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  8. Balang Island Bridge

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About the Project 

The Balang Island Bridge was built to facilitate connectivity between the cities of Samarinda, Balikpapan and the new Nusantara Capital City. It also created a shorter route for transport and logistics in the southern part of Kalimantan. The bridge is 804 meters long and situated on the northern part of the island of Balang connecting to the eastern side of Balikpapan Bay. An existing bridge connects island to the western side of Balikpapan Bay.

Construction of the bridge began in 2015 and was completed in 2021 at a cost of IDR 1.43 trillion. (86.5 million USD) The project was financed by State Sharia Securities (SBSN) or Sukuk and built as part of a collaboration between Ministry of Public Works and Public Housing (PUPR), the Provincial Government of East Kalimantan, the Penajam Regency Government, and the North Penajam Paser Regency Government.

The implementing contractor for the project was the Joint Operation (KSO) system comprised of three companies: PT Hutama Karya, Adhi Karya and Bangun Cipta.

This project falls under the administration for the preparation, construction and relocation of the National Capital (IKN) and statutory provisions from the State Revenue and Expenditure Budget.

Construction of the bridge is part of the ambitious new IKN (National Capital) project. It was chosen for ICRAT review because of the high project cost, and high levels of opposition by environmental activists who argued there was a high risk of environmental damage and pollution.

The project was also problematic because the final bridge height was too low and disrupted shipping in Balikpapan Bay.

Corruption risks

The ICRAT assessment found that the indicative risk of corruption was high (score 4) due to external influence on the decision-making agencies, low adherence to fair market competition rules and lack of information disclosure for project plans, budget preparation or approval. The red flags indicating a high level of corruption risk were:

  • IKN Authority administration
  • Involvement of State Owned Enterprises (SOEs)
  • Incomplete planning documents and weak adherence to regulations
  • Risk pattern of funder State Sharia Securities (SSBN)
  • Improper impact analysis
  • Lack of transparency of project documents such as audit reports, annual reports, contract documents, feasibility studies, and environmental impact assessments.

Environmental impacts 

Environmental activists were concerned construction of the bridge would damage forest areas of high conservation value including the Balikpapan Bay mangrove area Sungai Wain Forest.

There was concern the connecting road would damage mangrove areas causing:

  • soil erosion
  • river pollution
  • increased sediment in surrounding rivers.

This has played out with the Puda, Tengah, Berenga, and Tempadung rivers affected by pollution and increased sediment making the water yellow and turbid.

Findings

  1. Weaknesses in the planning process for the relocation of the National Capital (IKN) to East Kalimantan. In its audit report for the 2022 fiscal year, the Supreme Audit Agency found that planning and related regulations for the relocation were inadequate and incomplete.  Administration of the IKN give rise to the potential abuse of power because the authority is self-governed with no external oversight. 
  2. Project planning documents are complex, technical and split into multiple work packages - impossible to assess documentation of entire bridge construction Manipulation of the planning documents into multiple small and disparate documents makes oversight complicated, if not impossible. The Minister for Public Works and Public Housing was not held to account for lack of adherence to or oversight of the planning process. 
  3. Involvement of SOEs and high-level corruption risk in Indonesia Two of the three construction companies were state owned enterprises. These companies and high-ranking officials have been implicated in corruption cases in the past.
  4. Improper planning and lack of impact analysis Efficiency factors, such as logistics and inter-regional connectivity, were not considered in the planning process which means the project contributes little to social progress and economic growth, despite the huge scale of infrastructure spending and construction in Indonesia.

Additionally, the government is likely deliberately concealing, or not conducting environmental impact studies for several of the new Nusantara Capital (IKN) projects. The IKN is also lacking clear environmental and community planning processes, despite declaring environmental and social impact assessments have been carried out.