Infrastructure development becomes the backbone of economic growth

This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

Kompas.id - Pembangunan Infrastruktur jadi tulang punggung pertumbuhan ekonomi

9 January 2025

By Albertus Subur Tjahjono

Relevant ministries should develop policies and oversee the 2025-2029 National Medium-term Development Plan (RPJMN) to align with the Astacita vision and mission of President Prabowo Subianto.

Infrastructure development must be the cornerstone of economic growth, providing widespread benefits to the population. Achieving this, in line with President Prabowo Subianto's Astacita vision and mission, requires close coordination among relevant ministries.

Coordinating Minister for Infrastructure and Regional Development, Agus Harimurti Yudhoyono (AHY), emphasised that for infrastructure development to effectively drive economic growth, ministries must work together closely, as they rely on each other's support and collaboration.

"Infrastructure is anticipated to be the backbone of economic growth, supporting targets such as 8% economic growth, energy and food self-sufficiency, industrial downstreaming, digitalisation, and human resource development through the health sector that includes the free nutritious meal programme. These initiatives aim to enhance public welfare," Agus said on Wednesday (8/1/2024).

To achieve infrastructure development that fosters economic growth and enhances public welfare, Agus convened a closed meeting with five ministries.

Coordinating Minister for Infrastructure and Regional Development, Agus Harimurti Yudhoyono, led a coordination meeting with the five ministries under his authority in Jakarta on Wednesday (8/1/2024).

The coordination meeting was attended by Agrarian and Spatial Planning Minister and National Land Agency Head Nusron Wahid, Public Works Minister Doddy Hanggodo, Transmigration Minister Iftitah Sulaiman Suryanagara, and Transportation Minister Dudy Purwagandhi.

Also present were Public Works Deputy Minister Diana Kusumastuti, Transmigration Deputy Minister Viva Yoga Mauladi, and Housing and Settlement Areas Deputy Minister Fahri Hamzah.

Agus convened a meeting with the ministries under his authority to prepare policies and oversee the implementation of the 2025-2029 RPJMN. The relevant ministries are expected to translate and implement this plan in alignment with President Prabowo's Astacita vision and mission.

Agus emphasised the importance of not only coordination among ministries but also integration with other stakeholders, such as regional heads, to ensure the success of the national development programme.

For instance, in the construction of dams across various regions—particularly those intended for agricultural irrigation to achieve food self-sufficiency—collaboration is crucial.

The meeting also covered spatial planning, with Agus expressing hope that the adoption of the one map and one spatial planning policies will lead to more organised development in Indonesia.

Agus noted that the policy can be aligned with the goal of preserving agricultural lands to ensure they remain highly productive.

“Agricultural fields must be protected to maintain their productivity. However, given the realities of population growth and migration, it is also essential to prepare land for housing and settlement development,” he stated.

On Saturday (30/11/2024), residents living under a toll road were relocated to the Lokbin Rawa Buaya Low-cost Rental Apartment (Rusunawa). A total of 44 households, comprising 139 residents from under the Angke Toll Road, were moved to Lokbin Rawa Buaya Rusunawa. This relocation was a collaborative effort involving the Jakarta Provincial Government, the Coordinating Ministry for Infrastructure and Regional Development, the Ministry of Home Affairs, the Ministry of Housing and Settlement Areas, and the Ministry of Social Affairs.

Agus pointed out that there remains a significant housing challenge, with approximately ten million households still without homes and around 26 million people living in substandard housing.

Agus stated, "This is what we are continuously pursuing, including relocating people living under bridges to more modest rusunawas."

The day before, President Prabowo chaired a closed meeting focused on settlements. Following this meeting on Tuesday (7/1/2025), Housing and Settlement Areas Minister Maruarar Sirat reported that, as of 20 October, 40,000 houses had been constructed for low-income citizens.

Low-income citizens are defined as individuals with an income below Rp8 million per month. Additionally, those working in the informal sector are expected to gain access to housing financing, provided they have a steady income.

The transportation sector is also a critical area of focus. Multimodal transportation development—including air, land, sea, and rail-based systems—is intended to improve accessibility for the public.

During the 2024/2025 Christmas and New Year period, the government reduced airfares by 10%. This price reduction serves as a trial for the upcoming Eid celebration. In addition to airfares, ticket prices for other modes of transportation were also lowered.

Agus emphasised the need to extend logistics networks beyond Java and Sumatra to other islands.

“The challenge lies in assessing the current capacity and identifying any shortcomings. Is the supply meeting the demand? How many existing units can be revitalised, and how many new units need to be procured? Addressing these questions requires careful planning and close coordination,” Agus stated.

Agus mentioned that President Prabowo envisions continuous development across Indonesia, encompassing both civilisation and ecosystem growth. This includes efforts in transmigration to ensure balanced regional development and improved living standards nationwide.

“[Transmigration] involves more than just relocating people; it is not about moving poverty. Its primary purpose is the equitable distribution of welfare,” he stated.

Indonesia's vulnerability to natural disasters presents a significant challenge. Future infrastructure development must not only proceed but also be designed to adapt to and respond effectively to various potential disasters. This approach ensures resilience and sustainability in the face of such challenges.

Key infrastructure projects, such as the construction of the giant sea wall on Jakarta's north coast, are crucial. Focus must also be placed on supporting initiatives like the normalisation of 13 rivers in Jakarta. Additionally, addressing land subsidence caused by the overuse of groundwater is essential to prevent further environmental degradation.

To achieve sustainable infrastructure development that promotes economic growth and benefits the public, Agus acknowledges the need for a substantial budget.

“Addressing the budget shortfall is a significant challenge, and finding credible funding sources is a continuous effort. The government acknowledges that it cannot tackle this issue alone, and thus, it seeks to involve and strengthen cooperation with business entities. Investment is encouraged from both domestic and international sources to support sustainable infrastructure development,” Agus stated.

Agrarian and Spatial Planning Minister and National Land Agency Head Nusron Wahid stated that with a budget of $353 million, his department will prioritise the development of a Spatial Planning Detail Plan (RDRT).

The budget will be prioritised for creating a cadastral map for land mapping and defining forest and transmigration borders to prevent overlaps.

“The budget will also be allocated to map and register customary lands to prevent disputes. Additionally, it will fund the development of a comprehensive land information system,” Nusron stated.

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