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Indonesia Infrastructure Report Q1 2010
Market |
Construction |
Report Type |
Market Research |
Country |
Indonesia |
Published |
5 November 2009 |
Number of Pages |
92 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Indonesia's infrastructure market value is forecast to reach US$16.59bn by 2010
This quarter BMI has introduced a new data series for infrastructure and its subsectors (transport and energy & utilities). This is an effort to address a significant deficiency in the availability of globally comparable, infrastructure-specific indicators and forecasts across a wide range of countries. BMI's new infrastructure data series enables users to quantify trends and growth patterns in the infrastructure sectors of the 35 main emerging and developed markets out of the 62 countries in BMI's infrastructure service.
This quarter the sector received a boost after the House of Representatives in Indonesia announced that it is now willing to consider widening the 2010 budget deficit to 2.5% of GDP on condition that the money is strictly invested in infrastructure development – specifically in roads, electricity and agriculture projects – reports the Jakarta Globe, citing a lawmaker. The chairman of Indonesian House Commission XI, Hafiz Zawawi, said that if the government raised the 2010 budget deficit to 2% from the planned 1.6%, it would ensure IDR23trn (US$2.3bn) for infrastructure spending at an estimated GDP growth of 5%, which would almost double the funds allocated to infrastructure in the stimulus package for 2009.
The report forecasts that total 2009 infrastructure industry value in Indonesia will reach IDR152.8trn (US$15bn), rising to IDR167.3trn (US$16.59bn) in 2010.
Meanwhile, in August 2009, the pre-feasibility study for a proposed 30km bridge connecting Java and Sumatra in Indonesia was presented to the central government following two years of study. The construction of the bridge is expected to cost IDR100trn (US$10.07bn). The bridge could be open to traffic by 2020 if construction starts in 2012. The governor of Banten province, Ratu Atut Chosiyah, said that according to the study the bridge could boost the province's economic growth by 2-8%, and could boost the Lampung province by 4-11%. However, it is unlikely that the Indonesian government could finance more than a third of the project's cost. According to the National Development Planning Agency (Bappenas) the government will finance at least 29% of the total IDR1,430trn US$140bn) that is expected to be spent on infrastructure between 2009 and 2014.
In further positive news, in September 2009 it was announced that PT Medco Energi International is looking to build a new US$400mn geothermal power plant in Northern Sumatra. According to Reuters, the company is also looking to spend US$100mn on a biofuel project in Papua Island. With Indonesia looking to expand in renewable energy, areas such as geothermal power could be ripe for expansion. PT Medco Energi is looking to develop around 1mn hectares of land to develop biofuel feedstock.
Meanwhile, the World Bank is looking to provide Indonesia with around US$300mn in grants or loans to enable it to further develop its clean energy sector. Through the Clean Technology Fund the World Bank presently manages around US$5bn in funds. Indonesia has the world’s third largest capacity for geothermal energy, yet is still heavily reliant on non-renewable sources such as coal.
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