Infrastructure Plans Can’t Be Left Hanging

Administrative red tape and wrangling between the Finance Ministry and the State Enterprises Ministry may delay, if not totally disrupt, a plan to raise funds for vital infrastructure development. If this does indeed come to pass, it would be a major setback for the nation and the economy.

It was announced on Tuesday that the government had canceled plans to create an SOE investment fund that would have helped finance infrastructure projects.

Plans for the fund, which would have used government minority stakes in partially-privatized SOEs to raise money, were apparently illegal.

The plan was to have a new state-owned investment company use these shares, valued at Rp 13 trillion ($1.44 billion), as collateral for loans to finance the fund.

It is now understood that these shares are in fact controlled by the Finance Ministry and not the State Enterprises Ministry.

The ministry had expected the plan to generate up to Rp 40 trillion to help fund much-needed infrastructure development in the country.

Muhammad Said Didu, a secretary at the ministry, said on Tuesday that the proposed fund conflicted with a law that gives the Finance Ministry control over the government’s minority stakes.

“According to letter S-377/MK-06/2010 from the Finance Ministry to the SOE Ministry, dated Aug. 2, managing minority shares will still be the authority of the Finance Ministry, as stated by the state financial law,” Didu said.

It is unclear if this was an oversight or if this is a turf battle between the two agencies. It is clear, however, that the impasse will have a major impact on the government’s grand plan to improve infrastructure, and thereby put the economy on a much better footing.

The plan was first proposed by former State Enterprises Minister Sofyan Djalil and was later taken up by successor Mustafa Abubakar.

If no fresh funds are made available in the very near future, we can expect more breakdowns like the radar system failure at Soekarno-Hatta International Airport over the weekend. Not only do such failures create delays, they endanger lives.

Given the importance of the infrastructure fund, President Susilo Bambang Yudhoyono should get personally involved to resolve the situation.

The president must show leadership on this issue, as he had made it a central interest of his administration. If this idea is unworkable, other ideas must be developed quickly.

A lot of time has already been lost. Without modern infrastructure, our economy will not be able to reach its full potential.

More importantly, without new infrastructure, the lives of the people will not improve and the future will be no brighter. A way to move forward must be found.