From Government of Indonesia

Spending on Infrastructure to Rise

The government will allocate more money for infrastructure development in next year's budget in an effort to ease the distribution bottlenecks that have seriously hampered the country's economic growth.

"The bottleneck problem will become worse in 2008 if nothing is done to deal with the infrastructure issue," Coordinating Minister for the Economy Boediono said Wednesday (4/4/07), according to The Jakarta Post.

Boediono said that the government plans to increase spending on infrastructure by 34% to Rp56 trillion ($6.2 billion) next year from Rp41 trillion this year. The Public Works Department and the Transportation Department would receive Rp34.3 trillion and Rp24.2 trillion, respectively.

The Rp56 trillion would include Rp7.03 trillion for the regions paid out of the Special Transfer Fund (DAK).

Boediono stressed that while infrastructure spending would account for the biggest increase in budget spending, human development would also remain a top priority.

Human development, which includes education and health, would receive some Rp83 trillion next year, an increase of about Rp7.9 trillion over this year's figure. The human development allocation would therefore account for about 15% of the total 2008 budget spending, which Boediono estimated would amount to Rp554 trillion.

He said that the 6.8% growth penciled in for 2008 would be difficult to achieve if nothing is done to speed up the construction of infrastructure, such as new expressways and power plants. "We have acute experience of these problems. We lack electricity, expressways, ports," he said.
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