STUDY ON PERCEPTION OF CITY GOVERNMENTS REGARDING INNOVATION IN FINANCING OF URBAN INFRASTRUCTURE

Abstract

This paper aims to study the perception from city government regarding the financing innovation of city’s infrastructure. Cities need to provide basic infrastructure services—clean water, power and electricity, roads, public transit, sewage systems, telecommunications, schools, hospitals, to name a few — to support growth. Infrastructure is capital-intensive and expensive to build and, once built, lasts a long time. Apart from the fiscal aspect, the readiness of Indonesian cities to expedite urban infrastructure developments varies from one city to another. In this regard, city administrations need to increase the human resource capacity to support infrastructure development. With the high-demand of infrastructure provisions, high numbers of employees are needed to meet the demand as the current government priority sets ambitious targets in developing the infrastructure. 

There are dominant factors that hinder infrastructure development in Indonesian cities:

Lack of financial capacity, matching private sector with financially viable projects, lack of capacity in human resources, regulatory and political risks, and land dispute and land acquisition. To overcome this, city governments need to innovate around financing methods in a highly regulated finance regime. Moreover, this study seek to understand the challenges faced by five Indonesian city governments in finding innovative ideas in financing the needed infrastructure.