State-Owned Banks Should Finance Infrastructure Development

Bank Negara Indonesia (BNI), a state-owned bank, claims it is ready to support Indonesian infrastructure development. “It’s not impossible to establish an infrastructure bank. But it would be better to appoint a state-owned bank to develop infrastructure projects,” said Ryan Kiranto, a Chairman of BNI’s Economic Team on Strategic Planning.

During a discussion on Inter-region Infrastructure and Connectivity to Optimize National Economic Growth at Hotel Borobudur Jakarta, Wednesday (15/2), Ryan also explained that BNI has available funds to finance infrastructure development. According to Ryan, BNI is ready to organize the government plans stipulated in the Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI).

The government, said Ryan, faces huge barriers to establishing an infrastructure bank. For example, an infrastructure bank would require an estimated IDR 3 trillion in initial capital. “That figure escalates to IDR 30 trillion for regulatory and human resources,” Ryan asserted.

Another challenge is the amount of time that will be consumed establishing an infrastructure bank. “The parliamentary and regulatory process takes a lot of time. That is why the government should appoint a state-owned bank to fund infrastructure development,” he explained.

In addition to financing questions, the government will face several other barriers to infrastructure development. Ahmad Eriani Yustika, an economist, explained that the government will need to settle issues related to land acquisition, government insurance, and an independent regulatory agency. Land acquisition, according to Ahmad, is the government’s responsibility.

“A lack of implementing regulation creates uncertainty about Land Caping and the ineffective use of land acquisition funds. It hampers infrastructure development,” he asserted. Furthermore, Ahmad explained that infrastructure financing has not been addressed since the Infrastructure Summit in 2005 due to a lack of political will in the central government.

(Fitri Novia Heriani / Mahinda Arkyasa)