Indonesia to invest $97bn on infrastructure projects to boost growth

The new projects are set to provide jobs to around 4 million people every year

The central business district skyline is seen during the dusk in Jakarta. Indonesia will focus on infrastructure projects and social programmes worth $97 billion over the next five years. AP

Indonesia will focus on infrastructure projects and social programmes worth $97 billion (Dh356bn) over the next five years as President Joko Widodo seeks to rescue Southeast Asia’s largest economy from the fallout of the coronavirus pandemic.

The government has added 56 new projects including five industrial estates, 13 dams and five airports to its priority list, Coordinating Minister for Economic Affairs Airlangga Hartarto said at a briefing in Jakarta Friday. The so-called national strategic projects will also include social and health programs and development of five tourist sites, he said.

The projects with an estimated investment outlay of 1,422 trillion rupiah (Dh356bn) may help Indonesia beat a slump in economic activity triggered by the pandemic that’s killed more than 1,500 people, the most among Southeast Asian countries. The nation’s economic growth is now forecast to more than halve to 2.3 per cent this year with the risk of a contraction looming under a worst-case scenario, according to the finance ministry.

“Even though we are currently facing a pandemic, strategic agendas that are very important for our nation must not stop,” Jokowi, as the president is commonly known, told a cabinet meeting in Jakarta. “It’s very important to prioritise projects that have a large leverage toward post-pandemic economic recovery.”

The new projects are set to provide jobs to around 4 million people each year, taking the total employment potential to around 19 million in five years, Mr Hartarto said.

With the pandemic battering the economy, especially the small and medium businesses, about 8.6 million Indonesians have signed up for a government programme offering cash allowance and online training. The government is now working on a plan to reopen the economy in phases starting next month even after new cases more than doubled in May.

The virus outbreak may delay the Jakarta-Bandung high-speed rail project being jointly developed with China by one year and the government will explore extending the network to Surabaya, Mr Hartarto said. The government will also cooperate with investors from Taiwan to develop an integrated $12bn oil refinery and petrochemical project in Balongan, he said. The priority list also includes nickel smelter projects with potential to earn billions of dollars in exports, he said.

The government will prioritise development of tourist destinations Lake Toba, Borobudur, Mandalika, Labuan Bajo and North Sulawesi, according to Public Works and Housing Minister Basuki Hadimuljono.