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Aditya Suharmoko, The Jakarta Post, Jakarta

The government will prioritize the development of port and railway infrastructure this year to ease the flow of goods and reduce high transportation costs in the country, a minister says.

"Our priority is to reduce bottlenecks in ports and railways, including at Tanjung Priok port, and railways on Java island," Transportation Minister Jusman Syafii Djamal said after a meeting with economic ministers on Friday.

Among development plans for this year, he said, was the modernization of navigation systems in three international airports: Kuala Namu airport in Medan, Lombok airport in Lombok and Hasanuddin airport in Makassar.

He also said the ministry would develop ports designed to load crude palm oil (CPO) as the commodity had become the country's main export.

In the first quarter of 2008, CPO was the major contributor to the rise in the country's non-oil-and-gas exports, which increased 47 percent to $4.4 billion compared to in the same period last year.

To help secure domestic distribution, Jusman said the ministry would fast track permit issuance for coal railway transportation projects to help secure distribution, particularly to state power plants.

"For port and railway projects under development by coal producers, we will speed-up permit issuance," Jusman said.

The ministry stated its budget this year was reduced to Rp 14.11 trillion (US$1.53 billion) after a 7.76 percent cut aimed to reduce state expenditures in response to a surge in global oil prices.

The Finance Ministry has cut the budget allocation to all government offices by a maximum 10 percent to safeguard the state budget, which is burdened by oil subsidies.

Despite the cut, Jusman said the ministry would try to improve the country's transportation system, including by restoring trains and modernizing navigation systems.

He also said the country's transportation and logistics systems needed to be integrated so the ministry could design a complete, multi-year infrastructure development strategy.

"Our transportation and logistics systems must be integrated. The Transportation Ministry will design a master plan to rebuild the country's ports, airports and railways to support logistics," he said.

The Indonesian Chamber of Commerce and Industry has repeatedly said inferior infrastructure would result in increased product prices and burdened customers