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.
Investor Daily - Tekanan ekonomi global jadi tantangan investasi infrastruktur
13 June 2025
By Heru Febrianto
The government requires an infrastructure budget of US$625.37 billion, or approximately Rp10,000 trillion, for the 2025–2029 period. Of this amount, the state can only cover around 40 percent, with the remainder expected to come from the domestic and foreign private sectors.
President Joko Widodo has emphasised the importance of reducing reliance on state-owned enterprises (SOEs) and expanding opportunities for private sector involvement, both domestic and foreign, in national strategic projects.
He believes the private sector is often more efficient, timely, and cost-effective compared to the performance of some SOEs.
"Often, state-owned enterprises think it is fine to work slowly. If they are wasteful, it is also fine, because they can rely on state capital participation (PMN)—PMN, PMN, PMN. What is this PMN business?" President Prabowo remarked during the closing of the 2025 International Conference on Infrastructure (ICI) at the Jakarta International Convention Centre (JICC), on Thursday, 12 June.
Accordingly, the Head of State asserted it is time for the government to give a greater role to the private sector in physical development, particularly infrastructure.
“I am directing that in infrastructure development going forward, the private sector must play a bigger role. We need partners who are efficient and technologically modern,” he stated.
The President also underscored the need to create a favourable and competitive investment climate to attract both local and foreign private investors to contribute to national development.
“If private investors, domestic or international, are to be interested, the government must ease their way,” he said.
President Prabowo stated that the government will enforce fiscal discipline by streamlining licensing procedures and land procurement to accelerate national infrastructure development.
The government also plans to strengthen collaboration between the public and private sectors and enhance synergy between central and regional governments.
To support infrastructure projects, the government has established Danantara, which will participate in the financing and investment of the sector.
The President expressed optimism that Indonesia is on the brink of a major transformation and is confident about the country's economic future.
He highlighted that Indonesia possesses immense wealth, including largely untapped marine resources.
“We will achieve food self-sufficiency, that is certain. We will achieve water and energy self-sufficiency in the near future, and we will uphold order and the rule of law. Only with legal certainty—true rule of law—can a business climate thrive,” he added.
Private sector participation needed
During the same occasion, Minister of Finance Sri Mulyani Indrawati reiterated that the government needs US$625.37 billion (approx. Rp10,000 trillion) to fund infrastructure between 2025 and 2029. Of this, the state can only meet 40 percent of the required funding, and the remainder must come from private sector participation—both domestic and foreign.
According to her presentation, the state budget (APBN) can only fund US$143.84 billion (23 percent) of total infrastructure investment needs by 2029. Meanwhile, regional budgets (APBD) can provide only US$106.31 billion (17 percent).
“The total estimated investment for infrastructure over 2025 to 2029 is around US$625 billion. This will require active private sector participation, broader partnership support, and the creation of innovative financing mechanisms,” Sri Mulyani said.
She outlined several domestic infrastructure challenges. One is the ongoing global economic pressure, with continued geopolitical tensions triggering instability and fragmentation across countries and regions.
She highlighted OECD’s projection that global GDP growth is expected to fall from 3.4% in 2024 to 2.9% in 2025. The latest World Bank report also anticipates global growth to decline further to 2.3%.
On another front, climate change is compounding infrastructure development risks, as global temperatures are projected to hit record highs over the next five years, increasing environmental, social, and economic vulnerability.
These risks could also trigger population displacement, further reinforcing the need for more resilient infrastructure.
“These challenges—especially rising climate risks—have become major obstacles for many countries in planning and executing infrastructure projects,” the Minister said.
To address this, the government requires robust private sector participation and backing from development partners to close the infrastructure financing gap.
Driving transformation
To tackle the challenges of rapid urbanisation and global climate change, Minister of Public Works Dody Hanggodo stressed that Indonesia’s future infrastructure development must be guided by six key principles: resilience, connectivity, sustainability, inclusivity, innovation, and good governance.
“These principles are part of our broader vision under Asta Cita, where one of our key roles is to drive transformation in infrastructure development,” Dody said at the opening of the 2025 International Conference on Infrastructure.
To achieve inclusive and sustainable infrastructure, Dody outlined initiatives by the Ministry, including transforming 50 cities through the National Urban Development Project (NUDP) supported by the World Bank; incorporating Environmental, Social, and Governance (ESG) principles across all infrastructure programmes; constructing the giant sea wall to protect coastal areas from climate change impacts; developing dams for irrigation and renewable energy; reforming environmental management via waste-to-energy systems; and expanding access to clean water through the PPP scheme, such as the Jatiluhur 1 Regional SPAM project.
Dody also emphasised four enabling strategies as critical to delivering sustainable infrastructure: smart infrastructure powered by digital and AI technologies, green urban planning, disaster-resilient construction, and active community participation.
“Infrastructure resilience does not just come from concrete. It comes from how we think, plan, and engage. Strengthening infrastructure for the future means rethinking our approach—from capacity to resilience, from scale to purpose, and from short-term usage to long-term sustainability,” he explained.
To achieve infrastructure targets set out in the 2025–2029 RPJMN, Indonesia requires Rp1,900 trillion, with the government only able to finance 60 percent. Thus, Dody called on the private sector and international partners to collaborate through the PPP scheme.
“We have 55 PPP projects, with nine projects valued at Rp90 trillion now open for investment at the ICI forum. Let us build smarter, greener, and more inclusive infrastructure together,” he urged.
Meanwhile, Coordinating Minister for Infrastructure and Regional Development Agus Harimurti Yudhoyono (AHY) expressed hope that ICI 2025 would serve as more than just a forum for discussion, becoming a launchpad for bold, transformative action in Indonesia’s development.
“This decade will determine Indonesia’s direction. Our success will depend on what we build, how we build it, and—most importantly—whom we are building it for,” said Coordinating Minister AHY.
Next article: Boosting the economy through projects
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