgrade of the country's sovereign debts to investment level by international rating agencies.

Infrastructure is vital in the economic development. Many foreign investors have complained about the condition of infrastructure in the country. Development of infrastructure, however, will need huge investment and the government could not alone be expected to provide the necessary fund.

Around Rp115 trillion are needed to finance construction of infrastructure a year. In the next 14 years, therefore, the country would need Rp 1,700 trillion for investment in the infrastructure sector. The government based on its 2012 financial note, allocated Rp 168.1 trillion for capital expenditures or an increase of 19.3% from the previous fiscal year. Around Rp 88 trillion of the funds are for infrastructure development.

Meanwhile, the government is in difficulty to cope with swelling subsidy burden leaving little room for allocation of more funds for spending on infrastructure projects. The role of the private sector, therefore, is important in taking part in the development of infrastructure sector. However, implementations of a number of infrastructure projects especially toll roads awarded to the private investors have been delayed over a number of reasons.

Development of infrastructure is needed not only to spur growth but also to improve competitiveness facing other investment destination countries. Development of infrastructure is needed in all economic clusters and growth centers with locations spread out in different areas.

The priorities in the development of infrastructure projects in 2012 are included in the MP3EI and Metropolitan Priority Area (MPA). The infrastructure projects include airports, seaports, toll roads, clean water facilities and sanitation system. Implementation of the MP3EI scheme will be by development of economic potentials in six corridors through investment and strengthening of national connectivity mainly through development and improvement of the capacity of infrastructure such as toll roads, airports and seaports.

Groundbreaking has taken place and will take place in 2012 of a number of projects to support national connectivity including toll roads, ports, bridges and airports.

Among the major airport and seaport projects are expansion of the country's largest port of Tanjung Priok estimated to cost US$ 1.17 billion, expansion of Jakarta's Soekarno-Hatta airport estimated to cost US$ 800 million and expansion of the Tjilik Riwut airport in Central Kalimantan estimated to cost US$ 11.31 million. Expansion of airports will include modification of terminals and aprons. There are also plans to build the Maloy International Port in East Kalimantan with an estimated cost of US$ 1.78 million.

Among infrastructure projects in economic clusters to be implemented include Special Economic Areas (KEK) of Sei Mangke, in South Sumatra and Tanjung Lesung, in Banten. In 2012, the Tourist Area of Mandalika in Lombok, West Nusa Tenggara is also a new Special Economic Areas to be developed by the government. Development of the tourist area that includes Development of infrastructure, public facilities, hotel, rest areas, housing areas and a golf course will cost around Rp 829 billion.

Toll road projects to be implemented in 2012

Development of toll roads in Indonesia is integrated under the program of the Indonesian Master Plan of Acceleration and Expansion of Economic Development (MP3EI) launched in mid 2011. Under the program, toll road projects to be built are Trans Java toll road and toll roads in big city areas.

In 2012, there is no new toll road project . The government will concentrate more on clearing lands for 35 toll road projects for which contractors have been selected through tender. Toll road projects in Indonesia according to their development documents are grouped in preparation for tender, preparation of Agreement on Toll Road Management (PPJT), and PPJT projects.

There are 20 PPJT projects, 4 PPJT preparation projects and 31 tender preparation projects. Parts of the PPJT projects are to be implemented in 2012.

A number of toll projects as part of the Trans Java Toll Road to be implemented in 2012 include the Cikampek--Palimanan toll road. Construction of the 116 kilometer toll road will begin from the Cikopo cross road in the regency of Purwakarta. Construction of the toll road will be carried out in a certain working period to be completed in September, 2014. The toll road will open access to a number of areas in West Java, such as Cikopo, Kalijati, Subang, Cikedung, Kertajati and Sumberjaya.

There are six other projects to be implemented in 2012 totaling 63.33 km. The process of land clearing for the six projects has been almost completed. The six toll roads include Gempol-Pandaan 13.61 km, Gempol-Pasuruan Section I (Gempol-Rembang) 13.02 km, Porong-Gempol Section I (Kejapanan-Gempol) 3.55 km, Pejagan-Pemalang Section I and II (Pejagan-Brebes Barat-Brebes Timur) 20.2 km, Bogor Ring Road Section IIA (Kedunghalang-Yasmin) 1.95 km, and Bekasi--Cawang--Kampung Melayu (Becakayu) Section Casablanca--Jaka Sampurna 11 km.

Two of the projects--Cinere-Jagorawi Section I (Cimanggis-Raya Bogor) with investment of Rp 2.4 trillion and Kertosono-Mojokerto Section I. with investment of Rp 2.3 trillion--have been implemented and are almost completed.

The first phase of the Cisumdawu toll road project is also to be implemented early 2012 totaling 6.35 kilometers with an investment of Rp 1.02 trillion. The tender for the construction of the project was won by a consortium of Shanghai Corporation Construction Group, PT Waskita Karya and PT Wijaya Karya.

Other projects that could be implemented in 2012 include Semarang-Solo Section II (Ungaran-Bawen) 11.95 km, Kertosono-Mojokerto Section II (Jombang-Mojokerto Barat) 20.15 km, and Mojokerto-Surabaya Sections IB, II, and III (Waru-WRR-Driyorejo-Krian) 15.5 km.

In the Greater Jakarta areas Jakarta, Bogor, Depok, Tangerang, and Bekasi toll road to be operational in 2013 are Jakarta Outer Ring Road (JORR) W2 (Ulujami-Kebun Jeruk) 7.67 km, Cinere-Jagorawi Section II (Simpang BogorRaya Kukusan) 5.5 km, and Bogor Ring Road Section IIA (Kedung-halangYasmin) 1.95 km.

The government has a target that 94.97 kilometer (km) of new toll road will be operational in 2013 including 67.8 km of the sections of the Trans Java toll road, 15.12 kilometers of toll roads in Jakarta and 12.05 kilometers in other areas.

Other than those of toll road projects , that are parts of the Trans Java Toll Road there are a number of toll road projects to be built in large cities such as the Bekasi--Cawang--Kampung Melayu (Becakayu), Bogor Ring Road, and Nusa Dua--Bandara Ngurah Rai--Benoa toll roads.

More toll road projects are expected to be built in the coming years. BPJT said by 2014, around 832.47 kilometers of new toll roads will be operation bringing the total length to 1,592.47 kilometers of toll road in operation in the country. Currently the country has 760 kilometers of toll road in operation.

In 2014, the length of Jakarta Outer Ring Road (JORR) toll road to be operation will increase by 138.11 kilometer. In 2014, toll roads to be built will total 26.98 kilometer.

A number of projects in the priority list but not yet implemented in 2012 are now in the preparation for tender in Bali, East Java, West Java, DKI Jakarta, Lampung, South Sumatra and North Sumatra.

Non toll roads are also to be built in West Java, Bali, and Kalimantan. City toll roads are to be built include Bandung Intra Toll Road with an investment of US$ 800 million. In Bali, there is Serangan-Tanjung Benoa toll road project with an investment of US$ 196.1 million. In Kalimantan, there is Jembatan Tayang toll project in West Kalimantan with an investment of Rp 740 billion , and in West Java, there is Pasir Koja-Soreang toll road project with an investment of US$ 143.5 million and Cileunyi-Sumedang-Dawuan (Cisumdawu) toll road project with an investment of US$ 1.01 billion .

Land clearing still a bottleneck

Land clearing is still major bottleneck in the implementation of toll road projects. The Law on Land Procurement for Development for Public Interest is yet to be approved by the House of Representatives in 2012. The Law, however, will be effective only on new projects or projects after the Law comes into effect.

Winners have been announced of toll road project tenders, but implementation is hampered on difficulty in land clearing such as the Medan--Kuala Namu toll road project that will link the provincial city and the new international airport now under construction. The new airport is to replace the old Polonia airport. Land clearing for the toll road project has reached only 37% or 73.23 hectares of the total requirement of 197.94 hectares.

The Medan--Kualanamu toll road is 17.8 km long consisting of two sections. Section 1 is 10.75 km and section 2 is 7.05 km. Construction of the toll road will take 900 working days to cost around Rp 1.3 trillion that include fund from the state budget and loan from Export Import Bank of China.

The contractors awarded the project are China Harbour Engineering Co. Ltd, China State Construction Engineering Co. Ltd, and PT. Hutama Karya (Persero). The Medan-Kuala Namu toll road will be part of the Medan- Kuala Namu-Tebing Tinggi toll road.

The toll road is not the only access to the Kualanamu airport. There is also non toll road which is already in operation. Therefore, the operation of the airport would not be affected by delay in the completion of the toll road project. Fund from the 2012 state budget is set at Rp 44 billion.

The government also will provide Rp 58.5 billion for the construction of a 1 kilometer flyover leading to the airport. Construction of the flyover is to start in 2012.

Land transport and bridges

Land transport will need expansion of transport capacity including railway transport. The country has largest railway projects including double track projects in Java. The projects are vital to support economic development.

Rail track projects to be built in 2012 include 87.9 kilometer double track between Pekalongan and Semarang. The project is estimated to cost Rp 1.8 trillion. Other railway projects include Mass Rapid Transport (MRT) of Lebak Bulus- Hotel Indonesia Traffic Circle to cost Rp 40 trillion.

Other projects to be built starting in 2012 include Tayan Bridge in West Kalimantan. The 1,423 bridge links Dataran Pulau Tayan in the regency of Sanggau and the village of Kawat with an investment of Rp 575 billion

Airports

The role of air transport is also growing vital in economic development. Currently a number of Indonesian airports have come close to utilizing their maximum capacity. Some have even operated beyond capacity. Air transport is superior in speed but small in carrying capacity.

The country's aviation industry has grown over the past years notably in the past decade. In 2009, domestic aircraft departures grew 54.9% to 509,305 times and aircraft arrivals rose 19.1% to 513, 32 times from the previous years. In the previous two years departures and arrivals declined.

International flights also grew. In 2009, departures and arrivals of aircraft grew 10.7 percent and 10.6 percent respectively. The growth rates were lower than 12.5$ and 13.7% in 2007.

Increase in the number of domestic and international passengers reflected the trend, which is growing of demand for air transport in 2009, the number of departures of domestic passengers totaled 41.7 million or doubling from departures 6 years before. Annual growth in departures of domestic passengers averages 12.3%.

Among airport projects to be implemented this year include expansion of Jakarta's Soekarno-Hatta air port to cost US$ 800 million equivalent to Rp 7,360 billion, and expansion of Tjilik Riwut airport of Central Kalimantan with an investment of US$ 11.31 million equivalent to Rp 107 billion .

Other airport projects to be built in the next two to five years include construction of Banten Selatan airport in Pandeglang, in the province of Banten. The project is included among projects offered by the government to be built under the Public Private Partnership (PPP) scheme.

If the process of tender could be wrapped up in 2012, contract could be signed in 2013 and construction could start in the following year.

Development of the Banten Selatan airport will cost around US$ 213.60 million equivalent Rp 1,965 billion, with the private partner to provide US$ 75.67 million or Rp 696 billion in equity and loan to cover the remaining US$ 77.03 million or Rp 709 billion. The government will contribute in land procurement worth US$ 60.98 million equivalent Rp 561 billion.

A number of other airport projects have also been planned including new and expansion of old airports but construction is to start after 2012 as they are still in the preparation phase or feasibility studies. Among them are Samarinda airport project in East Kalimantan; Bali airport project; Singkawang airport project in West Kalimantan; Kulon Progo airport project in Yogyakarta; Kertajati airport project in West Java; and expansion of Dewandaru airport in Karimunjawa, Central Java.

Seaports

Transport of export and import commodities and inter-island trade commodities is made with ships facilitated with ports. Around 70% of exports and imports of non-oil/gas commodities are made via Tanjung Priok. Tanjung Priok and other main ports have operated beyond their handling capacity, therefore, expansion or constructions of new ports are needed.

Flows of goods via Tanjung Priok are growing from year to year. In 2009, the ports handled the flows of 3.7 million TEUs of container cargoes, up to 4.7 million TEUS in 2010 and to 5.8 million TEUs in 2011 exceeding its installed capacity of 5 million TEUs. Expansion of the port to Kalibaru Utara, therefore, has been planned to be completed in 2014.

Tenders have been held for a number of port expansion port projects and construction of new ones including the Kalibaru container terminal project and the Maloy International port project in East Kalimantan with an investment of US$ 1.78 million.

The Maloy port is designed to be integrated with an International Port Industrial Estate (KIPI) that it could serve downstream palm oil industry. The Maloy port is located in a strategic area in an international shipping lane and the world's growing economic center of Pacific Rim.

The KIPI of Maloy would provide links to all areas across Kalimantan and neighboring countries Malaysia and Brunei Darussalam. A freeway will also be built to link the KIPI of Maloy with other cities--Sangatta--Bontang--Balikpapan --Tanah Grogot--Batu Licin--Pegatan--Palaihari--Pontianak--Sungai Pinyuh Singkawang.

Construction of new ports and expansion of ports would start in 2012 including Quay of Merak VI in Banten, Garongkong port in South Sulawesi, Passenger and container terminals of the Depapre port in Jayapura and Jayapura ports.

Meanwhile, Pelindo III will build a number of projects in 2012 including expansion and dredging of Surabaya's western port basin (APBS), which will cost an estimated US$ 70 million, construction of Multipurpose Terminal of Teluk Lamong, Tanjung Perak port, modernization of Tanjung Emas port of Semarang; and construction of Marina port in Benoa, Bali.

Clean water

Tenders would be held for a number of drinking water supply projects under the government private partnership (PPP) scheme. Among the projects are Drinking Water Supply Project of Maros in South Sulawesi Drinking Water Supply Project of Tukad Unda in South Bali; Drinking Water Supply Project in Surakarta, Central Java; Drinking Water Supply Project of Pondok Gede, Bekasi, West Java; Drinking Water Supply Project of Jakarta--Bekasi--Karawang (Jatiluhur); Drinking Water Supply Project of Bandar Lampung, in Lampung.

Waste treatment and Sanitation

Other infrastructure projects in urban areas are waste treatment and sanitation. Demand for improvement in waste treatment and sanitation systems is growing with the growing urban population.

Among waste treatment and sanitation projects ready to be offered under the PPP scheme are Putri Cempo Mojosongo waste disposal place with a capacity of 250 tons per day in Surakarta, Central Java and Waste Management Repair with a capacity of 1,000 tons per day in the regency of Bandung, West Java.

With the relatively favorable economic condition and growing confidence of foreign investors , development of infrastructure projects in 2012 would be much brisker though difficulty remains in land clearing and potential problems have yet to be removed as a result of the oil fuel price hikes.
Table--1
Toll road projects as parts of Trans Java to be built in 2012.

Toll road Length Investment (Rp Investor
project Billion)

Cikampek-- 116 km 5,906.27 PT. Lintas
Palimanan I Marga Sedaya

Gempol-- 13.61 km 826 PT Margabumi
Pandaan Adhikaraya

Gempol-- 13.02 km of Rp1,800 PT Jasa Marga
Pasuruan total Gempol-- (Total Gempol--
Section I Pasuruan 33.75 Pasuruan)
(Gempol-- km
Rembang)

Porong-Gempol 3.55 km Rp 356.2 PT Jasa Marga
Section I
(Kejapanan-
Gempol)

Pejagan- 20.2 km of 3,235.81 (Total PT. Pejagan
Pemalang total Pejagan-- Pejagan-- Pemalang Tol
Section I and Pemalang 57.50 Pemalang) Road
II (Pejagan- km)
Brebes Barat-
Brebes Timur)

Cileunyi-- 6.35 of total Rp1.02 of total Shanghai
Sumedang-- Cisumdawu 58.50 Cisumdawu Corporation
Dawuan km Rp5,102 Construction
(Cisumdawu) Group--PT
Tahap I Waskita Karya--
 PT Wijaya Karya

Semarang-Solo 11.95 km of Rp6,135 (Total PT. Jasa Marga
Section II total Semarang-- Semarang--Solo)
(Ungaran- Solo 75.70 km
Bawen)

Kertosono- 20.15 km of Rp2,211.72 PT. Marga
Mojokerto total (Total Hanurata
Section II Mojokerto-- Kertosono-- Intrinsic
(Jombang- Kertosono 41.65 Mojokerto)
Mojokerto km
Barat)

Mojokerto- 15.5 km of Rp2,952.61 PT. Marga
Surabaya total 41.65 km (Total Nujyasumo Agung
Section IB, II, Mojokerto--
and III (Waru- Surabaya)
WRR-Driyorejo-
Krian)

Sources: Toll Road Regulator (BPJT), Data Consult

Table--2
Railway infrastructure projects and city transport

 Investment value
Projects (Rp. Billion) Locations

Development of MRT between Lebak 40,000 Jakarta
Bulus-HI traffic circle.

Development of railway double
tracks and facilities supporting 1,800 Semarang
traffic infrastructure between
Pekalongan-Semarang (87.9 km)

Tayan bridge 575 West
 Kalimantan
Source: Data Consult

Table--3
Airport projects to be built starting in 2012

 Projects Investment Locations
 (Rp billion)

Expansion of Soekarno Hatta 7,360 DKI Jakarta
 International Airport
Expansion of Tjilik Riwut 107 Central Kalimantan
 airport
Development of Banten Selatan 1,965 Banten
 airport

Source: Data Consult

Table--4
Seaport infrastructure projects, 2012

 Value
Name of projects (Rp Billion) Locations

Expansion of container terminal of 11.750 DKI Jakarta
 Tanjung Priok port
Development of Tanah Ampo Ship 3.240 Bali
 Terminal
Development of Maloy International 17 East Kalimantan
 Port
Development of Merak VI Quay 180 Banten
Development of Garongkong Port 252 South Sulawesi
Development of Passenger and 200 Jayapura
 Container Quay of Depapre Port
Jayapura Port 43.000 Jayapura

Source: Data Consult

Table--5
Drinking Water Supply Project offered under PPP scheme in 2012

 Name of Locations Types of work
 projects

Maros Drinking South * Building Raw Water Intake;
Water Supply Sulawesi channeling water from Bantimurung
 River and delivering to Water
 Treatment Plant (WTP).
 * Expansion and up rating of the
 WTP from 130 LPs to 250 LPs.
 * Transmission pipe to deliverance
 Bulk Water from WTP to City Primary
 Distribution Off take.

Tukad Unda Bali * Land acquisition 17.000 m2.
Drinking Water * Development of Water Treatment
Supply Plant 1,000 LPs.
 * Development of transmission line
 (40 km).
 * Development of 4 unit Reservoir
 15,000 m3.

Drinking Water Central * The development of intake and
Supply of Java transmission pipe from Bengawan
Surakarta Solo.
 * The development of Water
 Treatment Plant 300 LPs.
 * Distribution Reservoir.
 * The utilization for new user
 connection at 3 District and 22
 Sub-district.

Pondok Gede West Java * The development of intake and
Drinking Water transmission pipe.
Supply, Bekasi * The development of Water
 Treatment Plant 2x150 LPs.
 * Distribution Reservoir 2 x 1,650
 m3
 * The utilization for 30,000
 connections.

Jatiluhur Jakarta-- * The development of intake: 5,000
Drinking Water West Java LPs.
Supply * The development of Water
 Treatment Plant 5,000 LPs.
 * The procurement of transmission
 pipe ND 1,800 mm Length 58.00 km.
 * The utilization for 2 million
 inhabitants or 400,000 connections.

Bandar Lampung Lampung * The development of intake 500 LPs.
Drinking Water * The development of water supply
Supply pipeline transmission (ND 800 mm,
 length 27 km).
 * The development of WTP (2 unit,
 @250 LPs).
 * The development of distribution
 network (42,000 connections).

Umbulan Water In East
Conveyance Java.
project
(4.000l/s) with
investment of
Rp 1,900
billion

Source: Bappenas, Data Consult
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Title Annotation:INFRASTRUCTURE OUTLOOK
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Dec 1, 2011
Words:3520
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