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Indonesia, Japan agree on US$43b plan for Jakarta

Publication Date : 10-10-2012


Indonesia and Japan have agreed on a master plan for the construction of roads, railways, airports and other strategic infrastructure in Jakarta and its neighbouring cities.

A steering committee tasked with drafting the master plan concluded its third meeting in Tokyo on Tuesday, announcing 45 projects with the total value of investment required estimated to reach 410 trillion rupiah (US$43 billion).

All projects are expected to be completed by 2020 with the construction of 18 priority projects scheduled to start by the end of 2013.

The priority projects will include the construction of Jakarta’s Mass Rapid Transit system, Cilamaya International Airport, the expansion of Soekarno-Hatta International Airport, the creation of a new academic research cluster and the development of the city’s sewage system.

As one of the most populated cities in the world, Jakarta is struggling to accommodate growing demand for basic infrastructure. The capital has a population of 10,187,595 , equal to 15,427 people per square kilometre.

According to a study by the Public Works Ministry, at the current rate of car sales, Jakarta’s traffic may come to a standstill by 2014. The study finds that Jakarta is in need of 12,000 kilometres of roads to accommodate traffic in 2012 while existing roads currently stand at 7,208 kilometres.

Approximately 55 per cent of the total investment needed to make the master plan materialise would come from private investors, said Coordinating Economic Minister Hatta Rajasa, who represented Indonesia at the meeting in Tokyo.

The remaining investment, he said, would come from the government, in which Japan through its Official Development Assistance (ODA) would contribute 125.7 trillion rupiah or about 31 per cent to the total.

According to figures from the Japanese Ministry of Foreign Affairs, Japan’s ODA total loan aid to Indonesia reached 4.55 trillion yen ($58 billion) at the end of 2010.

Several other sources of financing are also under consideration, including financial mechanisms under the Indonesia Infrastructure Guarantee Fund and also loans from the Japan Bank for International Cooperation, which could be disbursed to the private sector.

According to a statement from Japan’s Ministry of Economy, Trade and Industry, the country’s leading companies participated in drafting the master plan. They include Mitsubishi Corp., Hitachi Ltd., JGC Corp., Taisei Corp., Chiyoda Corp. and Nippon Yusen K.K.

“For the public investment, there will be a mixture of public-private partnership, state budget and a loan scheme,” Hatta said.

To ensure the implementation of the master plan, the Indonesian government has established a special unit within the Committee for the Expansion and Accelera-tion of Indonesian Economic Growth (KP3EI), which reports directly to the coordinating economic minister.

Indonesia and Japan’s trade volume reached $32.5 billion during the January to July period, increasing by about 6 per cent compared to $30.56 billion in the same period last year.

The two countries’ trade volume is expected to exceed last year’s amount of around $53 billion.

*US$1=9,590 rupiah


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