Tenders in Indonesia: Infrastructure & Construction Tenders Delayed
The deadline for tenders for various infrastructure projects in Indonesia has been extended by the Public Works and Public Housing Ministry because it needs more time to determine the number of projects to be offered and to calculate new budget allocations for these projects. Ministry official Hediyanto W. Husaini said that his ministry is optimistic that by early May 2015 all construction projects can be tendered. Currently, only 9,578 construction projects (about 70 percent of total planned projects) can be tendered.
The Public Works and Public Housing Ministry needs more time as the central government has provided additional funds for infrastructure development, which includes ports, roads and irrigation. In the Revised 2015 State Budget (APBN-P 2015) a total of IDR 290.3 trillion (USD $22.3 billion) has been allocated to the country’s infrastructure development, up IDR 100 trillion from the original 2015 State Budget. This allocation to infrastructure spending is in line with Indonesian President Joko Widodo’s pledge to invest heavily in Indonesia’s infrastructure as the lack of quality and quantity of infrastructure in Indonesia has been one of the major obstacles that has been plaguing the country and causes a weaker investment climate as well as high logistics costs and uncompetitive businesses.
This additional IDR 100 trillion worth of funds for infrastructure development does not only flow to the Public Works and Public Housing Ministry. Other ministries that can count on additional funds are the Transportation Ministry and the Agriculture Ministry.
The central government also emphasized the importance of capital expenditure (capex) spending of the ministries. Based on data from the Finance Ministry, Indonesia’s capex realization rate stood at 84 percent (below the overall budget realization rate of 94 percent).
The Indonesian Public Works and Public Housing Ministry has been tasked by the central government to develop 1,000 kilometers of new toll road, 2,650 kilometers of new main roads, and 49 new dams across the country over the next five years. The ministry received IDR 94.5 trillion to develop new infrastructure projects through the Revised 2015 State Budget, while it received a further IDR 12.8 trillion for maintenance work on existing projects. However, in the first quarter of 2015 the ministry has not disbursed any funds for infrastructure projects as it has been waiting for the budget disbursement from the Finance Ministry. This has caused concern that infrastructure development targets this year cannot be achieved.
Hediyanto W. Husaini added that availability of land, the bidding process, and the design planning process are all important matters for construction projects and therefore need to be accelerated in order to achieve success.