Jakarta. Transportation Minister Budi Karya Sumadi is nudging private companies to also take part in building the transportation infrastructure -- including airports -- of archipelagic Indonesia.

Infrastructure development has been at the heart of President Joko “Jokowi” Widodo’s 10-year presidency. Between 2014-2023, Indonesia saw the construction of 26 airports that help connect Indonesia’s remote areas with the country’s major cities, the ministry data showed.

According to Budi, Indonesia cannot simply rely on the state budget to build its transportation infrastructure. The country will welcome private investors with open arms if they wish to invest in the country’s transportation sector. Budi also promised that investors would have no trouble getting the necessary permits.

“Transportation infrastructure should not only be built by the government,” Budi told the Jakarta Globe Forum in Jakarta on Friday.

Some private companies have chipped into Indonesia’s infrastructure development. For instance, Kediri’s Dhoho Airport is being jointly managed by the state-run airport operator Angkasa Pura and Surya Dhoho Investama, a subsidiary of the tobacco giant Gudang Garam. The government, however, did not spend a single cent on the Dhoho Airport construction. The project entirely used private sector investment totaling around Rp 13 trillion (around $857.9 million).

“I think we should congratulate the private sector involvement in the Kediri airport. There is also another private-funded airport in Bintan,” Budi said, alluding to the project ran by Bintan Aviation Investment.

The recently launched Singkawang Airport is another example of public-private partnership funding scheme in the aviation sector. The government spent Rp 272 billion in public money to build the airport, while the remaining Rp 155 billion came from Singkawang businessmen. 

The Investment Ministry reported that the transportation, warehouse, and telecommunication sector grouping was the most popular among domestic investors in the first half of 2024. Domestic investment within the sector totaled Rp 59.9 trillion that period. The sector was the third-largest popular investment destination for international investors. It attracted $2 billion worth of foreign direct investment (FDI) in the same six month period.

Former Trade Minister Enggartiasto Lukita also commented on why private institutions should take part in Indonesia’s transportation infrastructure development. Jokowi’s successor Prabowo Subianto also feels the same about the need to have more private sector involvement and rely less on state money, according to Enggartiasto.

“Mr. Jokowi and Mr. Prabowo had said that the private sector should be given the first chance to [build the country’s transportation infrastructure]. If they do not want to and are unable to, perhaps due to the huge risks, then Indonesian state owned enterprises [SOEs] can take over the job,” Enggartiasto, who is also the executive chairman to B-Universe Media Holdings, told reporters on the sidelines of the forum.

The state budget then should be the final option if neither the private sector nor the SOEs could fund the transportation sector development, Enggartiasto said.

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