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 - Solusi tutup gap pendanaan infrastruktur
5 June 2025
By Heru Febrianto
The infrastructure funding gap for the 2025–2029 period is projected to reach Rp753 trillion, accounting for 39.5% of total funding requirements. To address this issue, the government must provide regulatory certainty to encourage private sector participation in infrastructure projects and close the gap.
So far, private businesses have been reluctant to engage in government infrastructure projects due to unclear regulations. Additionally, private investors must be protected from investment disruptions, including those caused by rogue elements and mass organisations.
Minister of Public Works Dody Hanggodo stated that, under the National Medium-Term Development Plan (RPJMN) for 2025–2029, infrastructure development is projected to require Rp1,905.3 trillion. Of this amount, the State Budget (APBN) can only finance Rp678.91 trillion (35.63% of total requirements), while the Regional Budget (APBD) can provide Rp473.28 trillion (24.87% of total needs).
“With the current fiscal limitations in both the APBN and APBD, it is estimated that there will still be an infrastructure funding gap of Rp753 trillion,” Dody stated at the annual Creative Infrastructure Financing Day (CreatIFF) 2025 held at the Ministry of Public Works office in Jakarta on Wednesday (4/6/2025).
He affirmed that infrastructure development funds for 2025–2029 will be allocated to water resources projects, including the rehabilitation of 25 dams, an increase in water storage capacity to 63.54 m³ per capita, the construction of 180,000 hectares of irrigation systems, the rehabilitation of 1.2 million hectares of irrigation, and the management of 93.79 m³/sec of raw water infrastructure.
Furthermore, for road and bridge development, the targets include achieving 98% of national roads in good condition and reducing travel time on major routes to 1.7 hours per 100 km.
Finally, regarding housing development, the targets include 43% of households having access to safe drinking water, 51.36% of urban households gaining access to piped potable water, 30% of households being connected to safe domestic wastewater systems, and 38% of waste being processed at waste treatment facilities.
To meet infrastructure development targets by 2029, creative financing mechanisms are being developed to bridge the funding gap, involving investors, businesses, enterprises, institutions, universities, and the general public.
“I will continue to push all levels within the Ministry of Public Works, especially the Directorate General of Infrastructure Financing, to explore and develop various creative financing schemes, including Public-Private Partnerships (PPPs), blended financing, asset securitisation, and other potential methods,” he explained.
Dody emphasised the need to develop an inclusive, conducive, transparent, and accountable financing ecosystem to attract private investment, both domestic and foreign, for the sustainable development of infrastructure.
“The success of infrastructure development is not solely the government’s responsibility but requires active participation from the private sector and all elements of the nation. I invite all stakeholders to strengthen collaboration, enhance synergy, innovate, find breakthroughs, and work together to secure sustainable alternative financing sources,” Dody concluded.
Private sector discouraged
Minister of Public Works Dody Hanggodo responded to reports of private sector reluctance to re-engage in government infrastructure projects under the PPP scheme. He received this information from Donny Rahajoe, Vice Chairman of the Indonesian Chamber of Commerce and Industry (Kadin) for Housing and Settlement Areas.
Dody acknowledged that this development is a significant signal that needs immediate attention. Therefore, his ministry will intensify efforts to encourage private sector involvement in Indonesia's infrastructure development.
"If even local private companies are discouraged, how can we attract investors?" Dody remarked, as quoted by Antara.
Donny Rahajoe noted that many domestic and foreign entrepreneurs feel somewhat traumatised about investing in government projects. One of the reasons for this is the fragmented policies within the PPP framework, which vary from one project to another. According to him, this results in convoluted and prolonged processes.
"For instance, I have been in the new capital (IKN) for two and a half years, and not a single project has taken off despite the PPP rules having been simplified. So, investors wonder when financial closing can actually take place so they can begin operations," he added.
Infrastructure analyst from Universitas Trisakti Yayat Supriatna stated that boosting infrastructure investment without relying on the state budget can be achieved as long as the government provides certainty. According to Yayat, certainty is the key to infrastructure investment, meaning that regulatory frameworks should no longer contradict each other.
"The key is simply certainty. Investors need to be sure about their market, have clear production plans, and operate smoothly over a period of time. There should not be constant interference from thugs or disruptions," he told Investor Daily.
He added that the government could take inspiration from several Southeast Asian nations where economic growth has surged due to rapid infrastructure development. For instance, Vietnam grants investment concessions of up to 90 years for large-scale manufacturing facilities.
In Indonesia, the government must be bold in offering long-term concessions to investors to foster infrastructure development. Meanwhile, the Ministry of Public Works should focus on providing basic infrastructure, such as road networks, reliable access to clean water, and long-term regulatory frameworks, including sector-specific master plans.
"Just grant concessions—whether land concessions or otherwise—then let investors innovate and bring areas to life. There are plenty of examples, like Pantai Indah Kapuk, Bumi Serpong Damai, and other major property hubs," he explained.
Yayat further stressed that the central government must guarantee investment security during project development. He pointed out that disturbances often come from rogue groups or organisations, damaging Indonesia’s investment climate.
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