Indonesia’s President Susilo Bambang Yudhoyono salutes as the national flag is raised during a ceremony to mark Independence Day on August 17

Indonesian President Susilo Bambang Yudhoyono vowed to reduce corruption and streamline processes that he said are impeding the country’s drive to build roads, ports and power plants.

Failure to attract investment threatens Yudhoyono’s efforts to sustain Indonesia’s economic growth, forecast this year to be the fastest among major Asian economies after India and China. Infrastructure spending is among the lowest in the region relative to gross domestic product, as a lack of regulatory clarity prompts investors to turn to India, China and Vietnam.

Nine of 11 chief executive officers contacted last month by Bloomberg News said boosting investment to fix Indonesia’s roads, ports and power plants needs to be among Yudhoyono’s top priorities. He also needs to improve transparency in the legal system to attract global investors, the survey found.

Indonesia’s US$514 billion economy can expand “significantly” more than 7 percent once Yudhoyono fixes the nation’s physical infrastructure, Joachim von Amsberg, the World Bank’s representative in Jakarta, said last month.

“The focus of our strategy lies on efforts to overcome bottlenecks, whether from regulations, bureaucracy or governance,” Yudhoyono said.

Power demands

He said that his government has been trying to increase electricity by 20,000 megawatts but that drive was still “unable to meet power demands that never end as Indonesian economy growth keeps soaring.” He said more power plants will be built.

The Indonesian provinces of Riau on Sumatra island and East Kalimantan on Borneo island plan to build two 200- megawatt power plants for about 4 trillion rupiah ($400 million) because of a “severe” electricity shortage in their provinces, state utility Perusahaan Listrik Negara President Director Fahmi Mochtar said in Jakarta on July 24.

Yudhoyono also promised to improve the transport system in the crowded Java island where around half of Indonesia’s 230 million population live, including building a mass rapid transit system in capital Jakarta where a lack of public transportation has resulted into daily traffic congestions.

Source: Bloomberg