Indonesia's MP3EI Masterplan Received IDR 647.46 Trillion in Investments
The total value of investments in the Masterplan for Acceleration and Expansion of Indonesia's Economic Development (MP3EI) between 2011 - when the Masterplan was first introduced - and July 2013 amounted to IDR 647.46 trillion (USD $58.86 billion). Coordinating Economic Minister Hatta Rajasa said this to state-owned news agency Antara. State-owned enterprises invested a total of IDR 173.63 trillion, followed by the private sector with IDR 231.88 trillion, the government with IDR 99 trillion and public-private partnerships with IDR 143.12 trillion.
The MP3EI is the government masterplan through which it targets an economic growth rate of seven to eight percent per year after 2013 and aims to turn Indonesia into one of the world's largest economies by 2025. It includes USD $470 billion in investments that, to a large extent, is envisaged to be supplied by the private sector through public-private partnerships. The masterplan places high priority on the development of infrastructure because the lack of adequate infrastructure causes Indonesia's logistics costs to rise steeply, thus reducing the country's competitiveness and attractiveness of the investment climate. According to data published by the Indonesian Chamber of Commerce and Industry (Kadin Indonesia) around 17 percent of a company's total expenditure in Indonesia is absorbed by logistics costs. In peer regional economies this number is below the ten percent mark. In particular transport costs are high; for land as well as sea.
However, up to date investments under the MP3EI scheme have not yet showed satisfying results. To provide more assurance for private investors, the government has established the Indonesia Infrastructure Guarantee Fund (IIGF). This institution gives certain guarantees to safeguard private investors against the risks in this sector.