BI Governor: private infrastructure financing can drive growth of up to 6.5%

Bank Indonesia Governor Perry Warjiyo has said involving the private sector in financing the government’s infrastructure projects could boost economic growth to 6.5 percent from around 5 percent at present.

In this vein, he said Tuesday’s Indonesia Investment Forum in Nusa Dua, Bali, was expected to boost the role of private companies in financing infrastructure projects to reduce their reliance on the state budget.

In addition to boosting the economy, Perry said, private sector involvement in infrastructure development also had the potential to narrow the current account deficit, which has been blamed for the country’s lack of resilience against external pressures.

“If infrastructure financing is sourced from private companies, foreign capital will enter,” he added.

“This is [part of] the BI and OJK’s [Financial Services Authority] concrete steps toward narrowing the current account deficit, while at the same time, boosting growth in the medium and long terms,” said Perry.

The central bank and the OJK organized the investment forum.

Another possible benefit from involving the private sector in financing infrastructure projects was that the domestic financial market would strengthen, as bonds and shares issues would expand opportunities for both domestic and foreign investors in infrastructure development.

Earlier, state-owned lender Bank Mandiri said that it would coordinate Rp 200 trillion (US$13.10 billion) in direct investments for 21 state-owned enterprises (SOEs) projects, which were expected to be approved on Thursday during the investment forum. (bbn)

The Jakarta Post

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