The World Bank (WB) and the Asian Development Bank (ADB) will contribute around 2 trillion rupiah (about US$170 million) to Indonesia's new Infrastructure Fund, which would provide alternative financing for development projects since as early as this March.

"The Infrastructure Fund will be finalized by the end of February and will begin in full operation in the first semester of 2009," the Jakarta Post daily on Wednesday quoted Wahyu Utomo, the Indonesian Finance Ministry's assistant deputy for housing development, as saying.

According to Wahyu, the new fund also involved another 1 trillion rupiah (about US$85 million) allocated by the Indonesian Finance Ministry from the state budget fro the new institution.

"In total we will have around 3 trillion rupiah for the Infrastructure Fund, but there is a possibility that we can allocate up to 4 trillion rupiah for the fund," he said.

With the Infrastructure Fund, the country earned an alternative source of funds for business development for infrastructure.

However, even with the aid of the WB and ADB, the available fund is still far lower than the country's target for the Infrastructure Fund in the next five years. The country estimated a need of around 20 trillion rupiah for the Infrastructure Fund during that period.

"Learning from India, we can use the Infrastructure Fund to attract the private sector to take part in the institution and in the end to reach the targeted budget," Utomo said.

The government is intensifying its infrastructure projects this year to help stimulate an economy hampered by the global economic slowdown.

According to the National Development Planning Agency, the total need for investment in infrastructure development for the next five years will be around 1,429 trillion rupiah. However, the Indonesian government can only provide about 31 percent or 451 trillion rupiah.

The agency's deputy chairman for infrastructure Dedy Priatna said the government would try to cover the gap of 978 trillion rupiah by proposing public private partnership (PPP) programs to investors, which is expected to provide another 365 trillion rupiah.

To build confidence of investors to Indonesia, the agency recently submitted a proposal on the revision of a presidential regulation to the Finance Ministry, aiming at improving the country's lack of consistency in regulations as well as the country's uncertain conditions in both the political and security sectors.

(Xinhua News Agency February 11, 2009)