SDGs POINT 9 : INDUSTRY, INNOVATION AND INFRASTUCTURE

Goverment and Private Cooperation

(This paper is made to fulfill one of the subjects Sustainable Development Goals)

Compiled by :

Yessi Carolina

240110170007

AGRICULTURAL ENGINEERING

FACULTY OF AGRICULTURAL TECHNOLOGY INDUSTRY

PADJAJARAN UNIVERSITY

SUMEDANG
2017

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 PREFACE

Thanks to the Almighty God for His bless and grace to me for accomplishing the
English paper assignment with the title “Goverment and Private Cooperation”.

The writer also wants to deliver his sincere thanks to all the people who has given
their hands to help me completing this paper. It is written to complete the final task of
English subject.

I realize that it is still imperfect but he has a high expectation that my work may
help the reader to learn about innovation, infrastructure, and goverment-related private
industries.

Sumedang, 28 December 2017

Compiler

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 TABLE OF CONTENTS

PREFACE...............................................................................................................................i
TABLE OF CONTENTS.......................................................................................................ii
BAB I : INTRODUCTION...................................................................................................1
1.1 Background of The Paper....................................................................................1
1.2 Purpose of The Paper..........................................................................................2
BAB II : DISCUSSION........................................................................................................3
2.1 Developments Fields Infrastructure.....................................................................3
2.2 Goverment and Private Cooperation....................................................................4
2.3 Constraints That Occur From The Private Sector................................................5
2.4 Constraints That Occur From The Goverments...................................................5
BAB III : CLOSING..............................................................................................................7
3.1 Conclusion............................................................................................................7
3.2 Suggestion............................................................................................................7
BIBLIOGRAPHY.................................................................................................................9

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 BAB I

INTRODUCTION

1.1 Background of the paper

Infrastructure development in Indonesia proceed very slowly because of our nation

have financial difficulties. Krisis monetary policy that is ongoing for a long time there is
not much infrastructure built, even more infrastructure which is poorly maintained. This
matter because the existing budget should prioritized to overcome the crisis. Now, as the
storm of crisis is over and Indonesia is recovering from the crisis, with macroeconomic
indicators starting improved, then it should be infrastructure development in Indonesia
began to be re-activated. Accelerated infrastructure development very important because of
the building infrastructure can increase resilience food, reduction of territory and improve
the ettlement environment and region. Service support good will encourage growth
investment and ease of mobility of goods and services.

In addition, infrastructure development can also cope with disaster threats natural.
For example, infrastructure development associated with the agricultural sector and the
waters will be flooded and disaster landslide. However, the realization of the acceleration
of infrastructure certainly not easy. One factor is need to be considered in context the
development of this infrastructure is bureaucratic conditions. Accelerated development
infrastructure can be done if the government change the pattern and mental work of the
bureaucracy. So far, bureaucracy is a factor main development infrastructure. On the other
hand, the government is also lacking serious in rolling out development this infrastructure.
The government does not has a priority scale development projects. In the acceleration of
government development should give priority to: (i)improvement of appropriate
infrastructure services with minimum service standards; (ii)increasing the role of
infrastructure within supporting the competitiveness of the real sector; and (iii)increased
private investment in projects infrastructure. Therefore, the discourse of innovation
bureaucracy in the acceleration of development the infrastructure becomes very attractive
to discussed, however, on occasion this is only understood government and private
cooperation, constraints which is well advanced from parties private and government, and
solutions to solve it.

1.2 Purpose of the paper

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The purpose of this paper is :
1. To know the developments fields infrastructure.
2. To know the goverment and private cooperation.
3. To know the contraints that occur the private sector.
4. To know the constraints That Occur From The goverments Sector.

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 BAB II

DISCUSSION

2.1 Developments Fields Infrastructure

Before discussing the problem of the government and private cooperation,

presumably please know in advance field in infrastructure development which needs
serious attention, including:

- Toll Road
- Port
- Air Port
- Drinking water
- Power Plant
- Public Transport
Construction of toll road infrastructure (toll road) is necessary to smooth the current
of the traffic. The construction of this infrastructure is very needed considering already
many segments non-toll roads whose capacity is not able to accommodate vehicle volume
through it. Accelerated development this infrastructure needs to be prioritized on areas
with traffic conditions solid. Acceleration of toll road development is not means to forget
the non-toll road. Currently, the government seemed to forget that non-toll road
development is also a obligations that should not be ignored. Moreover, compared to toll
roads, the role of roads non-toll mainly in areas outside Java is more decisive within
sparking economic activity. This is because, more toll roads impact on activities economy
in urban areas.

Clearly, the highway it is more a necessity urban society. However, if non-toll road
development continues to be ignored, regional economic potentials are very difficult lifted.
This clearly can widen rural and urban economic disparities with all its unhealthy
implications social, economic and political. Port infrastructure is required considering
Indonesia is a country Island. Similarly, with infrastructure of air port (airport).
Accelerated development of this infrastructure is expected to be able to streamline the flow
passengers and various intermediate goods territory, both domestic and foreign country.
Development of drinking water infrastructure or clean water is especially urgent in the
urban areas. This is due to the availability of clean water in the region urban areas have not
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been able to meet needs of the community, which from year to year increases. To meet the
needs of drinking water, the government regulates the water supply pattern raw. Pattern of
water supply development the standard programmed by the Directorate General of Natural
Resources covers provision of raw water for purposes domestic, urban as well as industrial.
Special to support the provision of raw water rural, more focused on household water
supply.

The focus is on the vulnerable areas droughts, swamp development areas, small
islands and remote areas, also the border area. Power plant and public infrastructure
transport is equally important. Establishment of this infrastructure is necessary accelerated
given the level of needs is very urgent. Existing conditions the infrastructure is still far
from ideal expectations. The energy crisis and the bad public transport services show that
the infrastructure development need to be prioritized.

2.2 Goverment and Private Cooperation

One of the causes slow pace of infrastructure development is a financing issue.

Support bank financing often felt inadequate. It can occurs because the central government
does not have coordination integrated with private parties, SOEs, banks, and ranks local
government in realizing development infrastructure projects. Coordination among all
stakeholders the associated is indispensable for sake development of infrastructure.
Therefore, a relationship setting is required cooperation between government and private.
Public and private partnership schemes in infrastructure development based on Public
Private Partnership. Cooperation should have an umbrella laws which are poured in a
cooperation agreement (concession agreement), which is certainly binding between both.
In the agreement the regulated cooperative relationship between government with the
private sector in order supplying / building projects with his service to the public at a cost
private.

As a compensation, the private sector obtain concession rights and guarantees

(incentive) from the government. The government grants a concession rights over 30 years,
40 years etc (according to which agreed upon) to obtain a replacement at the expense of
private investment and interest and income through payment for public use of the project
private sector. Concession rights can be deep form of BOT (Build Operate & Transfer) and
BOO (Build Operate & Operation). Besides the concession rights, there is also a guarantee

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which the government grants to private / investors to have certainty of return of the
investment. Guarantee that can may be in the form of: tax incentives; utilization of lands /
assets government; guarantee the number of passengers (ridership guarantee); different
exchange rate guarantee (currency risk guarantee); guarantee payment guarantee; vehicle
tax guarantee (ERP guarantee); and country risk guarantee (sovereign guarantee). The
private sector provides / builds projects that were agreed upon. Private parties also provide
/ give services through the project to the public using a certain rate, as agreed upon in the
agreement. Besides that, the private sector is paying taxes to the government.

2.3 Constraints That Occur From The Private Sector

Realization of infrastructure development often encounter some obstacles. Some of
the obstacles that usually arise from private parties, including:
a. Often, the interested private is realtor / broker who will sell the rights concession.
b. Access to domestic / rupiah funding which is very expensive. When using their
LN banks just deliver to investors from countries where the Bank originated.
c. The existing regulation in Indonesia many clashes of the rules thus raising the
risk that is not clear from private.

2.4 Constraints That Occur From The Goverments

Some obstacles in the development infrastructure, normally comes from the
government, among others:
a. Bureaucracy that runs slowly
b. Regulation that is not comprehensive in supporting private sector investment
infrastructure. Suppose there is Presidential Regulation 67/2006, but not equipped
with rules clear about the guarantee and government support to investors.
c. The bureaucratic mindset tends to be suspicious with private / investors as
companies that are just looking for profit.
d. There is a reluctance to imitate practices overseas success increase infrastructure
investment through the provision of guarantees to parties investors.
e. The government prefers to provide facilities for investors who do exploration
natural resources rather than to investor infrastructure.
f. The arrogance of bureaucratic behavior.
g. Less competent bureaucrats.

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h. Consideration of greater popularity compared to the success of the project.
i. Fear of bureaucracy in taking decisions resulting from KPK activities
(Commission Eradication of Corruption).
j. Bureaucrats mindset of provision infrastructure that tends to:
- complicate the granting of collateral
- Not proaktive looking for investors infrastructure
- Reluctant to let go of development infrastructure to investors with costs borne
by the government cheaper.
- Less aware, if any infrastructure development by investors, then:
o The government obtains taxes
o The government obtains economic growth
o The government obtains employment Opportunity
k. Reluctant to provide tax incentives as a stimulator for the private sector build
infrastructure such as:
- tax holiday
- divert payment

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 BAB III

CLOSING

3.1 Conclusion

Development in the infrastructure sector has an important role for economic growth
of a country. adequate infrastructure, will have an impact on a significant increase in
economic growth. Therefore some countries tend to try to focus on building sectors
infrastructure to positively impact its economic growth. So as well as with Indonesia,
various businesses involving government and the community is striving to create favorable
environmental conditions infrastructure development. This is because, the availability of
that infrastructure adequate is the key to success in accelerating the development of a
country, both in terms of economic and social development. Development of good
infrastructure in a country it reflects progress and stability of the country into a prosperous
country, with purpose for the welfare of the whole society. In every development there are
interference and assistance from other countries deemed and appropriate in providing both
real and Financial assistance Investment or Loan.

3.2 Suggestion

Many obstacles that faced, both from the perspective of the private sector or
government. then needed solution to solve it. Some solutions for encourage the cceleration
of development infrastructure in Indonesia, among others:
a. To avoid brokers investment tender, the government should has a tender
requirement international quality as well as criteria the winning bidder must make
sure that the investor consists of a consortium to support implementation
investation.
b. Increase the involvement of banks in the country (which cost very expensive)
through intensive delivery bank interest or loan agreement.
c. The government issues sharing risk regulation for development infrastructure.
d. Agency that handles acceleration infrastructure development should be supported
by professionals and able to cope with obstacles regulation, and supported by clear
and easy rules in providing government support for infrastructure development.

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 e. Soon deregulation is done give priority to support private investment on projects
infrastructure.
If bureaucratic innovation is implemented expected to eliminate all sorts of obstacles and
discrimination can facilitate sector participation private. This private sector participation is
expected to encourage acceleration infrastructure development so it can proceed well and
smoothly.

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 BIBLIOGRAPHY

Cantika, Baby. 2016. Pancasila Sebagai Dasar Pengembangan Ilmu Politik. Available at
https://prezi.com/qt_8ieqfaw8i/pancasila-sebagai-dasar-pengembangan-ilmu-
politik-dan-pemeri/ (Accessed on 23 December 2017 at 13:00 WIB)

Mardhiyatirrahmah. 2014. Pembangunan Indonesia menurut Pancasila. Available at

https://www.academia.edu/9824796/Pembangunan_Indonesia_Menur
ut_Pancasila_dan_UUD_1945 (Accessed on 24 December 2017 at
10:00 WIB)

Rothberg, D.1999. Enhanced and Alternative Financing Mechanisms Strengthening

National Park Management in Indonesia.NRMP USAID, Jakarta.

Nugroho, Iwan. 2010. Pandangan Pancasila Sebagai Filsafah Pandangan Hidup Bangsa.
Available at http://publishing-widyagama.ac.id/ejournal-
v2/index.php/jk/article/download/321/316 (Accessed on 28 December 2017
at 09:18 WIB)