Indonesia’s Infrastructure Roadblock Under Jokowi

On April 16, Indonesia’s chief economic minister Darmin Nasution said that a number of key infrastructure projects were likely to be dropped from the government’s strategic development plan due to a lack of progress. Although this development was hardly unexpected given similar concerns that were raised in early 2018, it nonetheless once again highlighted the continued structural challenges that President Joko “Jokowi” Widodo’s administration continues to face in the realm of infrastructure as he gears up for a re-election battle next year.

Indonesia, the world’s 10th largest economy, has over 260 million people spread over some 17,000 islands, making connectivity an important objective and modern and efficient infrastructure a significant part of that. Yet the country remains far from reaching that goal. The World Bank assesses that Indonesia still has a whopping $1.5 trillion-dollar infrastructure gap, which is the product of decades of underinvestment and structural challenges in its economy and politics that will not be easy to address.

Since coming to office in November 2014, Jokowi has outlined an ambitious agenda for infrastructure, understanding that addressing the challenge it is a key part of boosting the country’s overall economic growth. The Jokowi government had initially targeted over $400 billion in investment in infrastructure projects in key areas like transport, water, and energy out to 2019 under its National Medium Term Development Plan.

Some progress has certainly been made since then. The Jokowi government has tried to make inroads through various moves including prioritizing certain key projects, aggressively courting private investment, and streamlining bureaucratic processes, all of which constitute relative improvements from where things were in the mid-2000s. All in all, despite an initial slow start, according to government estimates, of the initial pipeline of 265 projects, 26 have been completed since the program started in 2016, with 145 more under construction.

Yet as Jokowi gears up for upcoming local and gubernatorial elections in June 2018 and then general elections in April 2019, the implementation of this goal also remains far from a reality. Funding is still a major part of the problem, with close to half of the financing required for infrastructure projects still unfulfilled, according to one recent government estimate. Other familiar challenges also remain, such as red tape that continues to stop or slow even priority projects like the Jakarta-Bandung high-speed rail project.

While the Jokowi government has long been criticized for being too slow to deliver on its infrastructure ambitions, the public safety element of the infrastructure roadblock stems from the perception that it may now be moving too fast. As the Jokowi government looks to speed up the implementation of its infrastructure agenda and awards some contracts to state-owned enterprises (SOEs) in Indonesia, a string of accidents with respect to several high-profile projects has once again drawn attention to the limitations of these firms. That has in turn fed broader lines of criticism, including about the degree to which the Jokowi government is relying on SOEs as well as the extent to which the speed of projects is being prioritized over the safety of the Indonesian people.

That has come to the fore more so over the past few months. Back in mid-February, Minister of Public Works and Housing Basuki Hadimuljono admitted the government had cataloged 14 accidents in the span of just the last six months, resulting in several deaths and injuries. It came amid fierce criticism from the opposition Gerindra party, which likened Jokowi’s infrastructure agenda to forced labor in colonial times. Such sensationalism is par for the course as Indonesia enters into election season.

In response, the Jokowi government acted to stem the tide of criticism. The government temporarily suspended some projects tied to Waskita Karya, the state contractor that was implicated in seven of the aforementioned recent accidents. These shorter term measures are being paired with longer term considerations, such as Nasution’s April announcement that 14 infrastructure projects worth about $19.17 billion dollars could be suspended if they do not meet requirements by the third quarter of 2019, which is the end of Jokowi’s term (several of these projects were candidates for potential suspension for other reasons anyway, including issues related to land acquisition and investment).

Though such short-term fixes may well help ease criticism of the government now, they do not address the structural issues that remain. Put simply, the Jokowi government’s conundrum has been that its emphasis on boosting economic growth is contingent on speeding up infrastructure projects, but trying to speed up those projects when broader reforms are not yet in place can come at the expense of safety measures and quality management. Wasita Karya’s involvement is a product of this broader context: a major reason why it has been the top state contractor under the Jokowi government so far is because its business model is primed for speed, which may conceal other challenges in terms of how it operates.

Until that proper balance is struck, and as we move even closer to elections in Indonesia, we can expect criticism of the Jokowi government to continue to swing between two ends of the spectrum: being too slow to generate gains for the Indonesian economy and too fast to ensure proper protections for the Indonesian people. Though the truth in fact lies somewhere in the middle, that too often tends to get lost in the radical pendulum swings that we see amid the fierce political contestation, and infrastructure will not be exempt from this.