WATCH: Indonesia’s Trade Minister Lembong on country’s massive infrastructure spending

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Indonesia needs better roads, ports and other infrastructure to reach its massive economic potential, and is spending $400 billion on it. Trade Minister Thomas Lembong sat down with Borderless News Online in his office in Jakarta to explain how spending on infrastructure projects is going.

The interview comes at a time when the government is making an effort to upgrade the country’s crumbling roads and other infrastructure, which many critics say is holding the archipelago back from seeing its true economic potential.

“As state minister I travel a fair bit to the provinces, visiting markets, speaking with traders…a lot of times I am a bit surprised by how well it’s going,” he said.

He added, however, that the building of new airports is simply going “ok.”

“I think we have to admit that there are monetary constraints. Even at $20 billion per year, that’s still far from sufficient versus the actual need. I think in total we need something like north of around $150 billion over the next five to seven years,” he said, but added that there has been some progress in some projects.

When asked about the government’s easing of regulations and the opportunities for foreign investors, he said logistics would be one obvious sector.

“Everything from coal storage to warehouses. Indonesia suffers from famously high logistics costs, and I think there’s lot of space for investment to reap the high returns from those high costs but overtime,” he said.

“But I think one very intriguing new trend…is that we are now inside the cabinet talking more and more about services,” he said.

“With the changes we are seeing in China, across East Asia, services, like tourism, banking, insurance, hospitality and lifestyle are frankly very interesting,” he said.

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