Indonesia seeks $12 billion in funding for dozens of new infrastructure projects.

Over thirty infrastructure projects will be offered during the three day Indonesia Infrastructure Conference and Exhibition 2006 next week, with ten among them being ready for commencement in 2007 including three water supply developments, two toll roads, a ferry terminal, a port, and several electricity projects. The highest value, and more long term, projects, are the construction of a $1.5 billion fiber optic network and two coal-fired power plants worth almost $2.5 billion, said Conference Chairman Chris Kanter.

Participants at this year’s conference include 400 domestic entities, 460 foreign companies, among whom can be counted German engineering conglomerate Siemens AG, General Electric, Hewlett Packard, and IBM Corp, and 200 representing governments.

Indonesia held its first infrastructure summit in January of 2005 and requested bids for 91 projects worth $22.5 billion dollars. However less than ten of these projects won concrete interest from investors. Consequently many view this first conference as something of a flop and attribute its failure to problems with regulatory and legal obstacles, as well as investors’ fears over corruption and the state of the Indonesian economy generally.

Many of those fears remain in 2006. Above all this year, says DBS Bank economist Lim Su Sian, investors will be looking for reassurances from government officials of their ability to push through badly needed legal reforms.

Meanwhile Antara says that economist Thee Kian Wie, a senior researcher at the Indonesian Institute of Science, was glum about the prospects for success at this meeting:

Frankly speaking, I am cynical this summit will produce results unless there is an immediate improvement in fighting corruption and the bureaucratic attitude of the civil servants.

Sri Adiningsih from Gadjah Mada University agreed:

A summit is not of much use. What’s important is action in the field through better law enforcement measures to fight corruption.

In related news it was announced today that the Asian Development Bank had offered a loan of $3.8 billion, one quarter of which would be made available for government infrastructure projects.