Govt pins hopes on infrastructure development to drive growth

Urip Hudiono, The Jakarta Post, Jakarta

Boosting infrastructure development to help drive growth and create jobs, while improving education and public health services, will be the government's priority in next year's budget.

As part of this plan, seven ministries will receive significant allocation increases in the 2008 draft budget. These are the public works, transportation, agriculture, energy and mineral resources, education, religious affairs and health ministries.

"Next year's budget will signify a 'reorientation' of government spending, making it more efficient and effective," Coordinating Minister for the Economy Boediono said last Thursday.

"More spending will be directed toward efforts to 'de-bottleneck' our infrastructure, for rural development programs and for improving public welfare. We will try to improve social welfare not only indirectly through better development and higher growth, but also directly by financing related programs with the budget."

Finance Minister Sri Mulyani Indrawati said fiscal policy next year would be more stimulus oriented, marked by higher spending and deficits, after a period of budget consolidation.

Over the past three years, Indonesia's budget spending has mostly been used to cover such "overhead costs" as the government's operational needs, debt repayments and subsidies.

In the 2008 draft budget, the government calls for a 48 percent increase in capital expenditures to Rp 101.5 trillion (US$11.3 billion), and a 16 percent cut in routine expenditures to Rp 52.4 trillion.

Salary increases for civil servants, aimed at improving the bureaucracy, will increase personnel spending 29 percent to Rp 129.5 trillion.

In relation to next year's rise in capital expenditures, the Publics Works Ministry will see its budget jump 41 percent to Rp 35.6 trillion.

Some Rp 15.5 trillion will be used for the construction of highways in Sumatra, Kalimantan, Sulawesi, Papua, Nusa Tenggara, Java and Bali, while another Rp 3.1 trillion will be used for maintaining the country's road networks.

The government will allocate up to Rp 2 trillion for infrastructure development support funds, which may be needed for project guarantees.

The Transportation Ministry will see its budget increase 64 percent to Rp 16.2 trillion, with the money aimed at improving and building railways, seaports and air transportation systems.

Planned new airports include Kualanamu airport in Medan, North Sumatra, and Hasanuddin airport in Makassar, South Sulawesi.

The Education Ministry will see its budget more than double to Rp 48.3 trillion next year, with the money to be used for the improvement of schools and to raise the living standards of teachers.

The Religious Affairs Ministry, which supervises Islamic boarding schools, will see its budget increase to Rp 16.1 trillion. The Health Ministry's budget will almost triple to Rp 18.8 trillion, to improve public health services and health insurance schemes for the poor.

The 2008 draft budget will increase its total allocation for education by 17 percent to Rp 61.4 trillion, and for health by 4 percent to Rp 16.8 trillion.
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