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Zulkieflimansyah, Ph.D

Establishing A Bridge of Reason & Understanding
Thursday 5th of October 2017
Wawancara » 11 Juni 2012 » Hit: 848
Less attractive projects to enjoy financial leverage

Investments in government-sanctioned infrastructure projects will benefit from financial leverage provided by the central government starting next year under the so called Viability Gap Funding (VGF) scheme, says Finance Minister Agus Martowardojo.

The scheme will provide financial support in the form of grants to infrastructure projects undertaken through public-private partnerships with the aim of making them more commercially viable.

Agus said the regulation for the implementation of VGF would be available this month, but execution would not be possible until the new fiscal year started.

 “The VGF is a government-support financing scheme. Therefore, it must be in line with the budgetary cycle. The financing for the VGF must be formulated at the earliest stage of budgeting,” he told reporters on Monday.

Projects eligible to receive VGF are those with a strong orientation toward public welfare and which have a significant multiplier effect for the economy. Such projects could include toll roads, interconnectivity roads that connect villages and clean-water installations.

The government will provide a maximum of 40 percent of total funding needed for the projects. For less popular projects such as sanitation and garbage processing installations, the government could support the funding by up to 70 percent.

According to Agus, the VGF will be funded using the state budget surplus (SAL). Agus said that the complexity in preparing the regulation for the VGF scheme also depended on the commitment of all ministries’ to their respective projects.

“A sense of ownership from each ministry of its projects is crucial because the Finance Ministry is preparing the formulation to determine the amount of resources that will be included in the deliberation of the 2013 state budget,” Agus said.

“Each ministry will be given a portion of the resources and therefore, we need to be sure that there will be proper coordination among ministries on their projects. We do not want to face a situation in which a ministry requests VGF support but the officials can not formulate proper plans for their projects beforehand,” he added.

Agus also stressed that each ministry had to be able to identify which projects were eligible to receive VGF support.

He said that his ministry would consult with the House of Representatives to formulate the planned regulation on the VGF as soon as possible.

Prosperous Justice Party (PKS) lawmaker Zulkieflimansyah said he believed the implementation of the VGF would accelerate infrastructure development in Indonesia.

“Therefore, I fully support the idea of implementing the scheme because infrastructure development is the main key to raising our general social welfare,” he said.

Zulkieflimansyah, who is also deputy chair of the House Commission XI overseeing finance, said that proper monitoring of the VGF implementation would be needed to prevent potential misappropriations.

“I know the current Finance Minister has the integrity to monitor the implementation of the scheme to prevent misuse. Therefore, if Pak Agus endorses the scheme then we legislators see no reason not to support him,” he said.

(Source: The Jakarta Post, Jakarta, 05/22/2012)