Jokowi Administration Built 1,900-km Toll Roads

TheIndonesia.id - The government built 1,900 kilometers (km) of toll roads in the last seven years, starting 2014-end, President Joko Widodo (Jokowi) stated during the signing of the Indonesia Investment Authority (INA) master agreement here, Thursday, April 14, 2022. The head of state noted that the length of toll roads built since 2014 had increased significantly as compared to the construction of toll roads in Indonesia in the last four decades before 2014, which had reached 780 kilometers.

"1,900 km (of toll roads were built) in the last seven years, as compared to 780 km built in the last 40 years," Jokowi stated.

However, the governments faced numerous challenges, including financing sources, in building the toll roads. Jokowi noted that several toll road constructions in the past did not involve alternative sources of financing and only depended on the state budget or state-owned enterprises (SOE).

"Or they left it to the private sector, which had not been going well for several years," he noted.

This was one of the reasons behind the government establishing the Sovereign Wealth Fund called the Indonesia Investment Authority (INA) or the Investment Management Institute (LPI). The president conveyed that the cost to build toll roads was high. Hence, it requires alternative financing to cut dependency on the state budget or SOE budget.

To seek alternative financing schemes, the government needs to place an economic value with a qualified Internal Rate of Return (IRR). "Imagine the development of the Trans Sumatra Toll Road from Lampung to Aceh spanning a length of 2,900 km. On calculation, it will cost Rp90-110 billion per kilometer. The budget needed is very big," he remarked.

Although it requires a big budget, the head of state emphasized that infrastructure projects offer high benefits for increasing the competitiveness of domestic products as well as providing multiplier economic effects for other sectors of the economy.

"Infrastructure is important to build our competitiveness, especially for our domestic products," he added.

On Thursday, the INA signed an alternative financing scheme agreement of Rp39 trillion with PT Hutama Karya Persero Tbk, PT Waskita Karya Persero Tbk, and PT Waskita Toll Road. With this agreement, INA will invest in several sections of the Trans Sumatra and Trans Java toll roads built by Hutama Karya and Waskita Karya.

Minister of Finance Sri Mulyani Indrawati conveyed the master agreement for INA investment in three Trans Sumatra toll roads: the 17 km in the Medan-Binjai section, 141 km in the Bakauheni-Terbanggi section, and 189 km in the Terbanggi-Pematang-Kayu Agung section. INA will also invest in two Trans Java toll roads: Kanci-Pejagan and Pejagan-Pemalang.

"At the same time, it will provide a new fresh fund with Waskita and Hutama Karya to continue the construction of Trans Sumatra for six sections of 531 km, with a target of 24 sections of 2,800 km," she noted.