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Dedy S. Priatna Ph.DDeputy for Infrastructure Affairs - BAPPENAS
REPUBLIC OF INDONESIA
STRATEGY FOR DEVELOPING STRATEGY FOR DEVELOPING INFRASTRUCTURE INFRASTRUCTURE PPP PPP
IN IN INDONESIAINDONESIA
42nd Annual Meeting Board of Governors – Asian Development Bank
Bali, 5 May 2009
Presentation Outline Indonesia Infrastructure
Development Target 2010 - 2014; Development of Indonesia
Infrastructure PPP Strategy; PPP Projects Achievement; Challenges Ahead.
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Infrastructure Development Target 2010 - 2014
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ExistingCondition
(2009)
ExistingCondition
(2009)
Direction:• RPJPN 2005-
2025•Vision-mission &
program of elected president of 2009
•Continuation of un-finished RPJMN 2005-2009
•MDG Target•Sector Strategic
Plan•World Rating of
Infrastructure Competitiveness
Direction:• RPJPN 2005-
2025•Vision-mission &
program of elected president of 2009
•Continuation of un-finished RPJMN 2005-2009
•MDG Target•Sector Strategic
Plan•World Rating of
Infrastructure Competitiveness
Target for 2014
Target for 2014
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o Un-finished National Medium Term Development Plan (RPJMN) 2005 – 2009;
o Un-finished Strategic Plan of Ministry 2005-2009;o Un-finished Blue Book Proposal 2006-2009;o MDG Target;o Project Readiness;o Interregional Equality;o Target on infrastructure services at the end of 2014;o Infrastructure Financing Needs 2010-2014 based on
targeted goal = Rp. 1,429 T.
Basis for Calculation of Infrastructure Investment Requirement 2010-2014
Rationale for PPP in Indonesia Huge investment required,
in average, the infrastructure investment will require US$ 24 billions/year during 2010 - 2014.
As government budget is not sufficient to meet Indonesia’s investment requirements, large-scale private sector participation is essential to fill the gap.
This provides good opportunities for private sector to participate in the implementation of the project especially through PPP modality.
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Rp. 1,429 Trillion(USD 120 Billion)
Financing Gap: expected to be covered through PPP, CSR, community participation
Estimated GOI Financing Capacity
Infrastructure Financing of Other Countries (%from GDP)
Cross Country Comparison on Infrastructure Investment
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7
0.0
2.0
4.0
6.0
8.0
Indonesia Albania Russia Cambodia Kazakhstan
Private
Government
Source: World Bank
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Development of Indonesia PPP Strategy in Infrastructure Up to 1997: introducing PPP in infrastructure.1998 - 2004: consolidation period following Asian financial
crisis and changes in the Indonesian political system. 2005 – 2009:
Laying foundation for PPP project implementation through policy and regulatory reform to adopt international best practices;
Setting up PPP institutions, PPP network and PPP campaigns; Identification of potential PPP projects and implementation of
PPP model projects.2009 onwards:
Strenghtening PPP institutions; Improve the quality of project preparation and transaction;Extensive development of PPP scheme.
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Indonesia’s PPP Evolution
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Regulations Enabling PPP:• Law 15/1985
on Electricity• Law 13/1987 on Road• PP 8/1990 on Toll Road• PP 10/1989 on Electricity
Sector:• Toll Road • IPP (proposal)
Up to 1990 1990 - 1997
Pre
sidentia
l Decre
e (K
epp
res 7
/199
8)
Cro
ss-secto
r
Asian Financial Crisis
Major changes:•Global economy•Political system•Decentralization•Government Institutions
•Several New Laws on infrastructure passed•Renegotiation on IPPs•KKPPI formed
1998 - 2004 2005 - 2009
Regulations Enabling PPP:• Keppres 37/1992
on Private Electricity
• Keppres 55/1993 on land acquisition
Sector:• Toll road
•Water•Electricity•Port
Regulations Enabling PPP:• Keppres 37/1992
on Private Electricity
• Keppres 55/1993 on land acquisition
Sector:• Toll road
•Water•Electricity•Port
• Infrastructure Summit 2005
• Perpres 36/2005 on land acquisition
• Perpres 42/2005 on KKPPI
• CIIF• Perpres 67/2005• IICE 2006• PMK 38/2006• Reform of Sector
Laws • Establishment of
RMU • Land Revolving
Fund • PT. SMI, IIFF• P3CU• PPP Book
• Infrastructure Summit 2005
• Perpres 36/2005 on land acquisition
• Perpres 42/2005 on KKPPI
• CIIF• Perpres 67/2005• IICE 2006• PMK 38/2006• Reform of Sector
Laws • Establishment of
RMU • Land Revolving
Fund • PT. SMI, IIFF• P3CU• PPP Book
Regulatory Framework -1 PPP Regulations:
Presidential Regulation (Perpres) No. 67/2007 on Cooperation between the Government and business entity in the provision of Infrastructure;
Minister of Finance Regulation (Permenkeu) No. 38/2006 on Risk Management Guidelines for PPP in Infrastructure;
Minister of National Development Planning/ / Chairman of Bappenas Regulation No 3/2009 on Procedure for Formulation of PPP Book.
Sector Laws and Regulations: Toll Roads: Law 38/2004 and PP15/2005; Railways: Law 23/2007; Air Transport: Law 1/2009 and PP 70/2001 (airport); Sea Transport: Law 17/2008 and PP69/2001 (seaport), PP 82/1999; Water Supply & Sanitation: Law 7/2004 and PP16/2005; Telecommunications: Law 36/1999 and PP 52/2000 and PP 53/2000 Oil & Gas: Law 22/2001 and PP 42/2002 (upstream), PP 67/2002
(downstream), PP 37/1994 (PGN), PP 31/2003 (Pertamina); Electricity (Power): Law 15/1985, PP 3/2005
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Regulatory Framework -2
Cross-Sector Laws and Regulations: State Finance: Law 17/2003; National Development Planning: Law 25/2004 and PP
20/2004, PP 21/2004; Regional Governance: Law 32/2004 and PP 25/2000; Fiscal Decentralization: Law 33/2004 and PP 105/2000,
PP 107/2000, PP 65/2001, PP66/2001; State-Owned Enterprise: Law 19/2003; Investment: Law 1/1967 (Foreign) and Law 6/1968
(Domestic); Environmental Management: Law 23/1997 and PP
27/1999; Construction Services: Law 18/1999 and PP 29/2000; Government Procurement: Keppres 80/2003, Keppres
61/2004 (Amendment 1), Perpres 32/2005 (Amendment 2); Land Acquisition: Perpres 65/2006 and Law 20/1961.
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Indonesia PPP Institutional Framework
The Committee on the Policy for the Acceleration of Infrastructure Provision (KKPPI) established under Perpres 42/2005
A Risk Management Unit on Fiscal Support already up and running since 2006 in the Ministry of Finance
PT. SMI/Indonesia Infrastructure Financing Facility (IIFF) established in February 2009
PPP Nodes established in the (MEMR, MPW and MOT)
PPP Units in various Local Governments
P3CU in Bappenas Infrastructure Guarantee
Fund (under preparation)
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InfrastructureSector
Ministries(MPW, MOT, MEMR, MCI)
KKPPICMEA,
Bappenas
MOF
PPP Nodes (PPP Units)Project Identification, Preparation, Monitoring & Quality Control: -- Screening -- Due Diligence -- Bid Documents -- Transaction & Post-transaction Process
Secretariat/P3CUPolicy Analysis, Development and Planning & Coord.Monitoring & Quality CtrlIdentify Projects requiring Government SupportResolving cross-sector issues
Risk Mgt UnitAssess GSIssue &Manage Guarantee
Guaran-tee Fund
ProjectDev.Fac.
IIFF, Land
Fund, etc.
MOHA
MSOE
SOEsProject Dev’tProject Impl. & Monitoring
Local Gov’t & ROEs
Project DevelopmentProject Impl. & Monitor
Project Development FacilitiesProject Development Facilities (WB-PPITA, ADB-
IRSDP, AusAid, METI Japan) are in place to assist relevant PPP units in institutional development and project preparation to ensure better transaction mechanism i.e. financial closure and project execution;
ADB – IRSDP, closing date September 2012
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GOI; 4,726,696 ;
12%
Dutch Grant; 7,562,348 ;
20%
ADB Loan; 26,482,969 ;
68%
Government Support Direct support:
Provision of land Part of investment cost Operating subsidy (under PSO scheme) Non-fiscal support (license, permits, regulations, etc.)
Contingent support (Guarantee): Political Risk; Project Performance Risk:
location risk operational risk
Demand Risk: Allocation of government budget to support PPP projects
in the annual budget:• 2006; Rp 2 trillion was allocated for land acquisition; • 2007; Rp 1 trillion allocated for establishment of the Indonesia
Infrastructure Fund and another Rp 1 trillion allocated for the Guarantee Fund;
• 2008 – 2010; Rp 4.9 trillion has been allocated as government support for land capping;
• Budget allocation in the APBN for direct support.15
PPP Central Unit (P3CU) Established in Bappenas and performed by the
Directorate of PPP Development; The roles including:
Take a lead role in facilitating PPP promotion and in providing quality control of the PPP process;
Standardize procurement rules and review bidding documents;
Facilitate screening of projects subject to government support/financial assistance;
Monitor PPP results and facilitate a dialogue with potential investors/financiers;
Develop and implement communication strategy to the different stakeholders and know how to stakeholders;
Updating the PPP Book.
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Indonesia Infrastructure Financing Facility
GOI
(MoF)
PT SMI
(GOI wholly owned)
PT IIFF (Subsidiary)
Subsidiary Debt ADB US$ 100 M
Subsidiary Debt WB US$ 100 M
On-lending
Sub-loan
GOI Equity Rp 1 T
Equity PT SMI Rp 0,60 T
Equity ADB US $ 40 M
Equity IFC US $ 40 M
Public Fund (capital market)
Equity IDB, KFW, JBIC dll
PPP Infrastructure Projects17
Product Mix
Guarantee FundCurrently in the finalisation stage, expected
to be established in June 2009;One of the key objectives of the guarantee
program is to reduce the cost of finance to infrastructure projects in Indonesia;
Current Guarantee Scheme under PMK 38/2006 does not provide sustainability in term of provision of guarantee fund;
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Land Owner
Land Acquired
BLU DB
BPJT
MoF
Bina Marga
Payment Order Investor
Other Sources
Feasibility Consideration
Repayment
Repayment Order
MPW
P2T
Local Gov’t
AcquisitionReport
Handover of Acquired LAnd
Land Revolving Fund
AcquisitionReport
Indonesia Infrastructure Forum (IIF)IIF will act as a neutral, independent and inter-
stakeholders Forum addressing a wide range of emerging policy issues relating to infrastructure, its development and growth.
IIF will design a cohesive, decisive, and committed Forum to consolidate the views of the stakeholders (private sectors, associations, user-groups, NGOs, academicians, public-at-large etc…), to build-up consensus and to come-up with recommendations on policies related to infrastructure development.
IIF will provide on a regular basis these recommendations to the Government of Indonesia, as inputs to the governmental process in setting-up policies on infrastructure development in Indonesia
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PPP Projects Achievement PPP projects in operation:
Toll roads: 20 sections (607 km) Power sector (IPPs): 12 (est. 4,000 MW) Port: 4 ports (2 in Jakarta, 1 in Surabaya, 1 in Batam) Water sector: 27 projects
PPP projects under construction: Toll road: 4 sections IPP: 13 projects Water supply: 2 projects
PPP Concession awarded: Toll road: 17 sections IPP: 29 projects Water: 1 projects
Projects in the PPP Book: total 87 projects Project Ready to Offer : 8 projects Priority Projects : 18 projects Potential projects : 61 projects
PPP modality commonly used: BOT, BOO, ROT, O&M
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PPP Book Based on Presidential Instruction (Inpres) No.
5/2008 on Economic Development Focus 2008-2009;
To confirm list of PPP Projects in the Government pipeline;
To ensure that the PPP project planning is transparent and preparations are done properly;
As an instrument to monitor the progress of PPP implementation;
As a mean for cross-sector and inter-region synchronization and coordination for PPP project preparation;
As a mean for Public Consultation on PPP projects.
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PPP BOOK – CRITERIA
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POTENTIAL PROJECTS
PRIORITY PROJECTS
PROJECTS READY FOR OFFER
1. Conformity with the National/Regional Medium Term Development Plan and the infrastructure sector’s strategi plan;
2. Conformity of the project’s location with the spatial plan;
3. Linkage between the infrastructure sector and regioanl area;
4. Cost recovery potential
1. Included in the list of PPP Potential projects or proposed by the contracting agency as unsolicited project;
2. Pre-FS shows that the project is feasible (legal, technical, economic and financial);
3. Project risks identified and allocated properly;4. PPP Modality defined; 5. Government support identified;
1. Bidding documents completed;2. PPP Procurement Team formed and capable to
transact project;3. Procurement schedule defined and agreed upon;4. Government support (if applicable) has been
approved and allocated
PPP PROJECT READY TO OFFERN0
PPP Project Location Project Cost (US $ )
1 Medan - Binjai Toll Road North Sumatera 129 Million
2 Medan – Kualanamu – Tebing Tinggi Toll Road
North Sumatera 476 Million
3 Cileunyi – Sumedang – Dawuan Toll Road
West Java 395 Million
4 Tanah Ampo Cruise Terminal
Bali 24 Million
5 Palaci - Bangkuang Railway
Central Kalimantan
740 Million
6 Soekarno Hatta Airport - Manggarai Railway Development
Jakarta and Banten 700 Million
7 Bandung Municipal Water Supply
West Java 54 Million
8 Central Java Power Plant Central Java 2,000 Million25
Summary of PPP Projects in the PPP Book
Summary of PPP Projects by Sector and Region
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Internal Harmonization of conflicting regulations
within sector as well as cross-sector pertaining to PPP projects implementation;
Acceleration of land acquisition process, particularly for toll road projects;
Clarifying the provision of Government Support;
Mobilizing the potential of domestic capital resources;
Implementation of PPP projects listed in PPP Book.
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Global financial meltdown reducing the availability and capacity of private financing;
Competition with other countries in attracting PPP project developers;
30
Morgan Morgan StanleyStanley
RBSRBSDeutscheDeutscheBankBank
Credit Credit AgricoleAgricole
Societe Societe GeneraleGenerale
BarclaysBarclays
BNP BNP ParibasParibas UnicreditUnicredit
UBUBSS
Goldman Goldman SachsSachs
SantanderSantander
CitigroupCitigroup
JP MorganJP Morgan
HSBCHSBC
Credit SuisseCredit Suisse
49
120
76 67 80 91108
93116
75100
116
255
165
215
16 4.6 10.3 17 26 7.4 32.5 26 35
27 35 64 19 85 97
Market capitalization per Jan 2009 in USD Billion
Market capitalization per Q2 2007 in USD Billion
External
Concluding RemarkGovernment has engaged into a
comprehensive reform and will continue to expedite PPP project implementation in Indonesia;
In this global financial difficulties, Government will seek the optimal combination of financing options to accelerate PPP development;
We invite all stakeholders to support the development of infrastructure in Indonesia through PPP scheme.
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THANK YOUTHANK YOU