ACCELERATING INDONESIA’S INFRASTRUCTURE INVESTMENT

FOR HIGHER ECONOMIC DEVELOPMENT

Minister of National Development Planning/

Head of National Development Planning Agency

Presented at Head of Agreement between PINA Center for Private Investment with Investee and Investor
Jakarta, October 14th 2019
 President’s Direction
…facing development challenges…

Infrastructure • Connect industrial estates, tourism zones, small

industrial centers with growth centers for both
equity agricultural and plantation production

• Simplification of licensing to increase investment and

reduce the current account deficit and trade deficit
Bureaucratic  Export-oriented investment and investment in
substitution of imported goods
Reform • Non-contributing institutions will be deleted
• Stop old patterns
President Jokowi in National Development Planning
Meeting (Musrenbangnas), May 9th,2019

Human • 51% labors are elementary school graduates

• Upskilling, Reskilling millions of Workers
Resources • Prevent stunting, malnutrition and maternal-infant death
• Link and match vocational school with industry
Development • Business Process Outsourcing222

2
 Infrastructure Development Framework 2020-2024
…integrating infrastructure with economic sectors…
Infrastructure for
Infrastructure to Support Economic Sector Urban Infrastructure
Basic Services

Safe and Decent Housing

Connectivity Leading Sector Urban Public Transport
Access Development
Sea Toll + Intermodal
Management for safe and Sustainable Energy for
sustainable groundwater, Urban Area
Regional Development/ Regional
Manufacturing
raw water, drinking water Growth Center Overseas Highway Development/Growth
Center Industry
Decent and Safe Sanitation Infrastructure and Urban
Access (Wastewater and ICT Ecosystem
Domestic Waste) Services
and Tourism Safe Drinking Water and
Secure and Safe Developed Areas Seaport Rural Areas Sanitation (waste and
Seaport
Transportation sewarage) in Cities

Rural Areas Accessibility Agriculture- Safe and affordable Housing

Disaster Resilient in Big and Metropolitan Cities
Plantation-Marine
Infrastructure Multipurpose Dam and Irrigation Modernization
Fisheries

Energy and Electricity Development (Trilema) ICT for Digital Transformation

Gender Equality Capital and Social Culture

Mainstreaming Good Governance Digital Transformation
Green Infrastructure Disaster Resilient 3
 Integration of Regional and Infrastructure Development
SEA CONNECTIVITY AS A "BACK BONE" OF TRANSPORTATION SYSTEM
RAILWAY DEVELOPMENT

§ Double Track Railway

in South Java
§ Trans Sumatra Railway
§ Trans Sulawesi Railway
(Makassar - Pare-
Pare)
§ High Speed Train
(Jakarta - Bandung)

Makassar – Pare-Pare Railway

Development
PORT AND INDUSTRIAL AREA INTEGRATION
(CASE SEI MANGKEI - KUALA TANJUNG) "Waterways" and sea transportation as
modes of transportation that are more
energy efficient

Source: Proceedings of the 6th SoNorA University Think Tank Conference, October 2010 4
 Funding and Financing for Infrastructure Development

In order to increase infrastructure stock from 43% of GDP (in 2017) to 50% of GDP (in 2024), Indonesia
requires infrastructure investment of USD 441.3 Bn or 6.1% of GDP in 2020-2024 mid-term period. This
number increases by 33.8% from USD 359.2 Bn (in 2015-2019).

Financing – upfront investment Funding *– where the money comes from to

payback the financing
Financing Institutions that pays the Flow of money to payback Funding source:
source: upfront investment: the upfront investment
Central Central
Banks
Government Government
Tax
Capital Local Local
market Government Government
Infrastructure
Projects Citizens
Foreign
SOEs
Investors

User
MDBs Private Sector
Fees

*) A combination of tax and user fees is possible 5

 New Paradigm in Infrastructure Investment Framework
Total Investment Required for New Paradigm of Investing in Infrastructure
Infrastructure in Indonesia
Average Scenario
(Infrastructure Stock Target 50 %) PINA • Licensing
PRIVATE • Incentive

high
Projects that provide value for
PPP Opportunity by money for the government so the
PPP President development will be on-budget,
Regulation 38/2015

Internal Rate of Return (IRR)

schedule and on-service.

• Special Purpose Company (SPC) was formed for Operational

Infrastructure JV SOEs Projects

Investement (brownfield) • Divested SPC Shares

• Enhancing SOE Expansion Capability without State Investment
Required*
• SPC was formed for under preparation projects
2020-2024: JV SOEs • Collaboration with Private Sector in the SPC
(greenfield) • Enhancing SOE Expansion Capability without State
Investment
*USD 441.3Bn
SOEs Assignment to State Owned
Enterprises
State
Budget
low

(APBN/D) Source: Presidential Decree 79 year 2017

*) source: Bappenas analysist

“government encourages the involvement of the private sector in infrastructure development”
**)Calculation based on Prospera Analysis for RPJMN 2020 – 2024 that still being finalised 6
 Combination of PPP and PINA Scheme for Project Implementation
PLANNING PREPARATION TRANSACTION
Preliminary Outline Business Case Final Business Case Tender Request for Agreement Financial
Preparation PQ Bid Award
study (OBC) (FBC) Proposal Signing Close
the project innitiator
Government as

(SOLICITED)

CONSTRUCTION

PPP Book
PPP Scheme for PINA Scheme for
Infrastructure Development Equity Financing
National Development Planning
Agency issued PPP Book every year
to provide information on Indonesia’s PINA
PPP project to potential investors,
lenders and contractors
PPP (Non-Goverment Budget
Infrastructure Financing)

83
projects
29
projects

Adopting more critical assessment tool (5 Case

Total value Total value
Model) from UK Government to standardize
PPP appraisal system
>US$ 40 B >US$ 50 B
7
 PPP Joint Office in Indonesia

Coordination PPP Joint Office Republic of Indonesia

Accelerating PPP PT Penjaminan Infrastruktur Indonesia (Persero)
Facilitation Implementation Capital Place, 7th & 8th Floor
Jl. Jenderal Gatot Subroto Kav. 18,
in Indonesia Jakarta 12710 - Indonesia
Capacity Building email: info.pppindonesia@gmail.com

Coordination and Facilitation According to Authority:

• Ministry of National Development and Planning / Bappenas: Project selection and identification
• Ministry of Finance / Kementerian Keuangan: Fiscal facilitation
• National Public Procurement Agency / LKPP: Procurement – transaction probity
• Indonesia’s Investment Coordinating Board / BKPM: Market sounding and market value
• Ministry of Home Affairs / Kementerian Dalam Negeri: Advisory in Regional Availability Payment
• Coordinating Ministry for Economic Affairs / Kemenko Perekonomian: Debottlenecking
• Indonesia Infrastructure Guarantee Fund / PT.PII: Government Guarantee

Capacity Building
8
 Non-government Budget Financing (PINA)
...Pipelining, Facilitation, and Ecosystem...

Project Facilitation Ecosystem

Pipelining (match making) Building

PINA Participation in Project Financing

Direct Equity Near-Equity Fund

Financing Instrument (Private, Mutual)
(Perpetuity)

9
 PINA 2017-2018 Success Story
*

11
Projects
>700 km Toll Roads USD 190 million
USD 2.2 billion

22 mio 225 MW *

Islamic Bonds Power Plants

First Issuance
USD 380 million USD 190 million

Perpetuity Notes *

USD 3.3 billion

Total Financial Close

*Signed at the 2018 Annual Meetings IMF – World Bank in Bali 10

10
 THANK YOU

Disclaimer:
Non-Government Budget Equity Financing or Pembiayaan Investasi Non Anggaran Pemerintah (PINA) does not guarantee the accuracy, completeness, timeliness or availability
of the contents in this presentation. PINA cannot be held liable for its use, its partial use, lack of use, in combination with other products or used solely, nor can it be held
responsible for the result from its use or lack of its use in any investment or other kinds of financial decision making on which this report or publication is based. In no event
shall PINA be held liable for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses including
but not limited to lost profits and opportunity costs in connection with any use of the contents of this presentation.

Data and information in this presentation are gathered from sources it believe to be reliable. The contents cannot be a substitute for the skill, judgment and experience of its
users, itsinvestors in making investment or other business decisions. PINA does not act as fiduciary or an investment advisor. PINA does not perform an audit and does not
undertake due diligence or independent verification of any information used as the base of and presented in this presentation. 11