Safety won't be compromised

How would you describe the main responsibilities and focus of Commission V?

The duties of Commission V of the House of Representatives (Dewan Perwakilan Rakyat Republik Indonesia /DPR-RI) are amongst others to deliberate on matters in the area of transportation, public works and public housing and villages and disadvantaged regions. Commission V is also responsible for formulating bills in these fields for submission to the plenary session of the House.

Commission V consists of 56 members who are affiliated with 10 political parties.

As Commission V, at the moment we focus on the legislation of construction services and architecture, which will be summitted in 2015. Besides that we also focus on the Asean Economic Community and concentrate on the state budget revision of 2015.

In our activities we cooperate closely with the Ministry of Transportation, the Ministry of Public Works and Public Housing and the Ministry of Villages and Disadvantaged Regions.

Would you give us your views regarding to new government programs?

The House of Representatives supports every policy of the government that has the goal of reformation in several fields to improve the performance of the government, amongst others management of the state budget, proper administration and regulation as well as alligning the infrastructure of budgeting that can be directly linked to the growth of the national economy.

 Commission V has also been tasked with the audit of programs in the field of infrastructure, through the evaluation of the targets of the previous government and the targets of the new government.

Targets for the next 5 years have been set. By 2019 all Indonesians should have access to clean water and sanitation. Access to clean water was 68.5 percent in 2014, while for sanitation it was 60.5 percent in 2014. The current condition of national roads in solid condition is 94 percent and is targeted to be100 percent by 2019. Another target is to reduce the logistic costs from 27 percent in 2014 to 20 percent by 2019. To achieve the food sufficiency target, the number of irrigation reservoires for farming land should be increased from 12 percent in 2014 to 20 percent in 2019. A sustainable supply of raw water is targeted for 195 m3 by 2019, which was 54 m3 in 2014.

What are the plans on building new ports and improving the current ones?

Indonesia is the biggest archipelagic state in the world and owns the second largest coastline in the world. On a total coastline length of 81,000 kilometers Indonesia has 25 to 30 big ports. The vastness of the length in coastline is shown in these numbers. Where Japan has a port on every 11 kilometers of coastline and Thailand a port on every 50 kilometesr, Indonesia has a port on every 4,000 kilometers of coastline.

The lack of infrastructure still remains the main obstacle for the development of Indonesia. The new government plans to use the strategic location of Indonesia and its vast coastline to become the maritime axis in the region.  For that purpose President Jokowi wants to build 10 ports, 25 dams, 10 airports, 10 industrial regions and 2,000 kilometers of road. Specifically, President Jokowi emphasized to strengthen the maritime infrastructure, by developing a marine toll road to connect the islands. It is estimated that for this marine toll road an investment of 70 billion Rupiah is needed and will reduce logistic costs as big as 50 percent.

 Commission V supports the activities for the development of ports and also for current ports to strengthen their position. It is not only ports that need improvement, also the use of vessels (according to the needs of the region) need to be improved.

To  be able to achieve this Maritime Axis,  development of new ports is needed, rehabitalization of old ones and a National Logistic System and National Transportation system that is integrated and able to connect cities and islands. This will contribute to increase the local economy and improve the economical growth.

Would you give us your views about the future of Indonesian airports and airlines?

Most of the terminals at national airports experience an overload in capacity, since they are unable to accommodate the growth of passengers and goods. For example in 2013 international airport Soekarno-Hatta had an overload of 260,9 percent and international airport Juanda in Surabaya had an overload in capacity of 141,7 percent. Therefore the government has planned and budgeted the construction of new airports and expansion of current ones.

Commission V together with the Ministry of Transportation share the same view: “No compromise on safety”. There are 3 main points that airlines have to consider in their operation. First of all safety, secondly convenience and thirdly people’s ability to fly.

However they don’t share the same view on the plans of a new rule of the Minister of Transportation to stop budget airlines from selling seats at rock-bottom prices, in an effort to reemphasize safety and to ensure that these low-cost carriers have sufficient funds for safety-related costs. The plan is to set the lowest possible fare for such carriers at 40 per cent of the highest fare. Commission V believes that the Ministry should only focus on auditing and monitoring on safety.

In regards to public works and public housing as a priority for the Parliament, what would you highlight as the most important points regarding the strategy for the coming years?

With the increase of the middle-income in Indonesia, public housing and housing renovation are strategic points for the new government. Between 130 to 140 million people in the period of 2020 to 2030 will increase the demand for property.

Commission V supports the efforts from government to meet the basic needs of the people by owning a house. There is the Housing and Habitation Law (UU no.1 Year 2011) and the Law on Flats (UU no. 20 Year 2011).

Indonesia still  experiences a backlog in housing of 15 million households. This gap grows by 18,000 households demanding new units. The current housing stock is not sufficient to meet the demand (Yearly the government is able to build around 300,000 units).

With a total backlog of around 15 million houses, the government aims to provide 2 million new residences per year for the next 5 years, allocating Rp 10 trillion (US$795.3 million) of the 2015 revised state budget draft to realize the program.

FLPP is the Housing Finance Liquidity Facility, a government-subsidized mortgage program for Indonesian citizens who have never owned a house and earn less than Rp3.5 million (approximately US$365) per month. At Commission V, we acknowledge that the new government supports this program in an effort to meet the needs of housing for the people of Indonesia. Building homes for low-income residents is essential as it can gradually alleviate slums and, at the same time, tackle the issue of homelessness. Commission V supports this.

Real estate and construction, it is the sector expected to grow the most in the following years, what is the government doing to accompany this growth?

Contractors in Indonesia are obliged to use the 6-3-1 principle when building real estate. This principle indicates that there has to be a balance in the number of houses/buildings the contractor builds, meaning comparatively 6 units for lower class, 3 units for middle class and 1 unit for a big house should be built.

To encourage this, incentives for low income housing development are provided to developers or contractors, like tax incentives, public facilities and cheap credit.

What message would you like to send to foreign investors?

Indonesia has a population of 248 million people, making it the 4th largest country in the world and the highest population in ASEAN. Indonesia achieved a GDP of $ 871 million for the year 2013, making it the 16th highest in the world and the highest in ASEAN. The total area of Indonesia comprises 1.9 million km2, ranking it number 15 of the widest countries in the world and the widest country in ASEAN. The gross domestic product of Indonesia of 36 percent compared to other countries in ASEAN is the largest. Thailand reached 16 percent, Malaysia 13 percent, Singapore 12 percent, the Phillipines 12 percent and other countries 11 percent.

Indonesia is one of the main destinations and an attractive market in Asia for investment. World Investment Report 2014 ranked Indonesia number 4 as the main country for investment in the world for the period 2014-2016 after China, the United States and India.

For the development of infrastructure we need 2,500 billion rupiah for the next 5 years, specifically for connectivity we need as much as 1,500 billion rupiah. The government’s budget is about 120 to 180 billion rupiah yearly, meaning a backlog of 120 to 180 billion rupiah every year.

These conditions provide a chance to invest in the field of infrastructure in Indonesia. This is our invitation to you.