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National Connectivity 2011 Special Edition

How And What Is MP3EI? The Action Plan to Strengthen National Connectivity 33 PPP Projects to Support MP3EI

The Connectivity Of Six Economic Corridors

EDITORIAL

The Issue of Connectivity in Indonesia


How will Indonesia be in 2025? In 2025, Indonesias income per capita is targeted to reach around USD 15,000 with a Gross Domestic Product (GDP) of arround USD 4 to 5 trillion. Indonesia will receive a new title as a high earning country. As an illustration, in 2010, Indonesias income per capita was USD 3,000 and it had a GDP of USD 700 billion. This question will surely arise: how can we achieve that target? Can all stakeholders in the country synergize to build Indonesia? The answer is: they must be capable and must be able to do it. Now, there is the Master Plan for the Acceleration and Expansion of Indonesias Economic Development (MP3EI). This is a working document that complements the other existing documents such as the Long Term and Medium Term Development Plan for both the national and regional level. MP3EI is intended to encourage rapid, balanced, equitable and sustainable economic growth. Through those acceleration measures, Indonesia will be able to place itself in the ten major nations of the world by 2025 and six major nations by 2050. To achieve Indonesias Vision by 2025, three basic strategies are formulated, namely the development of economic potential through economic corridors; strengthening national connectivity; and strengthening human resource and National Science and Technology capabilities. With respect to this matter, national connectivity becomes a highly relevant issue to discuss in the Sustaining PARTNERSHIP magazine. Magazine discusses about how and what MP3EI is; the link between MP3EI with other working documents; and an action plan to improve national. This edition is also complemented by the opinion of experts and observers of this subject and a list of government programs with the PPP scheme that supports the massive MP3EI program. The issue of inter corridor connectivity is strongly associated with the availability of infrastructures that enable inter island and inter territory connectivity to become faster and cheaper. Therefore, ports with good shipping and loading and unloading management is a necessity. Connectivity should also be supported by an effective means of land transportation such as logistic trains and the existence of a smooth distribution routes. By highlighting the issue of national connectivity, hopefully we could provide an overview of the various investment opportunities in infrastructure in accordance with the governments priorities and major programs. Because without the participation of the private sector, it will be impossible to properly develop various infrastructures in Indonesia. ADVISOR Deputy Minister for Infrastructure Affairs, Bappenas DIRECTOR Director for Public Private Partnership Development, Bappenas CHIEF EDITOR Jusuf Arbi BOARD OF EDITORS Delthy Sugriady Simatupang, Gunsairi, Rachmat Mardiana, Novie Andriani, Mohammad Taufiq Rinaldi, Ade Hendraputra MANAGING EDITOR B. Guntarto REPORTER/RESEARCHER Sandra Kaunang, Agus Supriyadi Hidayat PHOTOGRAPHER Arief Bakri GRAPHIC DESIGNER Indrie Soeharyo TRANSLATOR FROM INDONESIAN VERSION Setiana

Please enjoy reading the magazine.

Editors

Infrastructure Reform Sector Development Program (IRSDP) BAPPENAS Jl. Tanjung No.47 Jakarta 10310 websites: www.irsdp.org Tel. (62-21) 3925392 Fax. (62-21) 3925390

SUSTAINING PARTNERSHIP - National Connectivity 2011 Special Edition

CONTENT

MP3EI Background:

HOW AND WHAT IS MP3EI?

4 9 13 18 22 25
3

MP3EI and RPJPN - RPJMN:

THE CONNECTION BETWEEN MP3EI, RPJP AND RPJM

Economic Corridor:

THE CONNECTIVITY OF SIX ECONOMIC CORRIDORS

Action Plan:

THE ACTION PLAN TO STRENGTHEN NATIONAL CONNECTIVITY

Expert Opinion:

OPINION ABOUT CONNECTIVITY IN MP3EI PRIORITIZATION OF CONSTRUCTION

PPP Project:

33 PPP PROJECTS TO SUPPORT MP3EI

National Connectivity 2011 Special Edition - SUSTAINING PARTNERSHIP

MP3EI BACKGROUND

The Master Plan for the Acceleration and Expansion of Indonesias Economic Development (MP3EI) was formulated based on various information and considerations that covers a variety of potentials possessed by Indonesia, particularly natural resources potential. The abundant amount of natural resources owned by Indonesia is an invaluable potential that can be developed to encourage economic growth in Indonesia.
Various efforts that were made to encourage economic growth in Indonesia faced numerous challenges, in particular limited provision of infrastructures that support economic activities. On the other hand, infrastructure availability is urgently needed while the governments funding ability for infrastructure development is very limited. Therefore, the participation of the private sector is crucial and must be realized to accelerate the realization of Indonesias development potentials. This could be achieved through infrastructure provision which is jointly conducted by the government and private sector. From the demography perspective, Indonesia also has a demographic bonus until 2030. This means that there is an increase in the number of productive aged population. The demography bonus shows that Indonesias economic potential is also supported by the potential of human resources productivity in the future. Another potential is rich natural resources. As we know, Indonesia is known as a country rich with natural resources, both renewable (agricultural products) and non renewable (mining and minerals). In fact, for some key commodities, Indonesia is one of the worlds largest producers and exporters. Indonesias various superiorities in natural resources must be maximally utilized with the precautionary principle, especially for matters related to the sustainability of natural resources and environmental damage that may occur. On the other hand, Indonesia is also facing challenges in development. Natural resources owned by Indonesia are not evenly distributed in all parts of Indonesia. The distribution of natural resources, especially oil and gas, as well as trade and industry growth centers are only concentrated in some areas. This concentration causes disparities between regions and differences of social welfare between regions.

DEVELOPMENT POTENTIAL AND CHALLENGES IN INDONESIA


As the largest archipelagic nation in the world, Indonesia has a range of potentials shown by the characteristics of its geography, demography, economy, socio-culture and natural resources. From a geographic point of view, Indonesia is located in a strategic place and has direct access to the largest market in the world since it is passed by the Sea Lane of Communication (SLoC) which is Malacca Strait that ranks first in the global container shipping line.

SUSTAINING PARTNERSHIP - National Connectivity 2011 Special Edition

We must change our dependence on the primary sector as the driving force of the economy. However, it is undeniable that the abundant amount of natural resources is an economic potential. Natural resources management must be supported by good management and adequate infrastructures so it could optimally encourage economic growth. Another challenge faced by Indonesia is low inter region connectivity which is indicated by the low availability of infrastructures that encourage economic activities. Infrastructure availability in some regions in Indonesia, especially in eastern Indonesia is still inadequate. Looking ahead, Indonesias infrastructure development should be focused to improve inter region connectivity. This aims to reduce transportation and logistics costs to encourage competitiveness and accelerate the distribution of products. Aside from economic potential and existing challenges, Indonesias image in the international level is improving. Global trust to Indonesias condition has increased in accordance with the improvement of Indonesias rank in terms of its condition. This rank is determined by various international institutions. In light with the above, transformation is necessary to shift the consumption based economy into a investment based economy. Such transformation must be prepared from now with the hope that by 2030, Indonesia will be successful and has completed the transformation. To support economic transformation, a concept on the acceleration and expansion of Indonesias economic development which is the concept of the development of Indonesia Economic Corridors is currently being developed. This concept uses a regional approach to accelerate the economy by addressing issues in regional development, namely lack of infrastructure and energy supply, inefficient logistic management, disintegrated domestic market (not united) and limited connectivity to the global market.

HOW AND WHAT IS MP3EI?


MP3EI is a roadmap that is formulated as an attempt to transform the economy to encourage economic activities as well as to accelerate economic growth to improve competitiveness. Such economic transformation efforts must be done by considering all of the potentials and challenges faced by Indonesia. In addition, MP3EI also acts as a starting point in developing the mutual commitment of the Government and business sector to carry out v a ri ou s co ncre te de ve l op m ent m e as u re s.

MP3EI is also a starting point to encourage Indonesia to become a developed country in the future. MP3EIs development concept was made with an approach based on the spirit of Not Business As Usual.
National development is not merely an aggregation or a combination of local/regional development or even a joint development between sectors. National development is the result of synergy between various forms of linkages, such as spatial linkages or regional linkages, sectoral linkages and institutional linkages. National development is conducted through a better synergy between the central government, regional government, State Owned Enterprises (BUMN), Local Owned Enterprises (BUMD) and the private sector. The private sector will play a major and important role in the acceleration and expansion of economic development particularly in terms of increasing investment and job creation. In contrast, the government will function as the regulator, facilitator and catalyst. Facilitation and catalysis will be provided by the government through the provision of infrastructures and fiscal and non fiscal incentives. In terms of regulation, the government will perform deregulation (debottlenecking) of certain regulations that impede the implementation of investments. Specifically, within Indonesia Economic Corridor, the role of the central government will only be limited to the regulation and allocation of central investment.

National Connectivity 2011 Special Edition - SUSTAINING PARTNERSHIP

MP3EI BACKGROUND

Meanwhile, the role of the local government, especially those located in Indonesias economic corridor, will play as the direct user of the determined corridor. In addition, regions will also play a role in determining regulations and investment allocation in the region. However, we must realize that government budget, either central or local, is limited. Therefore, the spirit of not business as usual should be reflected as an important element in development, especially in infrastr ucture provision. It is ver y difficult to fulfill the needs for adequate infrastructures across Indonesia with limited government budget. Hence, several infrastructure provision schemes can be implemented through joint investment allocation between the government and private sector though Public Private Partnership (PPP).

be supported by an effective bureaucracy which is supported by strong institutional commitment and the implementation of good governance. Fourthly, the establishment of inter region connectivity in Indonesia. In this case, the government becomes the motor for the establishment of inter region connectivity which can be realized by implementing an integrated system between national logistics, national transportation system, regional development and communication and information systems. Fifthly, food, water and energy independence policy. This is an essential prerequisite to support successful development in Indonesia. Sixthly, Social Security and Poverty Alleviation. The government is responsible for implementing the social security system to protect the public against economic development risks. Hence, the government needs to provide social security and conduct poverty alleviation efforts sustainably by creating many jobs. Basically, the economic corridor concept uses the regional approach to accelerate the economy by resolving various regional development issues. 6 economic corridors have been identified covering most of Indonesias area which are specifically enumerated as follows: East Sumatera Northwest Java, Northern Java, Kalimantan, Sulawesi, East Java Bali Nusa Tenggar a and Ma luku Isla nds and Pa pu a. Indonesia Economic Corridors basically consists of the main land access master plan which mainly connects economic centers and supporting land accesses that connects focus sectors to facilities/supporting infrastructures throughout Indonesia. Therefore, the basic development of economic corridors in Indonesia will focus on national connectivity (intra and inter island as well as international connectivity). The basis of the development of Indonesias economic corridors is aligned with the four main concepts, namely road map, the national logistics system, the national transportation system and regional development. In addition to intra and inter island connectivity, economic corridor development also aims to enhance regional and global connectivity. Within the regional and global scope, national connectivity is strengthened by the economic corridor concept and is expected to connect Indonesia with regional economy centers such as ASEAN and the world (global) as an effort to enhance national competitiveness. It is very

MP3EI is developed based on various basic principles on successful development that requires change in the point of view and attitude of all components of the nation
These changes should start from the Government along with its bureaucracy and should be followed by increased productivity, innovation, and creativity through the development of science and technology. In addition, the role of the business sector in economic development must also be increased. To achieve success in development, there are several requirements that must be met. Firstly, the role of the government and business sector in development. The business sector (private, state and local enterprises) plays a major and important role in development, especially in increasing investments and job creation. Meanwhile, the Government is responsible for creating a conducive macro economy condition for investments. Therefore, the commitment of the business sector and government becomes crucial to support the implementation of policies. Secondly, reformation of government financial policies. Budget policies must be made by creating a credible and sustainable State Budget (APBN) and it must prioritize accelerated growth to create equitable and sustainable development. Thirdly, bureaucracy reformation. The Acceleration and Expansion of Indonesia's Economic Development needs to
SUSTAINING PARTNERSHIP - National Connectivity 2011 Special Edition

important to maximize the benefits of regional and global connectivity.

INDONESIA ECONOMIC CORRIDORS


Indonesia Economic Corridors or MP3EI is implemented to accelerate and expand economic development in Indonesia through the development of 8 (eight) main programs that comprise of 22 (twenty two) main economic activities located throughout Indonesia. The development of those 8 (eight) major programs include: the ma nu facturing, m ining, agr iculture, ma rine, tour ism, telecommunications and energy industry and the development of national strategic zones. The focus of those 8 (eight) main programs covers 22 (twenty two) main activities such as: the ironsteel, food, beverages, textiles, transportation equipment, shipping, nickel, copper, bauxite, palm oil, rubber, cocoa, fishery, tourism, telecommunications, coal, and oil and gas industry as well as the development of Jabodetabek Metropolitan and Sunda Strait. The main strategy of the implementation of MP3EI is done by integrating the 3 main elements.

Firstly, the development of a 6 (six) Indonesia Economic Corridors, namely: the corridors of Sumatera, Java, Kalimantan, Sulawesi, Bali Nusa Tenggara and Papua Maluku Islands. These 6 (six) economic corridors are developed through the development of growth centers in each corridor by developing industrial clusters and Special Economic Zones (SEZ) that operate based on the key resources of each economic corridor. The development theme of these six economic corridors has been determined according to the potentials possessed by each region and the desired development goal. Secondly, strengthening the locally integrated and internationally connected national connectivity. The strengthening of national connectivity aims to improve the distribution of goods and services and reduce logistics transaction costs. Within the context of the development of a locally integrated and internationally connected national connectivity, the development and strengthening of connectivity is done by strengthening intra and inter connectivity of economic growth centers and inter corridor (island) connectivity to smoothen the collection and distribution of raw material, semi finished materials and final products moving in and out of the corridors (islands).

INDONESIA ECONOMIC CORRIDORS DEVELOPMENT


Sumatera Corridor: Center for Production and Processing of Natural Resources and As Nations Energy Reserves Kalimantan Corridor: Center for Production and Processing of National Mining and Energy Reserves Sulawesi Corridor: Center for Production and Processing of National Agricultural, Plantation, Fishery, Oil & Gas, and Mining

Java Corridor: Driver for National Industry and Service Provision

Papua Maluku Islands Corridor: Center for Development of Food, Fishery, Energy and National Mining Bali Nusa Tenggara Corridor: Gateway for Tourism and National Food Support
Source: Master Plan for the Acceleration and Expansion of Indonesia's Economic Development (MP3EI) 20112025, Coordinating Ministry of Economic Affairs
National Connectivity 2011 Special Edition - SUSTAINING PARTNERSHIP

MP3EI BACKGROUND

Meanwhile, international connectivity is enhanced by strengthening infrastructure networks, communications networks and commodity movement (goods, services and information) effectively and efficiently as the gateway for inter country trade and tourism. Thirdly, accelerating capacity building of human resources in Indonesia and developing science and technology to support the development of major programs in each economic corridor. Considering the demography bonus which Indonesia will have in the future, the quality of human resources must be enhanced. Several policies are implemented to improve the quality of resources such as by improving the quality of education including higher education, vocational education, and training specifically related to the development of major programs; increasing technological competence and skills; enhancing research development activities through collaboration between the government, business sector and higher education institutions and develop a national sustainable innovation system. Regarding infrastructure development needs, the development of major economic activities within Indonesia Economic Corridors needs to be supported by an abundant amount of energy resources. With the presence of Indonesia Economic Corridors, the electricity needs in Indonesia is predicted to reach approximately 90,000

MW in 2025 (in peak condition). Electricity is used to support the development of major economic activities within the corridor. The fulfillment of energy and other infrastructure needs will certainly require a significant amount of investments. In terms of investment needs to support the development of Indonesia Economic Corridors, indications show that IDR 4,021 trillion will be invested. Of the total estimated investment, the government will contribute around 10% in the form of basic infrastructures such as roads, seaports, airports, railroads and power plants. The remaining contribution will be provided, from th e ro l e o f the p ri va te s ecto r, BU MN s a nd oth er s . In general, MP3EI can be regarded as a manifestation of the collaboration between the government and the business sector as an effort to develop a range of key sectors and to identify infrastructure needs to develop Indonesias potential. Many have realized that the successful development of Indonesia in the future requires the participation of the business sector. Hopefully, mutual commitment of various stakeholders could be established through MP3EI to transform Indonesias economy to achieve Indonesias vision of an independent, developed, just and prosperous society.(*)

Indications of Investments in the Major Economic Activities of 6 Corridors


IDR Trillion

4.000 233 3.000 945 2.000 1.290 1.000 714 0


Sumatera Java Kalimantan Sulawesi Bali - Nusa Papua Total Tenggara Maluku island 6 Corridors

622

309

51%

Private Sector

4.012 10% 18%

Government BUMN

21%

Mix

% invetment per corridor

18%

32%

24%

8%

3%

15%

Indicated value of investments based on investors

Source: MP3EI 2011-2025, Coordinating Ministry of Economic Affairs

SUSTAINING PARTNERSHIP - National Connectivity 2011 Special Edition

MP3EI and RPJPN - RPJMN

Law no. 25/2004 regarding the National Development Planning System has mandated the integration of the long term, medium term and annual development plan. This also indicates that the Law acts as a legal umbrella for the implementation of development plans in order to guarantee the achievement of the countrys goals.
Meanwhile, the explanation of Law No. 17/2007 which is an integral part of the Law, explains that to achieve equitable distribution of development, regional development will be implemented to improve the living quality and welfare of the people as well as to equitably distribute it. The National Long Term Development Plan (RPJPN) 2005-2025 has been endorsed and became the basis for development programs for a period of 20 years commencing from 2005 to 2025. In addition, RPJPN 2005-2025 also serves as a guideline for the preparation of the National Medium Term Development Plan (RPJMN) which is a development program for the next 5 years. The Presidents vision and mission is conveyed in the RPJMN and it must also refer to RPJPN. Within this context, there is a clear relationship between RPJPN and RPJMN. The question that arises is where is Indonesia economic corridors positioned in the National Development Planning System and how does it interrelate with RPJPN and RPJMN? Another matter that indicates interrelation is periodicity between the two documents. The period of MP3EI starts from 2011 to 2025. 2025 is also the end of the implementation of RPJPN. Despite having the same completion period, the MP3EI document is not intended to replace the RPJPN document. The MP3EI document is actually a complementary document that integrates with the RPJPN document and is specifically aimed at a cc e l e r a ti ng th e de v e l o p m en t o f Ind o n es i a . In the MP3EI document, the development of major economic activities and the planned development of facilities and infrastructure to support economic activity are elaborated in greater detail with reference to the RPJPN. This is reflected in the vision Creating an Independent, Developed, Just and Prosperous Indonesian S o c ie t y w h i c h w il l b e a c h i e v ed by 20 2 5 . Besides referring to RPJPN, the MP3EI document also considers the National Action Plan for Reducing Greenhouse Gas Emission (RAN-GRK) which is a national commitment related to climate change. Another document considered in the development of MP3EI is the National Strategic Spatial Plan. Given that the MP3EI document contains a variety of strategic infrastructure development plans which aims to support economic activity, the development of various facilities and infrastructures should refer to the National Strategic Spatial Plan so a conflict does not arise between infrastructure development and efforts to preserve protected areas.

THE RELATIONSHIP BETWEEN MP3EI AND RPJPN


MP3EI is developed with the vision Creating an Independent, Developed, Just and Prosperous Indonesian Society. Th is vision aligns with the national developments vision as set out in RPJPN. The interrelated vision indicates that MP3EI is an integral part of the National Development Planning System.

National Connectivity 2011 Special Edition - SUSTAINING PARTNERSHIP

MP3EI and RPJPN - RPJMN

THE RELATIONSHIP BETWEEN MP3EI AND RPJMN


The next question is what is the relationship between MP3EI and the RPJMN document? In terms of their period, the MP3EI document clearly has a longer implementation period compared to the RPJMN document. The RPJMN document is a 5 year period document which reflects the vision and mission of the elected President and Vice President. Annually, the RPJMN document is elaborated more technically through the formulation of the Annual Work Plan (RKP) which forms the basis for the determination of programs and budget allocation for every sector and region. Meanwhile, the MP3EI document is prepared with a period commencing from 2011 until 2025. Hence, several programs and activities mentioned in the RPJMN document is a part of the development of Indonesia economic corridors which will be implemented for approximately 15 years with reference to RPJPN.

There are several connections between the RPJMN document (RPJMN 2010-2014 currently becomes the reference for the 5 y ea r d ev el o pm e nt p l an ) a nd th e M P 3 EI d o cu m en t. Firstly, the MP3EI document that contains a variety of Indonesias economic development plan for 2011-2025 serves as a reference for the formulation of RPJMN, particularly issues related to economic development and connectivity. By referring to the MP3EI document, the RPJMN document becomes the basis for the formulation of RKP and Draft State Budget (RAPBN) so the various programs and major activities set forth in MP3EI could be implemented. Secondly, the relationship between the MP3EI and RPJMN 20102014 document lies within the context of regional development. RPJMN 2010-2014 incorporates strategies and development directions that are divided in several regions. Meanwhile, MP3EI has also divided several economic corridors covering several islands such as Sumatera, Java, Kalimantan, Sulawesi, Bali-Nusa Tenggara and Papua and Maluku Islands.

The Connection Between MP3EI and National Development Plan

Source: MP3EI 2011-2025, Coordinating Ministry of Economic Affairs

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SUSTAINING PARTNERSHIP - National Connectivity 2011 Special Edition

Therefore, the development of policy and strategy directions in RPJMN which divides the corridors according to each island must consider the development strategies set forth in the MP3EI document. What about RPJM at the regional level? Considering that the locus of the development MP3EI is based on the division of areas, more specifically in Indonesia economic corridors, the role of the central government is merely limited to regulation formulation and investment allocation for the central government (government and private sector). In contrast, the role of the regions grows larger where regions act as the location and plays the role of the direct user of the determined corridors. In addition, regions will also play a role in drafting regulations and determining investment allocation in the region (government and private). Therefore, regions need to synergize the allocation of resources and the development of key sectors, infrastructures, and spatial planning with th e co n ce p t o f In d o ne si a ec o no m i c c o r r i d or s.

Such synergy is realized with regulatory support, location, resources, and implementation through the development implementation framework and determination of the development targets of regions as stated in the development plan of RPJMD and Regional Work Plan (RKPD). With such synergy, Indonesia economic corridors are expected to quickly be implemented and integrated in the central or regional development plan. Therefore, the prioritization of regional development plans is expected to support the developed economic corridors.

SYNERGY BETWEEN PLANNING DOCUMENTS


As a document, MP3EI contains various guidelines for the development of more specific major economic activities which are equipped with infrastructure needs and several recommendations for changes/revisions of legislations. Nevertheless, synergy between the planning documents is r e qu ir e d t o g u a r a nte e s u c ce s s fu l d ev e l o pm en t.

The Connection between MP3EI and Planning and Implementation

Renstra KL

Guideline

Renja KL

Guideline

RKA - KL

Detail of APBN

Guideline

Refer

Refer

Refer

MP3EI (Indonesias Economic Corridor)

Refer

Guideline

MP3EI Action Plan


Refer Refer Refer Guideline

Refer

RPJPN
Refer

Guideline

RPJMN
Consider

Elaborate

RKP

RAPBN

APBN

Align with Musrenbang

RPJPD

Guideline

RPJMD
Guideline

Elaborate

RKPD
Refer

Guideline

RAPBD

APBD

Renstra SKPD

Guideline

Renja SKPD

Guideline

RKA SKPD

Detail of APBD

UU SPPN

UU KN
Source: MP3EI 2011-2025, Coordinating Ministry of Economic Affairs

National Connectivity 2011 Special Edition - SUSTAINING PARTNERSHIP

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MP3EI and RPJPN - RPJMN

Such synergy is realized with regulatory support, location, resources, and implementation through the development implementation framework and determination of the development targets of regions as stated in RPJMD and RKPD.

b. Lack of law enforcement. Security and order threats are still relatively high, including in tourism areas. Therefore, local governments should increase security and order through the implementation of strict rules and sanctions for offenders; c. Harmonization of laws and regulations. The local government together with the central government should increase the harmonization of laws and regulations. Obstacles in inter region trade which can potentially create high economy costs in the form of levies and tax duplications must also be reduced; and d. Coordination between the central, provincial and regional governments to develop the area into an economic corridor. By considering the differences in the characteristics of each region, development synergy between regions is the answer to enco ura ge increa sed pr oductivity and na tional competitiveness by prioritizing efficient and effective management of natural resources in order to encourage harmony and balance of inter region development, observe sustainable development principles and maintain sustainable development. The strong role of the government will guarantee synergy in all existing development plan concepts of RPJPN, RPJMN, RKP, RPJPD, RPJMD, RKPD, Indonesia economic corridors and various Regional Master Plans. The synergy of various development plan concepts will result in the achievement of the desired development targets both at regional and national levels. Such synergy is realized with regulatory support, location, resources, and implementation through the development implementation framework and determination of the development targets of regions as stated in RPJMD and RKPD. With such synergy, acceleration and expansion efforts of Indonesias economic development through each economic corridor is expected to quickly be smoothly implemented and integrated in the central or regional development plan. Therefore, the prioritization of regional development plans is expected to support the acceleration of the development of the determined regions. (*)

As a planning document, the MP3EI document is closely related with the Long Term Development Plan (RPJP) and RPJMN. MP3EI is formulated by combining 2 (two) kinds of approaches, namely sector and regional (regional development) whic h are integ rate d i nto the development of economic corridors. Those 2 (two) kinds of approaches are also contained in the RPJMN and RPJPN planning documents which also combines sector and regional planning.
The sector approach is based on the identification of key sectors that has high development prospects globally and is based on the idea that Indonesia has the potential and capability for enhancing its competitiveness in the future. Meanwhile, regional approach or regional development is applied to propagate the development of key sectors that have been determined the 6 (six) identified economic corridors. To support the development of a regions key potentials and to create planning synergy with the central government, planning in areas that serve as the location for the implementation of economic corridors should be focused on the following issues: a. Acceleration on the determination of the Provincial Strategic Spatial Plan (RTRW) to resolve the conflict of the utilization of land between forest, agriculture and mining areas;

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SUSTAINING PARTNERSHIP - National Connectivity 2011 Special Edition

ECONOMIC CORRIDOR

THE CONNECTIVITY OF SIX ECONOMIC CORRIDORS


The Master Plan for the Acceleration and Expansion of Indonesias Economic Development (MP3EI) has developed six economic corridors which are grouped according its territory based on the natural resources potential possessed by each territory by considering inter region connection.
Those six economic corridors include the Sumatra, Java, Kalimantan, Sulawesi, Bali, Nusa Tenggara, and Papua Maluku Islands corridor. Intra regional connectivity will be developed in each corridor to connect the main economic centers in each corridor internally and externally with other corridors and the world market. Furthermore, connectivity strengthening aims to expand economic development to the surrounding areas, especially to underdeveloped, remote and border areas. Hence, successful acceleration and expansion of Indonesias economic development depends on how strong Indonesias national and international economic connectivity is. Increased connectivity in those six economic corridors is based on the integration of the four elements of national policy which consists of the National Logistics System (Sislognas), the National Transportation System (Sistranas), Regional Development (RPJMN/RTRWN) and Information and Communication Technology (ICT). Integration is performed to achieve effective, efficient and integrated national connectivity in order to enhance national competitiveness. The integration of the four main elements aims to achieve the vision of national connectivity which is locally integrated and globally connected. Locally integrated means integrating the existing connectivity system effectively and efficiently to support the mobilization of goods, services and people to all parts of Indonesia. To develop an integrated local connectivity, transportation networks must be integrated with the transportation hubs. In addition to transportation networks and to support connectivity, telecommunications and information networks should also be integrated.
National Connectivity 2011 Special Edition - SUSTAINING PARTNERSHIP

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ECONOMIC CORRIDOR

Four Main Elements that Form National Connectivity

Source: MP3EI 2011-2025, Coordinating Ministry of Economic Affairs

Such connectivity integration should be established in all regions in Indonesia. Some areas in eastern Indonesia tend to have minimal transportation networks due to its geographical condition and other aspects. At least, we must observe how to integrate connectivity effectively and efficiently to encourage equitable development between regions. Meanwhile, globally integrated means effective and efficient national connectivity system which interrelates with one another and acts as a door to the international world. In this case, the development of seaports and airports that have trade and industrial facilities as well as an effective and efficient custom will become the key for achieving that goal. In terms of connectivity, the Government is the driving force of the creation and development of basic infrastructures to support economic integration. In order to support economic integration, the government can identify transportation hubs and distribution centers to facilitate the logistical needs for main and supporting commodities and enhance communications and information technology networks to facilitate all economic activities, government activities and the national education sector.
SUSTAINING PARTNERSHIP - National Connectivity 2011 Special Edition

When developing the connectivity system in an economic corridor, effectiveness and efficiency and global connectedness is the main factor that must be achieved. Some principles should be considered to achieve it, such as: (1) enhanced flow of goods, services and information, (2) reduced logistics costs, (3) reduced cost inefficiencies, (4) realized equitable access across the region, and (5) realized synergy between growth centers. With regards to efforts to strengthen connectivity in six economic corridors, below are several enhancements that focus to encourage the de velo pm ent th em e o f e ach ec ono mic co rr ido r.

Connectivity Development of Sumatra Economic Corridor


Sumatra Island has great potential as a growth center in the ASEAN sub region, Asia Pacific and other international areas. In addition, Sumatra Island has the most strategic trading access compared to other major islands in Indonesia. It possesses a complete set of natural resources such as agriculture, plantation, fishery, forestry and mining.

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Based on this factor, Sumatera Economic Corridor is developed as a Center for Production and Processing of Natural Resources and As Nations Energy Reserves. The development of Sumatera Economic Corridor is directed to several main economic activities such as the development of palm oil, rubber, coal and steel. To support the development of each main economic activity, efforts to enhance connectivity such as the construction of toll roads and railway lines is required. Sumatra is strategically positioned as it is adjacent to another country. Therefore, connectivity strengthening focuses on the development of international hubs such as hub ports for international shipping lines on the eastern and western coast of Sumatera as an alternative to open and expand development opportunities outside Java, while reducing Javas load.

Connectivity strengthening through infrastructure development is focused on the northern part of Java which is marked by the construction of the Trans Java Roll Road and railway line which connects loci in order to smoothen the movement of commodities from north to south Java and vice versa. In addition, seaports and airports are also developed as an attempt to smoothen the flow of commodities within the corridor and between corridors. The development of major economic activities and connectivity in Java Economic Corridor is expected to address the disparity issue of the Gross Regional Domestic Product (GRDP) between regions as well as to encourage greater global integration.

Connectivity Development of Java Economic Corridor


The rapid economic growth in Java is not balanced or supported by adequate natural resources. On the other hand, Java has more adequate infrastructures compared to other areas outside Java. Java remains to be the most attractive island for investments as it has more adequate infrastructures and is home to the center of administration. Therefore, Java Economic Corridor is developed to become the Driver for National Industry and Service Provision.

Connectivity Development of Kalimantan Economic Corridor


Aside from possessing adequate amount of natural resources in the agriculture, mining and fishery sector, Kalimantan is the development center in Eastern Indonesia. It is strategically positioned and supports inter regional cooperation. Furthermore, Kalimantan has an enormous potential in the mining sector (oil, gas, gold and coal), forestry (wood), plantation (palm oil and rubber) as well as sea and land fishery.

The Framework of National Connectivity

Source: MP3EI 2011-2025, Coordinating Ministry of Economic Affairs

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ECONOMIC CORRIDOR

The development of Kalimantan Economic Corridor is designated to become the Center for Production and Processing of National Mining and Energy Reserves. The main economic activities in Kalimantan Economic Corridor will focus on the four economic centers of Pontianak, Palangkaraya, Banjarmasin and Samarinda City which are connected through the Corridor Connecting Line. In accordance with the Acceleration and Expansion of Indonesias Economic Development, several major economic activities have been identified. These major economic activities have a potential to support economic growth in Kalimantan Economic Corridor in the future, namely: iron steel, bauxite and timber. As a large region, some major economic centers in Kalimantan mentioned in the spatial plan of Kalimantan will be connected with the Trans Kalimantan road and railway network which will be integrated with river transportation. With many private companies engaged in the mining sector in Kalimantan, infrastructure development in Kalimantan will be conducted through the infrastructure development consortium model. Through this model, companies engaged in mining, coal in particular, will share the development and usage of infrastructures such as railway and roads so efficiency will be increased.

the agriculture, mining and fishery sector. Sulawesi Island has a great potential in the plantation sector (cocoa, cloves, coffee and cashew nut), marine fishery (tuna and skipjack), crops (rice and corn) and mining (nickel, asphalt and marble). Based on the various existing potentials, Sulawesi Economic Corridor developed as the Center for Production and Processing of National Agricultural, Plantation, Fishery, Oil & Gas, and Mining Infrastructure Development in Sumatera focuses on the movement of goods (crops and mining products) to a processing or industrial area which will then be transported to the port. Water and energy infrastructure development also applies the same focus. Water and energy infrastructure is developed to support the production of agriculture, plantation and mining in every province. The development of Sulawesi Economic Corridor will evolve in accordance with the construction and existence of Trans Sulawesi Toll Road which links South Sulawesi with North Sulawesi. In addition, given that the corridor is located by the Pacific Ocean and international shipping line, several locations should be determined to function as international hubs. Hopefully, the determination of international hubs in Eastern Indonesia will accelerate development in Eastern Indonesia which is dominated by islands.

Connectivity Development of Sulawesi Economic Corridor


Sulawesi is the development center in Eastern Indonesia, is strategically positioned and supports inter regional cooperation. In addition, the region possesses adequate natural resources in

ILUSTRATION OF THE ECONOMIC CORRIDOR

Source: MP3EI 2011-2025, Coordinating Ministry of Economic Affairs

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Connectivity Development of Bali Nusa Tenggara Economic Corridor


As an integrated region, the region of Bali Nusa Tenggara actually has huge development potential due to its natural resources in particular, livestock, fishery and tourism. The large marine fishery resources potential have not been managed optimally yet. The potential of field, forest and plantation resources is also large so there is an opportunity to manage those natural resources for regional economic development. The Development of Bali Nusa Tenggara Economic Corridor is designated to become the Tourism Gateway and National Food Support. In the long run, tourism activities in this corridor will become the driving force of economic development in Bali Nusa Tenggara Economic Corridor. This can be achieved through the diversification of tourism products, expansion of tourism area, sustainable development of the competitiveness of tourism destinations and the development of a market share with high purchasing power. Infrastructure development is conducted in line with the development of tourism destinations within the corridor. The development of farming activities will be pursued consistently through the development of advanced technology to improve the quality of cattle, integrate faming activities with crops to guarantee the food source for livestock, develop processing industries and increase the capacity of road and seaport infrastructures for the distribution of farm products. By considering the geographical condition of this corridor which comprises of islands, transportation in Bali Nusa Tenggara Economic Corridor is developed with an emphasis on land, sea and air connectivity which connects islands and provinces. This connectivity system will support all major economic activities (tourism, farming and fishery) as well as other activities that have high investment value. Mining exploration is not prioritized in this corridor because it would deliver negative impacts on the tourism, fishery and farming sector. Seaport and airport development is prioritized for existing ports located adjacent to the major economic activity loci in order to make it more effective, efficient and to minimize transportation costs.

Connectivity Development of Papua Maluku Islands Economic Corridor


Maluku Islands has a large development potential due to its natural resources, especially fishery and marine tourism. It has massive marine fishery resources potential but it has not been managed optimally yet. In contrast, Papua still has a great opportunity for development in terms of natural resources, especially mining, forestry, fishery, plantation and marine tourism. Based on various existing potentials, Papua Maluku Islands Economic Corridor is developed to become the Center for Development of Food, Fishery, Energy and National Mining. The development of Papua Maluku Islands Economic Corridor will focus on the preparation of the Sofifi-Ambon-SorongManokwari-Timika connectivity. Merauke Integrated Food and Energy Estate in Merauke which is presently being developed should be supported by the preparation of internationally scaled infrastructures with the development of airports and seaports. In addition, land connectivity from Timika-Jayapura-Merauke should also be developed in line with the growing economic centers in each corridor hubs. Considering that the costs required for the development of this area is very large, foreign funds may be required. Therefore, the government can start the feasibility study on the development of the area to ease the marketing of those areas to attract investors. (*)

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ACTION PLAN

National inter region connectivity system and its linkage with global connectivity is required to support national economic integration. The national logistics system failed to operate efficiently and effectively due to lack of support from domestic connectivity, technology and reliable information system.

As a result, various problems such as high price disparity between regions arise. These problems remain to be a major obstacle in the development of competitive main economic corridors, particularly in eastern Indonesia. The condition expected from inter region connection is strong national economic connectivity (intra and inter region) as well as strong international economic connectivity between Indonesia and the world market. Indonesias national connectivity is an integral and inseparable part of global connectivity. Therefore, Indonesias national connectivity must be connected with regional and global economic centers in order to enhance national competitiveness. Strengthening the national connectivity is essential to maximize the benefits of regional and global/international connectivity. This can be realized through the integration of the four elements of national policy which consists of the National Logistics System (Sislognas), the National Transportation System (Sistranas), Regional Development (RPJMN / RTRWN) and Information and Communication Technology (ICT / ICT). In the connectivity scheme of planning documents (see the scheme on the connection between the Master Plan for the Acceleration and Expansion of Indonesias Economic Development (MP3EI) and the national development plan document), it is clear that the MP3EI document must be restructured in the form of an action plan. The

action plan should be closely associated with the Government Work Plan (RKP) and is used to develop the Draft State Budget (RAPBN). In addition, the MP3EI document also aims to become a guideline for the development of investment policies for the private sector and Public Private Partnership (PPP).

MP3EI ACTION PLAN


Indonesia needs to provide infrastructures which aims to support economic activities. Infrastructure availability has a broad spectrum. Infrastructures that encourage inter region connectivity should receive main attention to accelerate and expand economic development in Indonesia. Infrastructure provision that support connectivity will reduce transportation and logistics costs, also increasing the competitiveness of products and accelerating economic movement. Infrastructure connectivity includes the development of transportation and ICT lines along with all related rules and regulations. Such connectivity must be supported by the national transportation system that synergizes with multi and inner transportation modes by considering the characteristics of each transportation mode, regional development, geographical aspects, region specific factors and selection of appropriate technologies.

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The Strengthening National Connectivity action plan in MP3EI aims to: (1) connect major economic growth centers in order to maximize growth, (2) expand economic growth through increased accessibility of economic growth centers and (3) widely disseminate the benefits of development (inclusive and equitable growth) through the enhancement of connectivity and basic services in underdeveloped, remote and border areas to ensure equal distribution of development. Specifically, the purpose of the development of the MP3EI Connectivity Master Plan are to (1) Become a guideline that includes goals, strategies, and policies on the acceleration of the implementation of the development and funding of MP3EI activities that encourage national connectivity; (2) Become a guideline for the Economic Corridor Team and activity implementers in accordance with the goals and targets of MP3EI activities that encourage connectivity which will be implemented in 2011-2012; (3) Coordinate and synchronize the existing resources at the central, provincial and regency/municipal level in the corridor to increase efficiency in the implementation of 2011-2012 MP3EI activities; either in terms of funding from the State Budget, Provincial Regional Budget (APBD), Regency/Municipal APBD, contributions from donor institutions and PPP or other sources of funding; and (4) Provide inputs for the formulation and improvement of planning documents in the central and regional level.

The connectivity action plan in the MP3EI framework is formulated based on two principles. First, the implemented connectivity action plan is expected to provide added value to the existing infrastructures. Added value can be gained by improving the condition of existing facilities infrastructures, improving infrastructure management and efficient usage of infrastructures. Second, the connectivity action plan is implemented with a focus on increased amount of infrastructures and new infrastructures. These two items could be implemented inter corridor and within a certain corridor. Inter corridor means that the connectivity action plan could be implemented in all corridors or is not just focused on one specific corridor with activities in the form of policy or regulation formulation for small scaled projects. In contrast, certain corridor means that the activities of the action plan only focus on certain corridors and is project based. The action plan is expected to strengthen national connectivity that focuses on several national development priorities related to physical connectivity such as the development of ports, airports, railway, and roads in the transportation sector; energy development; national logistics system and ICT development which have been divided in each economic corridor.

Concepts of Gate Port and International Airport in the Future

Source: MP3EI 2011-2025, Coordinating Ministry of Economic Affairs


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ACTION PLAN

The action plan for the period of 2011-2015 is the first phase of the quick win phase. In this phase, activities are focused to shape and operate MP3EI implementing institutions which will develop an action plan for debottlenecking regulations, licenses, incentives and the development of supporting infrastructures needed and realize investment commitments (quick wins). Policy and regulation formulation in this first phase emphasizes on inter corridor development. In addition, national connectivity is strengthened especially with the determination of global hubs for seaports and airports in the corridors in Western and Eastern Indonesia. Another issue developed in the first phase of the formulation of the MP3EI Action Plan is the preparation of high quality human resources. This corresponds to the demographic bonus that Indonesia holds until 2030. The preparation of human resources in focused on the establishment of centers of excellence related to the main economic corridors of each corridor. This is a first step towards the development of ICT capacity. Specifically, in the short term, MP3EI focuses on the implementation of various action plans which must be completed by 2014. The short term action plan aims to ensure that strategic initiatives can be implemented and can serve as a basis for the acceleration and expansion of economic development in subsequent phases. In the second phase (2016-2020), the activities will be focused to accelerate the development of long term infrastructure projects, strengthen innovation ability to increase the competitiveness of MP3EI main economic activities, enhance economic governance in various fields and encourage the expansion of industrial development which will create added value. In the third phase (2021-2025), MP3EI activities will emphasize on strengthening industrial competitiveness to win the global competition and the application of high technology for sustainable development.

activity derives from APBN and is supported by funds from State Owned Enterprises (BUMNs)/APBD/Private Sector. The activities mentioned in the MP3EI Action Plan are prioritized activities aimed to overcome the strategic issues of each corridor in accordance with the economic potentials possessed by each economic corridor. Following are several prioritized connectivity activities that are divided according to its corridor in the MP3EI action plan: Firstly, Sumatra Economic Corridor. The prioritized connectivity activities in this corridor focus on improving the quality of roads, railways, electricity and port services in order to develop main economic activities such as palm oil, rubber, coal and steel industry. Furthermore, inter connectivity development in the corridors of Sumatra and Java is also prioritized through the construction of Sunda Strait Bridge (JSS). Secondly, Java Economic Corridor. Prioritized connectivity activities are focused to increase electricity provision, improve service in major ports in Jakarta, Semarang and Surabaya to develop the main economic activity of textile and to construct of jetties to support the shipping industry. In the telematics sector, connectivity is prioritized on the development of secure communication and information systems. Meanwhile, Jabodetabek area is developed through various prioritized activities such as airport and seaport development, monorail construction and the development of a flood control system in Jabodetabek. Thirdly, Kalimantan Economic Corridor. Prioritized connectivity activities in this corridor focus on the development of coal railway networks, improvement and increase of river and seaport capacity,

National Connectivity Vision

PRIORITIZED CONNECTIVITY ACTIVITIES IN MP3EI


Prioritized connectivity activities in the first phase is divided into two parts, namely inter corridor prioritization and corridor prioritization. Corridor prioritization is an activity performed by the ministries/institutions of each corridor. Funding for such

Source: MP3EI 2011-2025, Coordinating Ministry of Economic Affairs

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improvement and increase of power plant capacity and improvement of road access for the economic activities of palm oil, steel and bauxite. Fourthly, Sulawesi Economic Corridor. Prioritized connectivity activities in this corridor focus on the improvement of access roads and irrigation facilities to support the main economic activity of agriculture. Meanwhile, to support the main economic activities of cocoa and nickel, several activities are prioritized to increase port capacity, road capacity, electricity supply, water supply and telecommunications access. To develop the fishery economic activity, the following activities are prioritized: the development of fishing ports and Fish Processing Units (UPI) and the construction of fish storage facilities. In order to develop the main activity of oil and gas, oil and gas refining infrastructures as well as fuel storage facilities are required. Fifthly, Bali-Nusa Tenggara Economic Corridor. Prioritized connectivity activities in this corridor focus to enhance airport developm ent, enhance capacity building, develop road infrastructures and construct new power plants to support the main economic activity of tourism, increase fishery production, develop the salt business and support livestock production.

Sixthly, Papua Maluku Islands Economic Corridor. Prioritized connectivity activities in this corridor focus on the development of water resources infrastructure networks, improvement and development of sea and river ports, improvement and development of roads and bridges, construction of power plants to support the development of the main economic activities of palm oil, copper, nickel, oil and gas and fishery. All of the prioritized connectivity activities in MP3EI are implemented through synergized development between the central and local government as well as between regions. Synergized development between regions is implemented by strengthening national connectivity that utilizes the regional and global geo strategic position. This will become the backbone that forms national connectivity and is expected to function as an instrument for creating balance in regional economy. This does not only encourage equitable distribution of economic activities to all parts of Indonesia, it can also create independence and competitiveness of an integrated national economy. (*)

Java Economic Corridor

Source: MP3EI 2011-2025, Coordinating Ministry of Economic Affairs


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EXPERT OPINION

Opinion About Connectivity in MP3EI

Prioritization of Construction
On 20 th May 2011, President Susilo Bambang Yudhoyono signed the Master Plan for the Acceleration and Expansion of Indonesias Economic Development or MP3EI. This Master Plan will be implemented in 2011 2025 with the hope that Indonesia will stand equally with developed countries in the world.
In 2025, Indonesia will gain a title as a developed country with an income per capita ranging from USD 14,250 15,500 with a Gross Domestic Product (GDP) of about USD 4.0 - 4.5 trillion. To realize this vision, the real economy must grow by 6.4% to 7.5% in the period of 2011 2014 and approximately 8.0% to 9.0% in the period of 2015 2025. Economic growth must be accompanied by inflation reduction of 6.5% in the period of 2011 2014. Therefore, the inflation rate will become 3.0% in 2025. How could Indonesia 2025 vision be achieved? At least, there are three main strategies in MP3EI. Firstly, develop economic potential through the economic corridors. Secondly, strengthen national connectivity. Thirdly, strengthen human resource capacity and national science. The strategy of national connectivity must be supported because as the worlds largest archipelagic nation, Indonesia has a vast territory. Indonesia stretches for 5,200 km long and is 1,870 km wide. Facts on the field shows that lack of inter island transportation has increased distribution costs, thus drastically increases the price of goods. The economies become focused on intra island economy and not inter island economy. Economic differential power is scattered on various islands. As a consequence, it could not be united due to the absence of connective modes. If domestic connectivity is good, the world will indirectly be closer to Indonesia because the countrys geographical location is very strategic as it is located adjacent to Malacca Strait which is the main route for global container ships. In relation to the development of national connectivity, infrastructure development must be prioritized. For instance is the development of roads, ports, airports until supporting infrastructures such as water. Despite that infrastructure development is the governments duty, the government has limited funding ability. Therefore, the government has included 33 Public Private Partnership (PPP) projects in the MP3EI document. According to the calculation of the Ministry of National Development Planning (PPN)/National Development Planning Agency (Bappenas), the target for funding of infrastructure development financed by the PPP scheme will reach IDR 327.8 trillion.

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PPP PROJECTS
PPP projects are encouraged to strengthen infrastructure availability, said the Director for Public Private Partnership Development of the Ministry of PPN/Bappenas, Bastary Pandji Indra. Some of the toll road projects which will be built with the PPP scheme among others include Medan-Kualanamu-Tebing Tinggi Toll Road, Palembang-Indralaya Toll Road, Pekanbaru-Dumai Toll Road, Balikpapan-Samarinda Toll Road and Manado-Bitung Toll Road. On the other hand, some airport and seaport projects include the expansion of Tanjung Priok Port, Kertajati International Airport, Kulonprogo International Airport and the construction of Maloy Port in East Kalimantan. For Vice Minister of Transportation, Bambang Susantono, the most important factor in the implementation of MP3EI is the commencement of construction work. What must be prioritized is construction, construction and construction, he said. According to him, the government is trying to meet the demand. The main function of development is to reduce the widening gap between demand and supply. Presently, the government and State Owned Enterprises (BUMN) have started physical work. Angkasa Pura II, for instance, has initiated the construction of the first foundation at Depati Amir Airport in Pangkalpinang on 24th October 2011; Taha Sultan Airport in Jambi, last Monday; and Supaio Airport in Pontianak, Kalimantan is planned to follow on 27th December 2011. There are three strategies that can be used to realize infrastructure development. Firstly, simplify the licensing process for

infrastructures that will be built by the private sector. The railway construction in East Kalimantan is an example of such simplification. Secondly, focus on the usage of State Budget (APBN) such as in the construction of the double railway tracks of Pantura line. Thirdly, empower the ability of BUMNs to accelerate the development of projects such as the delegation of railway development to PT. Kereta Api Indonesia/Indonesia Railway Company (PT. KAI). In addition, several initiatives are implemented by the Indonesia Port Corporation II (PT Pelindo) to construct port facilities. Chairman of the Indonesian Transportation Society (MTI), Professor Danang Parikesit, of the Faculty of Engineering, Gadjah Mada University in Yogyakarta revealed that there is optimism in the implementation of MP3EI. Various teams have been formed and they have started working. The results are also beginning to appear, he said. Danang hopes that in 2012, various large scale infrastructure projects will be implemented. In fact, these projects have been scheduled since a long time ago. Therefore, MP3EI only introduces old projects with a new face, he said. What Danang means by new face is the categorization of projects within economic corridors. Hence, development can be more prioritized and focused. The classic problem in infrastructure development in Indonesia is land acquisition. The Land Acquisition Bill plays a crucial role in encouraging the smooth implementation of infrastructure projects, especially those that require a vast amount of land such as toll roads.

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EXPERT OPINION

Moreover, the President Director of PT. Jasa Marga Tbk, Frans S. Sunito for example, has always been saying, In this world, only the land acquisition process in Indonesia is conducted through deliberation. As an illustration, the construction of the Trans Java Toll Road that connects Jakarta Surabaya has not been completed due to slow land acquisition. Another example is the construction of the new runway at Soekarno Hatta International Airport in Cengkareng which requires 830 hectares of land. With the new legislation, the land acquisition process will be faster. The Land Acquisition Law which consists of 62 chapters is quite progressive. In fact, some articles state that compensation does no t o nly com e in the for m of ca sh, but also shares.

We need 60,000 trucks per year but the domestic automotive industry is only capable of providing 30,000 trucks per year. We wish to import trucks, but we are constrained in doing so, he said. For Eka, many detailed plans in MP3EI should be reviewed and focused more. I see that many policies are made in the room. More benefits could be obtained if we talk more with the field operators, he said. Meanwhile, Djoko Setijowarno an expert in transportation from Soegijapranata Catholic University reminded various parties to always observe projects overseen by the local government. We should avoid the situation where transportation infrastructures have been constructed but the government does not develop the transportation modes and production centers. Keep an eye on how village roads are constructed and maintained. Do not allow high economic costs to arise due to the local governments ignorance in developing the transportation networks in the region, said Djoko. Similar to other projects, MP3EI is in the mid-term phase where the era is rapidly changing. Thus, it is crucial that programs should be more focused and revised. This should not be avoided as purely intends to accelerate development in this country. (*)

REVISION OF MP3EI
In its development, the National Logistics System (Sislognas) blueprint that aims to support MP3EI is also subject to criticism. For example, the master plan of Sislognas is considered to ignore the development and improvement of land transportation such as logistics trucks. In fact, 90% of goods in Indonesia are transported by logistics trucks. These trucks have not been touched by Sislognas to support MP3EI, said the Chairman of the Land Transportation Organization (Organda), Eka Sari Lorena, when asked for her opinion about MP3EI. Eka shows that from the 11 programs included in quick wins, there is no program which explicitly discusses land transportation. The 7th point only mentions that the balance of competition between land and sea transportation. Ironically, data from MP3EI which quoted from the founder of Independent Research Advisory Indonesia, Lin Che Wei, states that the portion of investment in road infrastructure is 19%. This is larger than railway (18%), ports (7%) and airports (2%). Roads are constructed without improving the users. Therefore, no matter how long roads are built, it will never meet the road demand because road users will never be efficient, said Eka. In essence, said Eka, how could we mobilize goods and people effectively within the economic corridors if the plan is not well prepared? Presently, there are 6 million units of tucks in Indonesia where 64% are aged between 10-24 years. Do not talk about efficiency, said Eka. He added that it is difficult rejuvenate trucks without government incentives.

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PPP PROJECT

33 PPP PROJECTS TO SUPPORT MP3EI


The government has included 33 Public Private Partnership (PPP) Projects in the Master Plan for the Acceleration and Expansion of Indonesias Economic Development (MP3EI) document. The Directorate of Public Private Partnership Development (PKPS) of the Ministry of National Development Planning (PPN)/National Development Planning Agency (Bappenas), stated that the p r o j e c ts w e r e d e l i b e r a te l y i nc l u d e d i n t h e M P 3 E I p r o g r a m t o a c c e l e r a t e i n f r a s tr u c tu r e d ev e l o p m e n t. Bappenas has set a target of IDR 327.8 trillion of funds to finance infrastructure development in the MP3EI document with the PPP scheme. That amount of funds is an accumulation of 33 PPP projects listed in the MP3EI document. The 33 PPP projects as listed in the PPP Book.

PROJECTS IN TRANSACTION PROCESS


Below is the list of projects in transaction process:
No 1 2 3 4
Project Title Project Estimation Value (million)

Location / Corridor East Java / Java Central Tengah / Java DKI Jakarta / Java Central Kalimantan / Kalimantan

Planned Operation

Umbulan Water Supply Central Java Coal Fired System Power Plant 2.000 MW Soekarno-Hatta Airport Manggarai Railway Development Puruk Cahu-Bangkuang Coal Railway

USD 204.20 USD 700 USD 204.20 USD 2,100

2014 2015 2013 2014

READY FOR OFFER PROJECTS


These cover PPP projects that have met the following criteria: (i) The tender document has been completed, (ii) The PPP tender committee has been established and is ready to operate, (iii) The tender scheduled has been determined, (iv) Government support has approved (if required). Below is the list of ready for offer projects:
No Project Title Project Estimation Value (million) Location / Corridor Planned Operation

1 2 3 4 5

South Banten Airport Expansion of Tanjung Priok Port Medan-Kualanamu-Tebing Tinggi Toll Road Strategic Infrastructure and Regional Development of Sunda Strait DKI Jakarta-Bekasi-Karawang Water Supply (Jatiluhur)

USD 213,61 USD 1.170,61 USD 670.40 USD 25.000 USD 189,30

Pandeglang Regency, Banten/ Java Kalibaru Sub District, DKI Jakarta/ Java North Sumatera/Sumatera Banten & Lampung/ Java -Sumatera DKI Jakarta & West Java / Java

2015 2015 2015 2021 2014

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PPP PROJECT

PRIORITY PROJECTS
Are PPP projects that have met the following criteria: (i) Included in the Potential PPP Project Plan proposed by the contractor as an unsolicited project, (ii) Based on the pre feasibility, the project is legally, technically, and financially feasible; (iii) Risk identification and its allocation has been identified, (iv) The PPP scheme has been determined, (v) Government support has been identified (for marginal projects). Below is the list of priority projects:
No Project Title Project Estimation Value (million) Location / Corridor Type of Proposal Planned Operation

Medan-Binjai Toll Road (15,8 km) PPP Modality: > Land acquisition cost and part of construction will be carried out by government. > The concession period will be granted for 35 years. Palembang-Indralaya Toll Road (22 km) PPP Modality: > BOT (Build-Operate-Transfer) > The concession period will be granted for 35 years. Tegineneng-Babatan Toll Road (50 km) PPP Modality: > BOT > The concession period will be granted for 35 years. Kemayoran-Kampung Melayu Toll Road (9,65 km) PPP Modality: BOT Sunter-Rawa Buaya-Batu Ceper Toll Road (22,92 km) PPP Modality: BOT Ulujami-Tanah Abang Toll Road (8,27 km) PPP Modality: BOT Pasar Minggu-Casablanca Toll Road (9,56 km) PPP Modality: BOT Sunter-Pulo Gebang-Tambelang Toll Road (25,73 km) PPP Modality: BOT Duri Pulo-Kampung Melayu Toll Road (11,38 km) PPP Modality: BOT Toll Road Access to Tanjung Priok (16,67 km) PPP Modality: > Design and construction work will be conducted by the government > Operation and maintenance will be offerred to the private sector through tender mechanism Pasirkoja-Soreang Toll Road (15 km) PPP Modality: > BOT > The concession period will be granted for 35 years.

USD 120,40

North Sumatera / Sumatera

Solicited

2015

USD 124,90

South Sumatera / Sumatera

Solicited

2015

USD 318,20

Lampung - South Sumatera

Solicited

2015

USD 695,40

DKI Jakarta/ Java DKI Jakarta/ Java DKI Jakarta/ Java DKI Jakarta/ Java DKI Jakarta/ Java DKI Jakarta/ Java DKI Jakarta/ Java

Solicited

2014

USD 976,10

Solicited

2014

USD 425,50

Solicited

2014

USD 572

Solicited

2014

USD 737,80

Solicited

2014

USD 596

Solicited

2014

10

USD 612,50

Solicited

2012

11

USD 143,50

West Java / Java

Solicited

2015

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No

Project Title

Project Location / Corridor Estimation Value (million)

Type of Proposal

Planned Operation

12 Cileunyi-Sumedang-Dawuan Toll Road (58,50 km) PPP Modality: > BOT > The concession period will be granted for 35 years. 13 Terusan Pasteur-Ujung Berung-Cileunyi-Gedebage Toll Road (27,50 km) PPP Modality: > BOT > Land acquisition cost and part of construction will be carried out by government. 14 Pandaan-Malang Toll Road (37,62 km) PPP Modality: > BOT > The concession period will be granted for 35 years. 15 Nusa Dua-Bandara Ngurah Rai-Benoa Toll Road (9,70 km) PPP Modality: > BOT > The concession period will be granted for 35 years.

USD 1.015,80

West Java / Java

Solicited

2015

USD 800

West Java / Java

Solicited

2015

USD 293,20

East Java / Java

Solicited

2015

USD 196,10

Bali/BaliNusatenggara

Solicited

2015

POTENTIAL PROJECTS
Are PPP projects that have met the following criteria: (i) Have complied with the National/Regional Medium Term Development Plan (RPJMN/RPJMD) and infrastructure strategic plan, (ii) The project location suits the Regional Strategic Spatial Plan (RTRW), (iii) A relationship is established between the infrastructure sector and the region, (iv) Recovery of potential costs, (iv) Preliminary study. Below is the list of potential projects:
Project Estimation Value (million) USD 800 USD 99.50 USD 500 USD 1.700 USD 844,60 USD 705 USD 260,90 USD 82,40 USD 375.66

No 1. 2. 3. 4. 5. 6. 7. 8. 9.

Project Title Kertajati International Airport Development of New Samarinda Airport Kulonprogo International Airport Development of Maloy International Port (874 ha) Pekanbaru-Kandis-Dumai Toll Road (135 km) Balikpapan-Samarinda Toll Road (84 km) Manado-Bitung Toll Road (46 km) West Semarang Municipal Water Supply Jatigede Water Supply

Location / Corridor Majalengka, West Java / Java East Kalimantan / Kalimantan DI Yogyakarta / Java East Kalimantan / Kalimantan Pekanbaru, Riau / Sumatera East Kalimantan / Kalimantan North Sulawesi / Sulawesi Kota Semarang, Central Java / Java West Java / Java

Planned Operation 2015 2015 2016 2015 2016 2016 2016 2015 2014

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An amphibious aircraft parked on Kahayan River, Palangkaraya, Central Kalimantan. The lack of airport facilities forces certain parties to charter small aircrafts that could land on the river.