Posted on 04 Nov 2009
Despite hype that this would help accelerate the economy amid the global downturn, the government's stimulus program for infrastructure projects has been running slowly as of the third quarter of the year.
The stimulus package, totaling Rp 12.2 trillion (about US$1.28 billion), was designed to help cushion the negative impacts of the global economic downturn but only 35 percent of it has been disbursed during the January-September period, Coordinating Minister for the Economy Hatta Radjasa said on Saturday.
"Only 35 percent of the stimulus has been absorbed. However, we are still optimistic that the rest of the infrastructure stimulus could be absorbed in the next two months," Hatta said.
Chief among the problems slowing down the implementation of the program has been the absence of clear guidelines which, according to Hatta, would be resolved following the issuance of supporting presidential regulations.
"We find that the complicated administration process is a core problem. We expect the presidential regulation will help ministries speed up these infrastructure programs."
Slow disbursement of the state budget has been a persistent problem, in what economists said could have been a key positive factor in accelerating the country's economic growth. Even more so this year as the economy has been hit on the export and investment fronts by the continuing global economic crisis.
Usually the government spends most of its budget toward the end of the year, which analysts say is counterproductive.
The infrastructure stimulus fund was set aside as part of a Rp 73.3 trillion stimulus package - about 1.4 percent of gross domestic product (GDP) - as stipulated under this year's state budget, to bolster the domestic economy.
The package includes paying the income tax contributions of employees working in industries hit hardest by the global economic crisis by up to Rp 6.5 trillion, subsidizing diesel by Rp 2.8 trillion, and additional spending on infrastructure of Rp 12.2 trillion.
The stimulus for infrastructure forms part of regular programs at ministries and government agencies. The Public Works Ministry and the Transportation Ministry are the largest recipients of the stimulus, package, with Rp 6.6 trillion and Rp 2.2 trillion respectively.
The government plans to finance 29 percent of a total Rp 1,430 trillion investment in infrastructure funding during the 2009-2014 period, with the shortfall targeted to come from local and overseas investors.
