MP3EI Update Indonesia: Total Investments Reach USD $51.6B in 2014
Total realized investments in the context of the government's Masterplan for Acceleration and Expansion of Indonesia's Economic Development (MP3EI) will reach IDR 628.9 trillion (USD $51.6 billion) in 2014. The MP3EI was unveiled by the Indonesian government in May 2011 to accelerate its ambitious goal of becoming one of the world's largest economies by 2025. This masterplan particularly focuses on (much-needed) infrastructure development by cooperating with the private sector (for example through public-private partnerships).
After the MP3EI has been in force for two and a half years, the groundbreaking of a total of 365 projects were realized, having a combined investment value of IDR 828.7 trillion (USD $68.5 billion). A further 166 projects (worth IDR 628.9 trillion) are expected to be initiated in 2014.
These 166 projects that are expected to take off in 2014 cover all six economic corridors within the MP3EI. These economic corridors, consisting of (1) Sumatera, (2) Java, (3) Kalimantan, (4) Sulawesi, (5) Bali & Nusa Tenggara and (6) Papua & Maluku Islands, are developed based on the key resources and other (economic) potential of each region.
Economic Corridors in MP3EI:
| Sumatra | Center for production and processing of natural resources and the nation’s energy reserves |
| Java | Driver for national industry and service provision |
| Kalimantan | Center for production and processing of national mining and energy reserves |
| Sulawesi | Center for production and processing of national agricultural, plantation, fishery, oil & gas, and mining |
| Bali - Nusa Tenggara | Gateway for tourism and national food support |
| Papua - Moluccas | Center for development of food, fisheries, energy, and national mining |
Investments per Economic Corridor in 2014:
| Region | Value (IDR) |
| Sumatra | 111.6 trillion |
| Java | 67.8 trillion |
| Kalimantan | 129.0 trillion |
| Sulawesi | 79.9 trillion |
| Bali & Nusa Tenggara | 114.7 trillion |
| Papua & Maluku | 125.8 trillion |
Most of the investments in these corridors originate from the private sector (around 65 percent), followed by state-owned enterprises (11.4 percent) and the government (5.1 percent). The remainder of investment sources are a mixture of various stakeholders, for example through public-private partnership (PPP) schemes. However, there is still ample room for improvement regarding PPPs in Southeast Asia's largest economy.
The MP3EI has a main focus on infrastructure development in order to improve both inter- and intra island connectivity, thus reducing logistics costs (which are currently high compared to its regional peers). If the country's connectivity improves, it will make its industries more competitive. This is particularly important in the context of the implementation of the ASEAN Economic Community (AEC) in 2015. The AEC will transform the ASEAN region into a region with free movement of goods, services, investment, skilled labour, and freer flow of capital. To feel the benefit of this new community, Indonesia needs to possess competitive industries. As such, Indonesia has been giving top priority to specific infrastructure projects that boost the country's connectivity, such as harbours, airports, coastal shipping, energy, water, telecommunication and railways.
Further Reading:
• Masterplan for Acceleration and Expansion of Indonesia's Economic Development
• Public-Private Partnership Projects in Indonesia Remain Troublesome
• Indonesian Government Offers 27 Infrastructure Projects to Private Sector
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