Indonesia's draft land acquisition bill, seen as crucial to improving the country's infrastructure, has got the go ahead from most political parties and could be approved by parliament by the middle of the year, a government official said on Thursday.
The government hopes the bill will speed up the acquisition of land for roads, railways and airports, and attract over $100 billion from investors to fund infrastructure projects that Southeast Asia's biggest economy needs to spur growth.
"The draft bill has been agreed by almost all factions. It's a matter for the parliament when to finish it ... By mid-year it should be finished," Syahrial Loetan, secretary to the planning ministry, told Reuters in an interview. The draft bill was submitted to parliament late last year and investors had hoped it would be approved by now, although policy-making is slow and often delayed in a body that only passed about 10 percent of bills targeted for 2010.
Inadequate infrastructure is seen as both an investment opportunity and an obstacle to growth, and was cited by Fitch Ratings this month as a key risk to the chances of the country winning an investment grade rating in the next 12-18 months. Investors in infrastructure projects, such as the country's main toll road builder Jasa Marga and Indian coal firm MEC Holdings, say land acquisition is the biggest hurdle, as small landowners can hold up projects for years.
The country's cities are facing gridlock from record car sales and its cargo ports are overwhelmed as commodity exports surge, while deadly accidents are all too common on ships and planes in the archipelago. "Almost all projects are stuck because of land problems," said Loetan, adding that he expected 24 toll roads on the main island Java could go ahead once the bill is approved.
The bill is expected to help determine compensation levels for landowners and set short timeframes for payments and appeals, though widespread institutional corruption is likely to remain a problem. Loetan said supporting government regulations, which are needed to implement bills in Indonesia, have already been prepared and could go through by the end of this year.
Japan has committed over $50 billion for infrastructure in Indonesia and the government has said this investment is expected to go ahead despite its devastating recent earthquake and tsunami. Loetan met 30 Japanese CEOs a week before the quake, who considered Indonesia their main trading partner. Toyota, Daihatsu and Yamaha Motor , leading vehicle sellers in Indonesia, have announced recent investments. "They won't change their decision on investing in Indonesia," Loetan said. "I think Japan will still make Indonesia a place for relocation."