Infrastructure Development Programs
for Growth and Equality
throughout Indonesia
Coordinating Minister for Maritime Affairs
Luhut Binsar Pandjaitan
Bandung; September 26th, 2017
Welcome to the Wonderful Indonesia,
The Largest Archipelagic State
Merauke
Sabang• 79% waters
• 17.508 islands
[5.707 inhabited]
• 99.000 km coast
lines
• 258 million
population
80% “yes”:“Do you trust your government?”
[Gallup World Poll]
The Government of Indonesia
is the most trusted Government
3
Healthy Economic Condition:
Investment Grade Status and Projected High GDP
Investment Grade results in low interest, so that
Government Budget can be allocated more productively
Indonesia 2016 GDP: US$ 932.259 billion
Indonesia 2030 GDP: US$ 5.4 trillion [#5]
#1 China: US$ 38 T
#2 USA: US$ 23.5 T
#3 India: US$ 19.5 T
#4 Japan: US$ 5.6 T
#6 Russia: US$ 4.7 T
#7 Germany: US$ 4.7 T
#8 Brazil: US$ 4.4 T
#9 Mexico: US$ 3.7 T
#10 UK: US$ 3.6 T
Sumber: World Economic Forum
Indonesia’s Sovereign Debt Rating[Source: Standard and Poor]
4
Indonesia’s 2016 Economic Growth is High
Sulteng: 9,98%
Papua
9,21%
Sulsel
7,41%
Gorontalo
6,52%
Sultra
6,51%
Kalteng
6,36%
Bali
6,24%
Sulut
6,17%
Sulbar
6,03%
DKI
5,85%
NTB
5,82%
Malut
5,77%
Maluku
5,76%
Jabar
5,67%
Jatim
5,55%
Bengkulu
5,30%
Jateng
5,28%
Sumbar
5,26%
Banten
5,26%
Kalbar
5,22%
Sumut
5,18%
NTT
5,18%
Lampung
5,15%
DIY
5,05%
Sumsel
5,03%
Kepri
5,03%
Papua Barat
4,52%
Kalsel
4,38%
Jambi
4,37%
Babel
4,11%
Kaltara
3,75%Aceh
3,31%Riau
2,23%
Kaltim
-0,38%
National: 5,02%
1. Central Sulawesi: 9,98%
34. East Kalimantan: - 0,38%
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2009 – 2016
Economic Growth:
Global: 3.26%
Developed Countries: 1.17%
Developing Countries: 4.96%
Central Sulwesi:
Boosted by mineral processing
industries [in Morowali, etc.]
East Kalimantan:
High natural resources, but low
commodities’ price
More Productive Government Budget Allocation
Rp Trilion
Education
Infra-
structure
Health
Energy
Subsidy
US$ 305 billion budget for Strategic infrastructure Projects
20% to be provided through Indonesian Government’s budget
Jump
15levels
Ease of Doing Business
#85out of 190 countries
2017
Energy
Subsidy
2009 – 2014:
Rp 1.486 T
6
Effective and Efficient Decision and Implementation
Plenary
Cabinet Meeting
Thematic
Cabinet Meeting
Inter-Ministerial
Coordination Meeting
Ministerial Meeting
Issues | Problems
Policy
Implementation
Monitoring
7
Indonesian Human Resources are Competitive
Grandprix Thomryes Marth Kadja:
the youngest man in Indonesia
awarded Doctorate Degree [24 years]
Completed his Masters and Ph.D. at
ITB within 4 years [2013 – 2017]
8
Current Development Strategy:
Indonesia Centric, Competitiveness, Added Value
Development
StrategyCompetitiveness
Added Value
Indonesia Centric
• Prohibiting raw material export
• Facilitating SME
• Providing incentives
• Human Resource Development
• Conducive investment climate
• National – Regional Connectivity
• Promoting higher growth outside Jawa
• Accelerating infrastructure development
outside Jawa
9
56
87
126
175163
2015 2016 2017 2018 2019
Infrastructure outside Java and Village Funds
Trans-Papua Road: 4,325 km, budget Rp 15.05 T • Village Fund 2015 – 2019 [Rp trillion]
• Basic needs, infrastructure, generate local economy
• 2017: Rp 1.7 billion [US$ 130.000] per village
Presiden Jokowi
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Development of New Centers of Growth
in Strategic Locations
Policy: to develop new centers of economic
growth in the eastern part of Indonesia and
near national borders
1. Regional development based on natural
resources
2. Downstream industries
3. Developing national capacity
4. Preparing national and local human resources
Masela
Natuna
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Demographic Bonus and Education Level
Productive Age
~ 70%
Children 25%
Elderly 5%63.00%
17.70%
10.30%
5.50%
1.60%
1.80%
55.50%
20.20%
12.70%
6.20%
2.20%
3.20%
51.50%
18.90%
14.60%
7.80%
2.70%
4.60%
2010
2006
2001
• ~ 50% of Indonesian
population: Elementary
School
• ~ 5% : higher education
University
Diploma
Vocational
High School
Junior High
Elementary
School
12
28,235
3,375 4,121
5,170
3,038
8,917
3,844
Singapore Malaysia Thailand Philippines Indonesia Vietnam Myanmar
Number of
Engineers
per 1 million
population
Number of
Professional
Engineers
Total Number
of Engineers150,000 100,000 276,000 500,000 750,000 800,000 205,000
3,490 11,170 23,000 14,250 9,000 n/a
Source: Indonesia Association of Engineers [PII]
KOREA
25,310
CINA
5,730
Indonesia Needs More Engineers
• More competitive job
opportunities
• 82.000+ new engineering
school graduates in 2016
• ASEAN Economic
Community
Indonesia: 3 Engineers out of 1.000 population
Vietnam: 9 Engineers out of 1.000 population
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Integrated Morowali Industrial Park [Central Sulawesi]
Power Plant
Ferro Nickel Smelter
Residential
Processing Zone
Manufacturing
Production
2.000 ha
45% industrial
24% power plant and processing
28% residential
• Production target 3 million ton
stainless steel per year
• Total investment in 2019: US$ 7 billion
• Provides 10.500 direct workers,
30.000 indirect workers
• During construction: 20% [4.000]
Chinese workers
• Operational: <2.000 foreign workers
[<10%] in 8 plants
• Polytechnic and vocational training
programs: 300 per year
Port
Research
14
Local Content to Grow National Industries
[examples: Oil and Gas Industries]
15
37.60% 35.08% 31.81% 30.84%
48.63%
25.61%
35.57%
71.23% 71.06% 69.17%65.07%
76.95%72.18%
66.62%
60.63% 60.04% 56.82% 54.15%
67.69%
55.38% 56.77%
2011 2012 2013 2014 2015 2016 Aug-17
Goods
Services
Total
3,969.68 4,626.21
6,348.63
9,337.90
8,195.41
12,432.59
6,666.30
9,011.56
3,953.99
2009 2010 2011 2012 2013 2014 2015 2016 Aug-17Local content in services is much higher than those in goods
Average
58.78%
Transaction Value in million US$
2009 – 2017
US$ 64.52Billion
Challenges: Unequal Distribution of Growth
Economic growth follows industrial growth
Sumatera
23.0%
Jawa
57.4%
8.8% 5.6%
2.9%
2.3%
Indonesian GDP Distribution [BPS, 2014]Concentration of Industrial Growth [World Bank]
16
Inefficient Logistic Costs
15.3 13.7
15.6
11.7
14.1
4.9
Jabotabek Surabaya Medan Makasar Rata-RataIndonesia
Jepang
Transportation Cost per Total Costs [%]
• Inefficient transportation results in high logistic costs
• Improve transportation and connectivity infrastructure to reduce costs
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“Economic Distance”
Jakarta to Singapore and to other ports in Indonesia
[example of 20ft container shipping cost]
2004, Aceh
1861, Sumbar
1833, Bengkulu
1883, Krakatau
2006, Pangandaran
1994, Banyuwangi1977, Sumba
1992, Flores
1820, Sumbawa1979, Lombien
1674, Banda
1955, Seram1996, Biak
1993, Taliabu
1969, Sulsel
1968, Sulteng
1996, Sulteng
1856, Sangihe
1918, Mindanao
1897, Mindanao
1948, Panay
1994, Mindoro
Since strong 2004 in
Aceh, earthquakes
occur ~10x more
frequently; tsunami
3x more frequently
Disaster Risk Reduction is a Must
Data Source: BMKG 18
Gunung Agung [Bali] Volcanism Activities
• 3.145 m above msl
Stratovolcano, Kecamatan
Rendang, Kab.
Karangasem
• Level IV (AWAS)
Advisory: stay away from 9
– 12 km area from the
crater
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From Waste to Resources
• National Action Plans: Assessment on marine plastic debris hotspots,
policy design, reduce plastic waste dumping to the seas
• Waste-based power plants 8 municipalities under Presidential
Regulation
• Asphalt mix in Bali and Bekasi from waste to resources, benefiting
ordinary people
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Infrastructure Development Programs
1. Boosting national development
2. Balancing regional development
3. Improving equality
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Indonesia Population Density Distribution
National Strategic Projects and Programs
• 245 Projects and 2 Programs
• Total investment: US$ 323.3 billionRoad: 74
Railway: 23
Port: 10
Airport: 8
Estate: 30
Housing: 3
Bonded
Zone: 3
Water &
Sanitation: 10
Dam: 54
Irrigation: 7
ICT: 4
Smelter: 6
Energy: 12
35 GW
ElectricityAircraft
Manufacturing
Sumatera61 Projects
US$ 45
billionJawa
94 Projects
US$ 72 billion
Bali & Nusa
Tenggara15 Projects
US$ 0.8 billion
Kalimantan25 Projects
US$ 43 billion
Sulawesi26 Projects
US$ 13 billion
Papua13 Projects
US$ 33 billion
Region/Nation-wide: 9 Projects + 2 Programs [US$ 98 billion]
Fishery: 1
Eastern
Indonesia2 Projects,
US$ 0.007
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• 15 new airports
• Upgrade 9 cargo airports
• Upgrade 25 airports in remote and disaster-prone areas
Port and Airport Development to Connect Indonesia
• 5 deep-sea ports: Kuala Tanjung, Tanjung Priok,
Tanjung Perak, Makassar, Bitung
• 19 Feeder Ports
• 100 sub-feeder ports
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8276 78
6156
62 60
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Indonesia
Infrastructure
Development Index
LRT Jakarta – Bogor – Depok – Bekasi
Indicators
Concession period 50 years
Ridership 116.000 [2019] – 464.000 [2069]
Ticket Rp 12.000
Capex [train set, depot,
infrastructure, contingency]
Rp 28.1 Triliun
Government Budget Rp 9 Trillion
IRR 9.1% (Excluding TOD)
Subsidy [12 years] Rp 16.7 Trillion Operating in
June 2019
Kertajati International Airport, West Java
• To provide better air connectivity in West Java
• Will be connected with Toll Road
• Will be further developed as an Aerocity
Top 10 New Tourist Destinations
Lake Toba
Kepulauan Seribu
Bromo – Tengger – Semeru
Wakatobi
Morotai
Tanjung Lesung
Labuhan BajoMandalikaBorobudur
Tanjung Kelayang
• Improving infrastructure,
environment, promotion, and
local people participation
• “Single Destination, Single
Management”
• Target: 20 million
international tourists in 2019
26
Tourism Road Map
27
• Tourism competitiveness index
• International tourist visit
• Domestic tourist visit
• Contribution to GDP
• Foreign Exchange
• Job Opportunities
2014 Target in 2019
• 15%
• Rp 240 T
• 13 million
• 9 % [Rp 946 T]
• Rp 120 T
• 11 million
• #30
• 20 million
• 275 million
• #70
• 9 million
• 250 million
mac
rom
icro
Indonesia as a global tourist destination
meg
a
Number of Tourist [2014]:
Blobal, Asia – Pacific, ASEAN,
Indonesia
Malaysia: 23,1 million
Singapore: 15,1 juta million
Thailand: 29,8 juta million
Top 5 – Indonesia Tourism
1. Price competitiveness
2. Prioritization
3. Natural resources
4. Cultural resources
5. Air connectivity
Bottom 5 – Indonesia Tourism
1. Environmental Sustainability
2. Health and hygiene
3. Tourist service infrastructure
4. ICT readiness
5. Security and safety
Tourism as a Prime Mover of Economic Growth
• Contributes 10% of national
GDP, the highest in ASEAN
[2015]
• The growth is above other
industries
• Revenue: 9,3% of national [#4]
• Contributes 9.8 million jobs
[8.4%]
• Job opportunity grows 30% in 5
years
• Low investment on job
providing: US$ 5.000/worker
28
0
5
10
15
20
25
30
2015 2016 2017 2018 2019
USD
Ju
ta
Minyak Batubara Pariwisata CPO Karet
Projected Revenue
The Future Relies on Technology and Human Resources
High tech cluster eco-system
• Anchor tenants
• Research centers of companies and universities
• Universities, education institutions
• Government support: regulatory one-stop, subsidies, public
schools, infrastructure and transportation
• Start up ecosystem: startup companies, angel investors,
venture capitals, accelerators, professional services,
outsourced services
• Living and working: residential, commercial, hotel, utilities,
transportation
• International connectivity: airports, ports China Industrial Cluster
Songdo
Smart City
Singapore One North Project
Potential Industrial Ecosystem for Indonesia
• Agriculture, fisheries and forestry:
smart farm and fishery
• FinTech: given low penetration of
banking and high reliance on cash
• High tech manufacturing production
base for ASEAN countries
• Logistics and IT based
transportation management
• Recycling and renewable energy
• Big data based on 250 million
people: e-Government, etc.
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