Interview: Basuki Hadimuljono

How is the government working to eliminate development disparities among the regions?

BASUKI HADIMULJONO: The disparity in development in Indonesia is clear, and the explosion of urbanisation will result in rising poverty rates in urban areas. We have not kept up with this development. We currently have 53% of the population living in urban areas. Now we are implementing the “100-0-100” programme, meaning we are going to serve 100% of people with clean water, reduce the number of slums in urban areas to zero and give 100% of people proper sanitation. Before we saw it as a problem, but now urbanisation is a tool to improve quality of life. It is a priority of the government to develop Indonesia from the periphery, which is why Kalimantan and Papua are focal points. In the past people said that development in Indonesia was Java-centric, now we are trying to make it Indonesia-centric.

What stage is the implementation of the national plan for road construction at?

HADIMULJONO: Of the ministry’s Rp97.7trn ($7.1bn) budget in 2016 – the largest budget for any ministry in Indonesia – Rp40.6trn ($3bn) has been allocated for roads and bridges, one of the four main areas that the ministry oversees. Water resources like dams and irrigation receive Rp28.6trn ($2.1bn), settlements and water supply Rp17.6trn ($1.3bn), and the rest is for housing and other projects.

The priority is connectivity. In 2016 we are going to finish 670 km, which includes the Trans-Sumatra, Trans-Kalimantan, Trans-Papua and border roads.

During the five-year programme we have to build 1000 km of toll road and 2650 km of national road, including bridges. With land acquisition we have already done quite a bit of deregulation. For instance, we now do not have any issue when using forest land. We have relaxed this regulation, and there is a scheme to borrow land from the Ministry of Environment and Forestry. We use Law No. 2 of 2012 concerning land acquisition for public purposes. This gives us clearer timescales and procedures for acquisition.

What steps are being taken to address the housing backlog for the low-income segment?

HADIMULJONO: Since the launch of the One Million Houses Programme by the president in April 2015, we have already built 667,000 houses for lower-income people. The residential real estate market is now more interesting for the middle to lower class, while for luxury housing the market is a little slower, as developers have had difficulties selling middle-upper-class houses. The construction of affordable housing will continue, given that the budget for it is increasing year by year. In 2016 the Ministry of Public Works and Public Housing allotted Rp21.5trn ($1.6bn), adding to Rp13.4trn ($978.2m) allocated by the Ministry of Finance, an increase of Rp12trn ($876m) from 2015. In 2016 we have sped up the process of budget disbursement. This will mean that many more projects, for housing and other areas, will be on-line sooner.

What role can foreign investment play in the development of public works projects?

HADIMULJONO: In public works and housing, foreign investors can only participate in toll roads. However, we are going to start foreign participation in water supply projects in East Java, and we plan to allow private investment to provide clean water for Jakarta. There is also investment in hydroelectric power, through both this ministry and the national electricity distribution firm. The challenge with public-private partnerships (PPPs) is in the regulations, and we have to simplify them. The first example is the long-delayed Umbulan water supply project. We do not have the best practices yet in Indonesia, but if the Umbulan scheme moves forward it may pave the way for more interest from investors and involvement of PPPs.