More funds for Indonesia's infrastructure sector reform

By Richard High27 November 2008

The Asian Development Bank (ADB) is to provide an additional US$ 280 million loan to support ongoing reforms in Indonesia's infrastructure sector. The loan also aims to fuel economic growth and narrow the disparity between the country's rich and poor.

The US$ 280 million loan will fund the second of three sub-programs of the Infrastructure Reform Sector Development Program, which was approved in 2006.

The program seeks to encourage private sector participation to speed up infrastructure development and help improve the overall investment climate by removing infrastructure bottlenecks and increasing access to infrastructure services.

It will also help Indonesia improve policies, laws, and institutions needed to attract large-scale private sector infrastructure investments, as well as streamline responsibilities in national and local government agencies.

Commenting on the loan, Rehan Kausar, infrastructure specialist in the ADB's Southeast Asia Department, said, "Domestic demand, coupled with private investment, has been a key driver of the recent economic growth. The country's progress is made more significant given the natural disasters it had to face, including the 2004 tsunami."

Indonesia's government has estimated that about US$ 65 billion is needed in new infrastructure investments from 2005 to 2009. About US$ 25 billion of this will be from its budget, while US$ 14 billion is expected to come from domestic banks, insurance funds, and pension funds. Another US$ 10 billion will come from multilateral and bilateral development partners, and US$ 16 billion from the private sector.

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