Indonesia needs to spend $500 billion in the next five years on infrastructure development, World Bank Group president Jim Yong Kim said on Tuesday (25/07).
The country’s challenging geography leaves many without access to electricity, running water and paved roads.
Also, as Indonesia’s population is growing even faster than China’s and India’s, the existing infrastructure becomes overloaded.
“We estimate Indonesia will have to invest $500 billion in the next five years to fill this infrastructure gap. That means increasing central and sub-national infrastructure spending from 2.4 percent of today’s GDP to 4.7 percent of GDP, doubling as a percentage of GDP by 2020,” Kim said at the Indonesia Infrastructure Finance Forum in Jakarta.
More private investment will have to be brought in for this purpose.
Indonesia’s $932 billion gross domestic product grew 5 percent in real terms last year. The World Bank projects it to increase to 5.2 percent this year and 5.3 percent in 2018.
President Joko “Jokowi” Widodo has pledged to prioritize infrastructure development. The state budget can only cover Rp 1,500 trillion ($112.58 billion), or less than a third of Rp 4,900 trillion required for the 225 strategic projects that the president promised to complete by 2019.
The government has allocated Rp 387.3 trillion for infrastructure in the 2017 state budget to construct 836 kilometers of roads, 10,198 meters of bridges, 13 airports, 61 ports and three bus terminals.