Although Indonesian President Joko 'Jokowi' Widodo pledged to boost infrastructure development across Indonesia, government spending on infrastructure projects was sluggish during his first year in office due to budgetary and organizational reforms (including cutting the energy subsidies). A positive sign, however, is that government spending on infrastructure development and the number of groundbreaking ceremonies for infrastructure projects rose in the second half of 2015 as reforms were completed.
The Indonesian government earmarked IDR 313.5 trillion (approx. USD $22.9 billion) for infrastructure development in the 2016 State Budget, the highest budget ever allocated to the country's infrastructure development. In the table below it is visible that the government's infrastructure budget has risen sharply in recent years. This is a good sign as the country is still plagued by a lack of quality and quantity of infrastructure development hence causing high logistics costs as well as social problems (for example people's limited access to healthcare).
Funds Allocated to Infrastructure Spending in the Government's State Budget:
Among the key priority infrastructure projects that should see groundbreaking in 2016 are 768.7 kilometers of national roads and the construction of 11,642 apartment units. Basuki Hadimuljono, Indonesian Minister of Public Works & Housing, said his ministry has already tendered various projects (or parts of projects) in the last quarter of 2015. Early tenders should manage to boost budget spending at the year-start. Normally, there occurs a big delay in government spending at the start of the year due to organizational and legal matters.
Meanwhile, Wismana Adi Suryadibrata, Deputy Minister for Development Funding Affairs of the National Development Planning Agency (Bappenas), said the government is set to issue IDR 13.7 trillion worth of Islamic bonds (sukuk) in 2016 to help finance next year's infrastructure projects. The government will also seek foreign loans and inject capital into state-owned companies to fund the projects.