Indonesia Announces C$130B in Infrastructure, Social Projects

Airports, harbours, and roads to recovery . . .

Southeast Asia’s largest economy plans to spend C$130 billion on 89 new infrastructure and social projects over the next five years. The laundry list for Indonesia’s post-COVID-19 recovery includes five tourist sites, 13 dams, 15 roads and bridges, and five airports, as well as social and health programs. The plan aims to add four million new jobs to the Indonesian economy each year over the next half-decade, which is especially needed since the COVID crisis and related closures have already put two million people out of work in just two months. The government has set aside about C$60 billion to respond to the pandemic, with further promises of additional stimulus measures, including a separate C$900 million for the farming and fisheries sectors.

The ‘new normal’ . . .

The job losses to date and mounting economic challenges also spurred the Indonesian government to announce last week that a ‘new normal’ of reduced social distancing restrictions would begin on June 4. The new normal includes some new restrictions, too, with the government cancelling this year’s Hajj, the annual Islamic pilgrimage to Mecca, Saudi Arabia, and dispatching as many as 340,000 military and police personnel to enforce social distancing rules. The Health Ministry has also issued a circular explaining health protocols that workplaces must adopt. The opening of different regions also depends on the course of the pandemic, with the government’s chief health expert saying that regions with “good epidemiology indicators” will be the ones allowed to loosen their movement restrictions.

Co-operation, social measures planned . . .

The success of the planned new infrastructure projects will require co-operation with other economies in the region: Taiwanese investors, for instance, will be funding a C$20-billion oil refinery. Indonesia is also banking on economic competitors becoming partners, with Jakarta signalling a plan to merge China-developed and Japan-developed rail projects with one multinational consortium of investors. But with many of the pandemic’s economic impacts felt at the individual level or among micro, small and medium-sized enterprises, some of the most diffuse impacts could be driven by the acceleration of land reform measures, helping swathes of the economy but encroaching on Indigenous and forested lands in the process.

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