Ministers to propose PPP pilot project at APEC Summit

Administrator | Sabtu, 21 September 2013 - 16:50:26 WIB | dibaca: 2093 pembaca

Finance ministers of the Asia-Pacific Economic Cooperation (APEC) member countries will propose the creation of a public private partnership (PPP) pilot project at the APEC Leaders’ meeting.

Indonesia was appointed to create a PPP project design, which would be used as an example in other countries and is expected to help spur infrastructure projects as well as enhance economic cooperation among APEC members, according to Indonesian Finance Minister Chatib Basri.

“Indonesia has been consistent in pursuing infrastructure issues during previous G20 meetings, and now APEC members support the issue because infrastructure is important for economic growth,” he said during a press conference after an APEC Finance Ministers’ meeting in Jakarta on Friday.

The proposal will be submitted for discussion during the upcoming APEC Economic Leaders’ meeting, scheduled for Oct. 7-8 in Bali.

Chatib said that the Finance Ministry would set up a unit that would specifically deal with the project design. Various PPP experts from APEC would serve voluntarily on an APEC PPP Experts Advisory Panel.

Indonesia is scheduled to present the first design in another APEC meeting in Hong Kong next September.

In his opening remarks for the ministers’ meeting, Chatib said emerging economies needed to develop high quality infrastructure projects to unlock their growth potentials, with long-term capital being one of the requirements.

However, he said the private sector deemed that only a few opportunities were available so far in such projects despite the high demand for long-term investments.

In Indonesia, PPP has long been expected to play a role in various infrastructure projects, especially ones under the government’s Master Plan for Economic Expansion and Acceleration (MP3EI) program. It sets a blueprint for infrastructure development up until 2025, with Rp 4 quadrillion (US$360.24 billion) needed to finance the projects.

However, private involvement has been minimum due to mounting bottlenecks, such as poor planning and legal uncertainty.

Earlier this month, Coordinating Economic Minister, Hatta Rajasa, announced that 240 MP3EI projects, worth Rp 647.46 trillion, had been launched since 2011.

Seventy nine projects belong to the government, 69 to the private sector, 60 to state-owned enterprises and the remaining 32 to others.

Meanwhile, World Bank Managing Director, Sri Mulyani Indrawati, also acknowledged the need of infrastructure investment by developing countries. “To sustain faster growth, developing countries will need to redouble efforts to reduce bottlenecks by […] investing in infrastructure,” she said in the same meeting.

The World Bank reported earlier this month that it needed $1 trillion to $1.5 trillion per year to build infrastructure in developing countries alone, but addressing long-term investments would require significant progress in project selection, implementation and financing, both from the private sector and capital markets.

“The lingering problem is that there is a huge need for infrastructure with big budgets, but governments only have limited funds. Meanwhile, there are a lot of financing sources in the forms of pension funds, equity funds or banks, but they are reluctant to get involved because of the perceived high risk and policy uncertainty,” Sri Mulyani told reporters.


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