The Investment Coordinating Board (BKPM) has passed a number of business permits for foreign investors to build power plants with a total value of US$8.94 billion in the first quarter of this year.
The 12 permits will facilitate power projects that will produce nearly 6,000 megawatts (MW) of electricity nationwide.
The capacity is expected to be produced by various kinds of power plants ranging from hydro to coal-fired and will contribute to the production of an addition 35,000 MW of electricity for the country by 2019.
BKPM deputy director for investment planning Tamba Hutapea said Tuesday that the figure for the planned investments was more than 10-fold the $780 million recorded in the initial quarter of last year.
“We see that the one-stop licensing service has helped raise interest in the electricity sector, as seen by the significant jump in investment plans,” he said during a press briefing at his office.
Out of the overall figure, the largest sum of $6.26 billion will come from a Chinese investor, followed by $1 billion from three Japanese firms and $444 million from five Singaporean firms, according to BKPM data. The 15 power projects are set to be developed in 12 provinces on Sumatra, Java, Sulawesi and Maluku.
Apart from the licenses given to foreign investors, the board has also granted permits for 17 power plant projects funded by local firms worth Rp 3.45 trillion (US$265.64 million) in the January to March period.
Limited infrastructure, including power plants, remains one of the major bottlenecks that hampers the Indonesian economy from reaching its growth potential.
The new administration has calculated that $460 billion in investments are necessary to finance enormous infrastructure projects to spur higher growth in the sprawling archipelago of more than 17,000 islands. Of the figure, the government’s expenditure can only make up 22 percent, thereby the participation of the private sector, including foreign firms, is much encouraged.
To help attract funding, the investment board has been carrying out some reforms, such as integrating its licensing service and cutting the time to process investment permits.
In the update on investment permit reforms, the board claimed that it would be able to shorten the permit process for electricity investment from the present 923 days to 256 days.
BKPM chief Franky Sibarani attributed the shorter process to some accelerations in the electricity-related investment licensing process.
Meanwhile, the time to process forest area clearing permits, for instance, has been reduced from 111 days to 47 days, while licenses for the use of forested area for mining and non-mining has been cut from 110 days to 52 days.
“The simplification of the permits will not only benefit the power sector, but also other sectors,” Franky said.