During the Susilo Bambang Yudhoyono administration (2004-2014) the Indonesian government presented public-private partnerships (PPPs) as solution to infrastructure development in Indonesia. However, there was limited enthusiasm as investors remained hesitant due to the nation's complex investment climate (including the difficult land acquisition process, regulatory uncertainty and doubts about the economic feasibility of certain projects).

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The government of Indonesia needs to be more aggressive and innovative to find new sources to fund its ambitious infrastructure development program. To achieve its infrastructure targets, the government will need to find ways to entice the private sector because public funds are limited. So far, however, the private sector is hesitant to engage in capital-intensive and long-term investment in a country where the investment climate is not optimal.

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The government of Indonesia wants to construct the Bontang oil refinery in East Kalimantan through a private-public partnership (PPP). Sudirman Said, Minister of Energy and Mineral Resources, said construction of the Bontang oil refinery is scheduled to commence in 2017. State-owned energy company Pertamina will be in charge of the project and is now searching for investors to participate in the project which is estimated to require a total of USD $14.5 billion in investment.

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After having banned the sale of alcoholic drinks in minimarkets, Indonesia may see the birth of another law concerning alcohol. Several secular and Islamic political parties seem to back a bill prohibiting the sale, production, distribution and consumption of drinks that contain over 1 percent alcohol. This bill is among the 37 so-called priority bills expected to be passed this year. Although the new bill had been first proposed in 2012 by two Islamic parties - National Development Party (PPP) and Prosperous Justice Party (PKS) - it had laid on the shelf.

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Pemerintah Indonesia berencana untuk melakukan tender 4 proyek untuk sektor swasta melalui skema kemitraan pemerintah swasta (KPS). Proyek-proyek ini mencakup pembangunan jalan tol Balikpapan-Samarinda, jalan tol Manado-Bitung, sarana suplai air minum di Semarang, dan jalur kereta Bandara Internasional Soekarno-Hatta. Menteri Koordinator Bidang Perekonomian Sofyan Djalil mengatakan bahwa 3 dari 4 proyek ini, akan ditawarkan pada sektor swasta di akhir 2015.

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On Tuesday (03/03) the governments of Indonesia and the Netherlands launched a comprehensive five-year public-private partnership (PPP) for enhancing coastal safety at the northern coastal line of Central Java. By joining forces in this 5 million euro project (financed by the Dutch Sustainable Water Fund), mangrove restoration, small scale hard-engineering, and sustainable land use are to result in reduced erosion risk at the coastal area. Key to the project is the use natural protection to strengthen sustainable coastal engineering.

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Ahead of implementation of the ASEAN Single Aviation Market (ASAM) in 2015, it is important for Indonesia to improve infrastructure at (and around) airports, particularly the nation’s smaller airports, in order to be able to compete with other airports in the ASEAN region. ASAM will turn ASEAN into a unified and single aviation market by 2015, meaning that air travel between ASEAN member states is fully liberalized. As such, ASAM will supersede existing unilateral, bilateral and multilateral air services agreements between ASEAN members.

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A total of 555 people have been officially inaugurated as members of Indonesia’s House of Representatives (DPR) for the period 2014-2019 on Wednesday (01/10). The ceremony was witnessed by incumbent President Susilo Bambang Yudhoyono as well as President-elect Joko Widodo (Jokowi) and his running mate Jusuf Kalla. The Jokowi-Kalla pair will be inaugurated as the country’s next president and vice-president on 20 October 2014. The PDI-P, winner of the legislative election, is the largest party in the House.

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Indonesian President Susilo Bambang Yudhoyono, who will end his second term as president in October 2014, is expected to appoint Lukman Saifuddin as the new Minister of Religious Affairs on Monday (09/06) or Tuesday (10/06) next week. The position of Religious Affairs minister has been vacant since Suryadharma Ali stepped down from his post in late May 2014 to focus on his defense after being named a suspect (by the country’s Corruption Eradication Commission, KPK) in the hajj pilgrimage fund-corruption case.

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Indonesian Minister of Religious Affairs Suryadharma Ali resigned from his ministerial post today (26/05) after having been named a suspect in a corruption case by the Corruption Eradication Commission (KPK) last week. Ali is accused of mishandling the country’s hajj pilgrimage fund. This fund is centrally managed by the government and contains deposits paid by people who want to make the holy journey to Mecca (Saudi Arabia). Ali resigned in order to concentrate fully on his defense in the graft case.

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It is estimated that Indonesia will need some USD $450 billion in funds to finance the government's infrastructure development plans for the 2015-2019 period. However, through the state budgets the government can only deliver USD $230 billion, or roughly 50 percent of required funds. The remainder should originate from the private sector (30 percent of total funds) and state-controlled enterprises (20 percent). However, is it likely that the private sector (both foreign and domestic) is to come up with USD $141 billion for investment in infrastructure up to 2019?

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The government of Indonesia plans to add new fuel refineries soon after such development has been postponed for many years. Today, Indonesia's total of oil refineries have roughly the same combined production capacity as a decade ago, indicating that limited progress has been made. In fact, domestic oil output has experienced a steady downward trend for almost two decades due to a lack of exploration and investments amid weak government management, bureaucracy, an unclear regulatory framework and legal uncertainty.

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The prequalification tender for the construction of the Soekarno-Hatta International Airport Railway project has been postponed until late October 2014 (from August) as agreements with several stakeholders still need to be finalized. For example, the government is yet to underwrite part of the required investment. Indonesia’s Ministry of Transportation proposes to underwrite IDR 13.5 trillion (USD $2.3 billion) - approximately 49 percent of total required investment for this railway project.

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The Indonesian Transportation Ministry will tender the Soekarno-Hatta International Airport train project in August 2014. The project, which will connect one of the world’s busiest airports to the capital city of Jakarta, is offered in the shape of a public-private partnership (PPP) with the Indonesian government. The total of investment required to develop the railway, which will be built partly underground, is estimated at IDR 26 trillion (USD $2.2 billion). The project aims to improve connectivity to the airport.

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Total realized investments in the context of the government's Masterplan for Acceleration and Expansion of Indonesia's Economic Development (MP3EI) will reach IDR 628.9 trillion (USD $51.6 billion) in 2014. The MP3EI was unveiled by the Indonesian government in May 2011 to accelerate its ambitious goal of becoming one of the world's largest economies by 2025. This masterplan particularly focuses on (much-needed) infrastructure development by cooperating with the private sector (for example through public-private partnerships).

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The government of Indonesia - through its Ministry of National Development Planning (known as Bappenas) - designed three funding scenarios for Indonesia's infrastructure development in the National Medium-Term Development Plan (RPJMN 2015-2019). The lack of appropriate infrastructure is one of the bottlenecks to Indonesia's development. The scenarios involve the amount of funds and other requirements for infrastructure investment. The three scenarios are divided into a 'full scenario', a 'partial scenario' and a 'baseline scenario'.

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The regional government of Surabaya, Indonesia's second-largest city after the capital city of Jakarta, is planning to tender two separate infrastructure projects - open to both foreign and domestic investors - at the start of December 2013. The two projects involve the construction of the city's monorail, valued at IDR 6.42 trillion (USD $558.3 million), and the construction of a tramline, valued at IDR 2.41 trillion (USD $209.6 million). When finished, the two projects are expected to reduce traffic congestion in Surabaya, East Java's economic center.

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One of the major problems which is blocking Indonesia's economic growth is the country's infrastructure. The lack of quality and quantity of Indonesia's infrastructure causes logistics costs to rise steeply and thus makes investors (particularly the foreign ones) hesitant to invest as high logistics costs imply a weakening of the country's competitiveness. The problem of Indonesia's infrastructure is both 'hard' infrastructure (roads, airports and electricity supply) and 'soft' infrastructure (social welfare and health care).

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