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New minister seeks private sector participation

Jakarta Post - July 30, 2016

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Farida Susanty, Jakarta – On his second day in office, newly appointed Transportation Minister Budi Karya Sumadi pledged to make it easier for private businesses to get more involved in the transportation sector.

Budi, who replaced Ignasius Jonan, argued that more private participation would help realize President Joko "Jokowi" Widodo's vision of improving the country's connectivity and boost the efficiency of the state budget.

"To make the state budget more efficient, I want to attract as much private sector participation as possible. The state budget can serve as a stimulus that, when combined with the private sector, can fund more projects," he said on Friday.

The ministry expects to prioritize private investments over those of state-owned firms and in so doing, reduce the use of the state budget by public companies.

The priority of private investment comes about following the government's decision to cut spending for several ministries due to weak tax revenue collection.

The Transportation Ministry saw its spending slashed by Rp 3.75 trillion (US$286.39 million) in the revised 2016 state budget. The amount of its foreign loans was cut as well by Rp 1.8 trillion, leaving the ministry with a spending allocation of Rp 42.85 trillion in the revised 2016 state budget.

The government hopes infrastructure development will be able to spur economic growth in the country, even though the state budget can only cover 30 percent of the projects.

Jonan previously initiated moves to attract private sector investment to build public ports by revising a government regulation. Companies will be able to operate the ports for a certain period, but will be required to hand them over to the government by the end the period.

The minister also talked about the reactivation of railways in West Java and his plan to boost the ministry's budget spending, which stood at 28 percent as of July 21, lower than targeted 31 percent for that period.

Indonesian National Air Carriers Association (INACA) secretary general Tengku Burhanuddin stated his association did not really expect a major breakthrough from the ministry, while the Organization of Land Transportation Owners (Organda) chairman Adrianto Djokosoetono said his organization predicted that the new minister would just continue with existing programs in land transportation.

Source: http://www.thejakartapost.com/news/2016/07/30/new-minister-seeks-private-sector-participation.html.