Challenges and Expectation in Indonesia’s Infrastructure

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With so many infrastructure projects planned by the Indonesian government, a construction boom is anticipated. Expectations are high that the government spending will boost the economy this year – and in future years. Some of the planned infrastructure projects for the current five-year period (2014 - 2019) are 1000km of new toll roads, 2650 km of new paved roads, 46770km of road maintenance projects, and 195 new water reservoirs to increase the national rice production.

Axis Capital Group, a company which sells and rents capital equipment with its main office in Singapore has set up a branch in Jakarta, Indonesia and is being optimistic in the fast growth and expansion of the archipelago. Moreover, local production has also set up in the country, employing hundreds of citizens. Axis, along with these manufacturers and the government are being involved in countless of projects set within 2015-2020.

In addition the government will focus on increasing the capacity of mass transportation by building 15 new airports, 24 new seaports, and 3258km of railway in Java, Sumatera, Sulawesi, and Kalimantan.

In a review, the recently elected government in Indonesia intends to begin this year on a vast and desperately needed infrastructure programmed throughout the archipelago.

Over the next five years the government aims to build 5,500km of railways, 2,600km of roads, 1,000km of toll roads, 49 dams and 24 seaports, along with a number of power plants whose combined capacity will total 35,000MW.

The programmed will, in addition to needing foreign know-how and equipment, also bring challenges and opportunities to the members of the Indonesian Contractors’ Association (ICA), an organization that represents 130 contractors and suppliers.

Another challenged imposed to the industry is the worsening traffic congestion in the country’s capital with lots of complaints coming from thousands of commuter’s every day. This has greatly affected the business investments of Jakarta and the government now aims to resolve this issue.

Indonesia would greatly needs roads, bridges, seaports, airports and other infrastructural projects to support communications, and the government intends to begin by releasing the first projects for tender in the middle of this year.

The government is also aiming to attract further investment from the private sector through public-private partnerships (PPPs). This would include foreign investment, bringing with it foreign expertise and skills transfer.

The amount of money due to be injected into the national economy is so large that it is expected to nudge the construction industry’s contribution to the Gross Domestic Product, currently at 10%, up by at least a percentage point.