Indonesia must get infrastructure financing model right

A SECOND political mandate for President Joko Widodo (Jokowi) will usher a fresh wave of big-ticket infrastructure projects, including new airports, seaports, road and rail links and a possible new capital city to replace the over-populated and gridlocked Jakarta.

After setting an infrastructure budget of US$350 billion in his first term, his advisers are touting a fresh US$412 billion for the second term. The ambitious plan - one of the biggest building programmes in Asia - is noble: lift economic growth, eradicate poverty and propel the nation of 260 million people to developed status before 2050, when the population is expected to cross 320 million.

With the poverty level below 10 per cent in 2018, Indonesia's economic narrative has shifted from survival and subsistence to infrastructure. The country needs connectivity to link the vast archipelago, so that people, goods and services can be transported easily and at affordable rates. The growing middle class is also restless to travel more and seek new economic opportunities, which are currently inhibited by numerous bottlenecks.