Minister of Finance Sri Mulyani Indrawati has highlighted a critical gap in Indonesia’s infrastructure development − the lack of credible funding plans −which she says is the main reason private investors remain hesitant to engage in large-scale national projects.

Speaking at the 2025 International Conference on Infrastructure (ICI) held at the Jakarta International Convention Center (JICC) on Thursday, June 12, 2025, Sri Mulyani emphasized the urgent need for coherent and transparent funding strategies to support the government’s ambitious infrastructure agenda.

“Infrastructure projects without a credible funding plan raise one crucial question: Who is going to pay? It doesn’t matter how sophisticated the financing structure looks. Without clarity, investors will smile, nod, and then walk away,” she said.

Her remarks come amid a renewed national push to attract private sector involvement in infrastructure development, especially as Indonesia prepares for major capital-intensive projects including the relocation of its capital to Nusantara (IKN) and expansion of energy and transport networks.

Funding vs financing

The minister cited the difference between funding and financing, two terms often conflated in infrastructure discussions. Financing, she noted, refers to the mechanism by which capital is raised to build infrastructure, such as loans or public-private partnerships. Meanwhile funding, answers the question of who ultimately bears the cost of the service or facility provided.

“Investors want certainty. If there’s no credible indication of who pays in the long run whether it’s the government, users, or subsidies then no amount of financing ingenuity will close the deal,” she said.

The government’s limited fiscal space, according to Sri Mulyani, makes it imperative that infrastructure development is not just ambitious but also realistic. She warned against the overuse of creative financing mechanisms that lack a foundation in sound funding logic.

“Chasing innovative financing models without resolving basic funding challenges can lead to structurally flawed projects. These might look feasible on paper, but are unsustainable in practice,” she cited.

“Eventually, the government may be forced to step in and bear inefficient costs,” she added

Project selection

Sri Mulyani underscored the importance of strategic planning, starting from careful project selection, thorough preparation, realistic pricing models, and where needed, the implementation of transparent and measured subsidies.

“We believe the real solution to infrastructure bottlenecks lies in getting the fundamentals right: good project selection, credible pricing, and clear accountability for who pays,” she concluded.