Remarks of President of the Republic of Indonesia at the Signing Ceremony of Head of Agreement by Indonesia Investment Authority (INA), at Djuanda I Building, Ministry of Finance, Jakarta, April 14, 2022
Assalamu’alaikum warahmatullahi wabarakatuh,
May peace be upon us all.
Distinguished Coordinating Ministers, Ministers, President Directors of Waskita Karya, Hutama Karya, Waskita Toll Road,
Distinguished Ladies and Gentlemen.
I have mentioned million times about the importance of infrastructure. Our competitiveness; our products will not be able to compete with those of other countries if we don’t have adequate infrastructures. We have built toll roads in a 40-year period, and during that period, we only built 780 kilometers of toll roads.
In 2014, we strived to connect all toll roads, be it the Trans Java and Trans Sumatra toll roads or toll roads in Kalimantan and Sulawesi. I don’t know how many kilometers we have built to date. Minister of Public Works and Public Housing, how many kilometers have we built during the past seven years? 1,900 kilometers. The previous 40 years only built 780 kilometers.
What was the difference? I learned that the problem lies on funding. There is no alternative funding. We are heavily dependent on the State Budget and budgets of our state-owned enterprises. In case the work was trusted to the private sector, it did not end well. Considering the importance of infrastructure which will create multiplier effects to other sectors, the Government launched INA, the national sovereign wealth fund, chaired by Pak Ridha.
It is an alternative for financing scheme which we never had before. Today, I am delighted that history has been made. The agreement has been inked worth more than Rp39 trillion. It is expected to build trust of both domestic and foreign investors on financial management and governance of the INA. Governance of the INA is able to build trust of international and domestic investors. There will be a lot of investments entering the country through the INA. And the Authority can have cooperation with State-Owned Enterprises or private sector which is expected to bring effects to the country’s economy.
I am excited when imagining the completion of Trans Sumarta Toll roads that connects Lampung and Aceh, spanning 2,900 kilometers. If we calculate the cost needed to build the roads, the amount reaches Rp10 billion per kilometer. How much money do we need to finance the project? It is a substantial amount of money.
I am also delighted that based on the last calculation, Internal Rate of Return of toll roads connecting Bakauheni, Terbanggi Besar, and Kayu Agung is in a range of 9 and 10, am I right? It is between 9 and 10. And, the rate of toll roads in Java is usually in a range of 12-13. The combination of Trans Java and Trans Sumatra Toll Roads is acceptable in term of business by the INA.
I think we need to further develop similar financing scheme in order to gain trust from investors. We hope there will be more investors entering the country through the INA, not only for toll road projects but also other major projects that bring economic effects to the country.
Once again, allow me to congratulate the INA (Indonesia Investment Authority), Hutama Karya, Waskita Karya, Waskita Toll Road, and all parties involved who have put your trust. We hope the construction of other toll roads will be accelerated.
I thank you.
Wassalamu’alaikum warrahmatullahi wabarakatuh.