Intervention by Mr. Muhammad Mahmud Azhar Lubis, Deputy Chair of Indonesia Investment Coordinating Board, on Agenda Item 4 “Promoting Investment for Development : Best Practices in Strengthening Investment in Basic Infrastructure in Developing Countries”
May 02, 2011 Posted under Statements
Mr Secretary-General of UNCTAD,
Ladies and Gentlemen,
As this is the first time Indonesia is taking the floor, I would like to congratulate you, Mr. Chairman, for presiding over this important session of the Investment, Enterprise and Development Commission. I am confident that under your able chairmanship, our meeting will prove constructive and generate insightful discussions and ideas for the way forward.
I would also like to thank Dr. Supachai for his comprehensive and insightful remarks. We also thank the eminent panellists for their illuminating presentations. My delegation would also like to extend appreciation to the Secretariat which has done an excellent job in preparing the background documents for this session.
(Indonesia wishes to align itself with the statements made by Lesotho on behalf of the G-77 and China and Thailand on behalf of the Asian Group.)
Investment plays one of the most important roles in the development and economic growth of developing countries. On this note, Indonesia concurs with the background note by UNCTAD that underlines the importance in identifying the best practices for infrastructure investment. Indeed, issues of investment in infrastructure merit further discussion and a more proactive response.
Investment in infrastructure, particularly in the service industry, is an important driver for socio-economic development. By investing in the infrastructure needed for the telecommunications, transport, energy, sanitation and financial sectors, we can not only improve our public services but also create jobs and improve competitiveness.
Indonesia recognises the importance of well-developed infrastructure and its benefits to attracting investment, distribute income, and open economic access to less developed area, which is not only important to improve the welfare of those who are currently living far from the growth pole, but also to ensure a continued stability in developing countries. Greater portion of investment will also be needed for developing countries to reach sustainable growth and development for their citizens. Private sector investment in this matter is a powerful catalyst for innovation, economic growth and poverty reduction.
Despite much progress made, we acknowledge that there is still a lot to be done in our country. In the last few years, Indonesia has only been spending 3% of its GDP on the much needed infrastructure. In the next 5 years, Indonesia is targeting to build 20.000 km of roads, 15.000 mega-watt (MW) of electricity, as well as key ports and other infrastructure, with an estimated total cost of USD160 billion. Public funding will be used to finance most of the infrastructure projects, but the rest of the projects will be financed by private investment, particularly under Public-Private Partnership (PPPs) scheme.
In order to meet the afore-mentioned requirements, the Indonesian Government has launched a range of measures to attract private, particularly domestic, investment to infrastructure, including enacting the Presidential Regulation No.13/2010 on Partnership between Government of Indonesia and Private Sectors in Developing Infrastructure. The Regulation is part of a comprehensive plan to facilitate an investment climate that encourages the participation of the private sector in the provision of infrastructure, while protecting and securing the needs of the consumer, community and private enterprises.
Indonesia has also established the Indonesian Infrastructure Finance Facility/IIFF and the Indonesia Infrastructure Guarantee Fund/IIGF in 2009. Both institutions are designed to serve as credible guarantee providers. These are ensured through a robust governance structure minimizing any risk of political interference, very high standards of transparency and disclosure, and a mechanism to ensure full operational independence of both afore-mentioned institutions.
To address the constraints of fully implementing the Public Private Partnerships (PPPs), the Government of Indonesia has drawn up a master plan relating to business processes, institutional and financing. To implement this master plan, the Indonesian Government has also developed an action plan to improve the institutional and processes frameworks of PPPs.
As I conclude my intervention, I would like to assure you that Indonesia looks forward to an interesting exchange of views and ideas during this session.
Geneva, 2 May 2011