By

Bastary Pandji Indra

Director for Public-Private Partnership Development

National Development Planning Agency (BAPPENAS) - Indonesia
Linking Cities to Finance Shanghai September 27-28, 2010

Indonesias Outlook & Infrastructure

PPPs

Standard & Poors raised Indonesias sovereign credit rating to BB from

BB- on 12 March 2010, with a positive outlook. S&P and Moodys
Investors Service both rank Indonesia two levels below investment
grade, while Fitch Ratings on 25 January 2010 raised its rating to one
grade below.

PPP is a priority in the National Medium Term Development Plan 20102014 to address the financing gap in infrastructure.

Urban Infrastructure PPPs are part of the Indonesian PPP landscape.

However, schools, hospitals & prisons, for example, are not included in
the governing PPP regulation, Presidential Regulation 13/2010

Urban Infrastructure PPPs

governments in Indonesia.

Urban Infrastructure PPP focus so far:

are

invariably

implemented

by

local

Water Supply & Sanitation, Solid Waste Management, Transport (Monorail, Bus &
Rail Terminals and Busway)
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TOTAL Rp 1.923,7 T

Infrastructure financing gap

323,67 T

??

SOE
340,85 T
Local Gov
355,07 T
Central Gov
559,54 T

Investment Needs 2010-2014

7% growth target requires:

Rp 1.923,7 Trillion (about US$ 161.8
billion) of investments during 20102014.

Estimated Financing Capacity

Gap

Central Government budget can

only cover 29.1 % of total
investment need.
Big opportunity for private
investment through PPP (Rp

Problematic Cycle in
infrastructure & investment

The Strategy on infrastructure

development in National Medium
Term Development Plan 2010-2014
Enhancing Public Private Partnership:
Shifting government role to be facilitator or
enabler.
Focus on service sustainability through efficient
and effective investment.
Dual Track Strategy:
Developing infrastructures which accelerate
goods and information flow, and
Encouraging industrialization program through
regional centers development.

Infrastructure Resource
Allocation
GOVERNMENT
PLAN

Public Private Partnership

(PPP)
Planned by Government
Financed by private
Executed by private

Central Government
Financing (APBN)

External
Loans/Grants
(PHLN)

Blue Book

Government
Guarantee
For SOEs
Projects

Government
Revenue
(Rupiah)

PPP Book
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Alternative PPP Financing

Scheme

System of Government Support in Indonesia

Government support is divided into:
Direct/non-contingent support (e.g. fiscal contribution, land
provision for viability consideration)
Contingent support (Government guarantee for credit
enhancement);
Project land must be acquired before project is offered to the market;
Fiscal contribution is provided through grant-in-kind, as existing MOF
regulations do not allow line ministries or local governments to
provide a direct grant to a PPP concessionaire;
Grant-in-kind involves partial construction of the project by the
Government Contracting Agency as the governments contribution to
the PPP project (to reduce the investment cost);
This approach creates more uncertainty and complications potential
construction delays & cost over-runs on the government side;
Annuity payments, increasingly being used on urban infrastructure
PPPs, are not yet available.
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Nature of Urban Infrastructure

PPPs in Indonesia
Urban infrastructure projects tend to have
immediate & direct impact on the achievement of
the MDGs, hence on peoples life;
Many are strong on social cost-benefits grounds
but not financially viable;
To attract private investment, direct government
support is required;
Urban PPPs usually require a component that is
commercially viable to support those that are not.

Issues Confronting Urban Infrastructure

PPPs in Indonesia
Certain infrastructure projects not defined in Presidential
Regulation 13/2010 for PPP, e.g. schools & hospitals;
Viability gap funding through a grant-in-kind approach is
cumbersome and not attractive to the private sector,
providing a direct grant under the MOF, would be more
effective;
For schools & hospitals, for example, a PFI approach coupled
with annuity payments is an option to be explored;
Capacity building particularly for GCAs;
Need to harmonize procurement regulations:
Brown field => Government Regulations 6/2006 &
50/2007 (Asset Management)
Green field => Pres reg 67/2005 & 13/2010
Grant-in-Kind => Pres reg 54/2010 (Pres int 80/2003
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amended)

Examples of Urban
Infrastructure PPP Models in
Indonesia

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Soekarno-Hatta Airport Railway

Estimated Project Cost: US$ 1.1 Billion.
Private sector is invited to develop the Project on a
Build-Own-Operate-Transfer basis.
Government support of US$ 355 million (32%) for land
and part of construction
Scope:
35 Km double track (fully elevated and dedicated for
Soekarno-Hata Airport).
6 stations proposed.
RFP will be issued at the end of 2010 to pre-qualified
investors.
+ 30%
State
Budget

Government
Support

Ministry of
Finance

MoT
Provision of
Land & Part of
Construction

Shareholder - Equity

Lenders - Debt

Provision of Facility,
O&M
PPP Project
SPV
Agreement

Recourse
Agreement
Indonesia
Guarantee
Fund
Guarantee
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Bandung Waste to Energy

Treat a minimum of 700 ton per day of waste by
waste to energy facility.
Estimated Project Cost: USD 100 million
Local Government will pay an appropriate tipping fee
and facilitate the Power Purchase Agreement (PPA)
with Electricity State Owned Company (PLN).
Issuance of EOI: End of September 2010.
Government
Investment
Center / IIFF

Loan for
Gate Fee

Ministry of
Finance

Bandung
City
Tipping Fee
Payment
Provision of Facility
& Waste Treatment

Shareholder - Equity

PPP Project
Agreement

SPV
Lenders - Debt

Recourse
Agreement
Indonesia
Guarantee
Fund

Guarantee

Supply of Power
PPA

Power Purchase Payment

PLN

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THANK YOU
Bastary Pandji Indra
bastary@bappenas.go.id
+6221 31934175

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