Payments from the government to the companies will be contingent on the availability of the infrastructure services, as per criteria agreed upon in the partnership agreements.
The Indonesian Minister of Communications and Information said last week that the installation of fibre-optic network under the Palapa Ring Project is expected to be completed by 2019. Currently 400 out of 514 regencies have been connected with the network enabling high-speed Internet access and the remaining 114 will be completed by the deadline.
The Palapa Ring Project, one of the national strategic projects stipulated in Presidential Decree No. 3 of 2016, aims to develop a nationwide fibre-optic network, which will provide the backbone for a national information superhighway. It is part of the Government's USO (Universal Service Obligation) to ensure telecommunications and informatics for the public.
Providing reliable Internet connection in remote areas has proven to be challenging in developing nations, with Indonesia’s geographical layout and terrain creating further complications.
In order to bridge the digital divide and provide affordable access to Internet, the project will connect all districts and cities in Indonesia, even those which are located in areas where it might not be commercially viable for telecom operators to lay cables. It is viewed as an important step in moving towards economic equality. It would open up new opportunities for education and expand business reach for Small and Medium Enterprises (SMEs) to provide just a few examples of the benefits.
However, the project is being implemented in collaboration with the private sector, which will handle the construction and ensure service delivery up to desired standards during the concession period.
The enterprises will be able to recover capital costs and operating costs, and earn a reasonable profit desired by business entities, contingent on the availability of the infrastructure services, as per criteria agreed upon in the partnership agreements. Demand risk will be borne entirely by Kominfo or the Ministry of Communications and Information.
It is estimated that regular Availability Payments will reach IDR 4 trillion (~USD 300 million) during the concession period of 15 years. The continuity of the payments will be guaranteed by the Government through PT Indonesia Infrastructure Guarantee Fund (PII).
The project is divided into three packages:
Minister Rudiantara also affirmed the role of local government in the Palapa Ring project, saying that it can be implemented only with support from the regents and communication agencies in the local administrations.
Read the press releases (in Indonesian Bahasa) here and here.
Featured image: Kominfo
We release new articles daily on trending topics within technology and the public sector. Subscribe to have weekly digests of our articles conveniently sent to your email address.
Mövenpick Hotel and Convention Centre KLIA
One Farrer Hotel
Sheraton Towers Singapore
Putrajaya Marriott Hotel
Marina Bay Sands, Singapore
JW Marriott Jakarta