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Massive Infrastructure Investments in Indonesia

Large-scale infrastructure investments in Indonesia promise to radically affect the region, for better or for worse.

The Strategic Foresight Group writes,

"Developments taking place in the railway sector in South Sumatra, and Central and East Kalimantan will significantly change the economic landscape of these provinces in the coming decades. A USD 1 billion, 130-kilometer railway project is about to be constructed in East Kalimantan. This infrastructure which will link the Muara Wahau coal mine in East Kutai with the coast where a new seaport terminal is also being constructed, is designed to support coal mines, aluminum smelting and coal-fired power and fertilizer plant projects in East Kalimantan. Another 185-kilometer railway project worth USD 1.5 billion in Central Kalimantan is in the planning stage, also designed to facilitate an efficient transport of coal from mines to seaport terminals. An agreement has also been signed to build a 270-kilometer, USD 1.67 billion railway project to expedite the transport of coal from Bukit Asam’s coal mine in South Sumatra to a coal terminal at Tanjung Api-Api port."

Implications

Proper infrastructure, social, and urban planning is needed to ensure these developments benefit the region.

The Strategic Foresight Group notes that if these construction projects are ready by the planned date, they will have a significant impact on the region in terms of development of infrastructure, foreign direct investment, employment opportunities, development of the Indonesian coal industry, boost to the nation’s economy, in-migration (from rural areas as well as all over Indonesia), and rapid urbanization. These effects will be positive if the infrastructure and resultant urbanization is planned well, but if they are not, it could increase urban poverty and devastate the local environment.

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Sources:

Strategic Foresight Group, Dec 2010, page 13:
http://newsletters.clearsignals.org/SFG_Dec2010.pdf#page=13

“Editorial: Coal industry-driven railways”. The Jakarta Post. 30 August 2010, http://www.thejakartapost.com/news/2010/08/30/editorial-coal-industrydriven-railways.html

Haryanto, Bilhuda. “India’s Adani to Invest $1.6b In S. Sumatra Coal Railway”. The Jakarta Globe. 25 August 2010. http://www.thejakartaglobe.com/business/indias-adani-to-invest-16b-ins-
sumatra-coal-railway/392884

“Indonesia Private Railway Freight Corridor, Indonesia”. Railway-technology.com. http://www.railway-technology.com/projects/indonesiaprivaterail/

Simamora, A.P. “Coal mining ‘destroying’ Kalimantan”. The Jakarta Post. 18 March 2010. http://www.thejakartapost.com/news/2010/03/18/coal-mining-%E2%80%98destroying%E2%80%99-kalimantan.html