02 Nov 2022
New Regulation to Speed Up Development of Infrastructure Projects Assigned to Public Works Ministry

The President has issued a new regulation, which came into effect on 27 September 2022, which grants the Ministry of Public Works and Housing (“MOPW”) broad strategic authority to undertake the timely development and delivery of key infrastructure projects. The new regulation (Presidential Regulation No. 120 of 2022 on Special Assignments to Accelerate Infrastructure Development / “PR 120/2022”, effective 27 September 2022),[1] is backed by expedited mechanisms and procedures to help remove the obstacles and bottlenecks that tended to stymie the quick delivery of urgent infrastructure projects by the MOPW in the past.

Under PR 120/2022, the President can assign the MOPW to take charge of development projects in respect of 21 different types of public infrastructure, facilities and buildings. The scope and locations of special assignments will be determined by the MOPW.

The full list of the public infrastructure projects covered by PR 120/2022 is as follows:

1. Development or rehabilitation of water resources infrastructure;
2. Development or rehabilitation of coastal protection structures;
3. Development of vessel moorings;
4. Development or expansion of drainage systems;
5. Development of roads and bridges;
6. Renovation of roads and bridges;
7. Development or renovation of government office buildings;
8. Development or renovation of student dormitories;
9. Development, rehabilitation or renovation of elementary, middle and high school facilities and infrastructure;
10. Development or rehabilitation of public buildings/structures;
11. Development or renovation of dwellings, housing facilities, and related infrastructure, and utilities;
12. Development or rehabilitation of public facilities, infrastructure and utilities;
13. Development, rehabilitation or renovation of sports facilities and infrastructure;
14. Development or renovation of auditoriums;
15. Development or renovation of buildings with social and religious functions;
16. Development and renovation of state palaces;
17. Renovation of cultural heritage buildings and related spaces;
18. Development, rehabilitation or renovation of market facilities and infrastructure;
19. Development or renovation of hospitals;
20. Development or renovation of low-cost apartments to revitalize local neighborhoods; and
21. Development, rehabilitation, or renovation of low-cost apartments or government office buildings in order to provide emergency hospitals and centralized quarantine facilities.

To streamline the processes involved, PR 120/2022 permits the MOPW to procure goods and services via a direct appointment process (rather than by tender). It also provides that projects may be developed via public-private partnership (PPP) schemes.

PR 120/2022 further provides that land to be acquired for infrastructure projects must be free from dispute or legal issues. It envisages that the land may be owned by the state, regional or village governments, state- or region-owned enterprises, or private landowners. As regards funding, in addition to allocations from the National Budget (APBN), PR 120/2022 provides that other forms of lawful financing may be accessed in order to fund the development of infrastructure projects.

ABNR Commentary

PR 120/2022 is primarily aimed at simplifying and streamlining, if not quite eliminating, the bureaucratic red tape that previously prevented the MOPW from quickly and efficiently proceeding with important infrastructure projects.

Of course, the MOPW has regularly been given special assignments in the past. However, these were highly specific in nature or related to one-off events, such as infrastructure developments for the G20 summit in Bali to be held in November 2022 and the planned ASEAN summit to be held in East Nusa Tenggara in 2023, the redevelopment of the Taman Mini Indonesia Indah theme park in Jakarta, and the Mandalika mixed-use project in West Nusa Tenggara. What is new about PR 120/2022 is that it places the special assignment mechanism on a solid legal footing, and expands and mainstreams it across a range of important infrastructure sectors in the expectation that this will allow the MOPW to act as a key driver of urgent infrastructure projects going ahead.

By partner Mr. Ayik C. Gunadi (agunadi@abnrlaw.com) and senior associate Mr. Gombang Satria (gsatria@abnrlaw.com).

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