Having discussion with Mr. Ignatius Jonan as the Minister of Transportation in Working Cabinet 2014-2019 at the Chamber of Commerce office on Friday, November 14th, 2014, he is straightforward and clear in spoken-person. Within two months the 2014 targets will be directly prioritizing activity that does not require the government budget and only use pens and paper type, which includes reviewing overlap policies and changing crucial policies also simplify licensing.
According to Mr. Jonan, the biggest problem of public services and the provision of infrastructure is because of the policies that are state-owned enterprises to always monopoly in the public service, for example in airport services there is only Angkasa Pura, in the harbor there is the IPC/Pelindo and in the land transport rail is PT KAI. So that for the future, it will be easier for private companies to get involved in public service associated with transportation as a competitor in order to create efficiency.
One policy that he wants to change is PP 57 2005, but actually his intention is Presidential Regulation (Perpres) No. 67 Year 2005 on investment in infrastructure by the private entity or Public Private Partnership (PPP). He will make a change, if there are investors who are ready to finance and also able to do land acquisition, they can directly apply for permission to direct investment and build the infrastructure. For example, if an investor wants to build airports, ports, toll roads and railway, as long as there are available funds also ready for land acquisition, there is no state budget needed, also the project is suitable to government planning and feasibility of safety, it can directly apply permission to the Department of Transportation, it does not need to be tendered. He assured if the license application that goes to the table of Mr. Jonan in the morning, afternoon will be signed so in that day it will also be completed.
So far, in accordance with regulation 67, 2005, the delivery of infrastructure by private entities is done in 2 ways; Solicited Project by open tender and Un-solicited projects with a limited tender. Solicited project when the project was developed in the Government and the preparation of a project funded by the Government, so that the procurement of private enterprises should be open tender, and land acquisition are usually conducted by the Government with financed by private. While unsolicited project is the idea of infrastructure project and project preparation offered by private and submitted to the Government, the Government will check the suitability with the Government's plan, if appropriate, the limited tender will be opened to get the best offer, it is expected that the winner would be the private entity which own the ideas but if the winner is the other private entity, therefore private which own idea have the right to get replacement costs for project preparation or can do direct nego with private winner. The development of infrastructure with PPP scheme in Indonesia is very unfavourable, the level of success of the project is less than 5% of the existing project plans that is published in the PPP book published Bappenas annually.
http://www.kemendagri.go.id/produk-hukum/2005/11/09/peraturan-presiden-nomor-67-tahun-2005
The main obstacle to the development of infrastructure with PPP scheme is mainly due to difficulties in land acquisition or land acquisition risk and politics risk which also includes the length of the tendering process and the permitting process.
The case of delays in unsolicited projects that will be reformed by Mr. Jonan, he will facilitate all the infrastructure procurement process. If the ideas of the infrastructure project fully supported with finance and land acquisition by the private sector, therefore the private sector can directly apply permission without tender again.
In my opinion, this idea is a very good breakthrough in the short term (until next 5 years) to accelerate infrastructure development.
But there are things that must be observed, because the infrastructure is for the provision of public services so if controlled and owned by private entities that have strong capital in the long term, for example, > 30 years it will be very bad for our grandchildren.
So it should be, the breakthrough Idea by Mr. Jonan to directly give license without a tender can be equipped with a time restriction on ownership / Exploitation Concession in Infrastructure Projects Cooperation for example 50 years.
So it will be expected that the private sector will be faster to build the infrastructure and comfortable without any bureaucratic obstacles, as well for the long term 50 years of private infrastructure constructed can be transfer to the Government to be owned / managed by our grandchildren.
Advice for young entrepreneurs now, make haste to prepare the infrastructure development ideas that benefit to the community or the State and be prepared to bring in finance or be a local partner for investors so as not to fall behind in the development process of the RI.
Congratulations to Mr. Ignatius Jonan, we wish you all success and be wise in improving policy.
Thank you.
Jakarta, 15 November 2014
Leny Maryouri
