INFRASTRUCTUREFINANCINGININDONESIA:

GovernmentPolicyandTheOpportunity

MinistryofNationalDevelopmentPlanning/

NationalDevelopmentPlanningAgency(BAPPENAS)

13November2015

OUTLINE

• Na$onalMedium‐TermDevelopmentPlan2015‐2019

• IndonesiaInfrastructureDevelopment2015‐2019

• InfrastructureFinancingNeeds2015‐2019

• IslamicFinanceforInfrastructureProjects

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NationalMedium­TermDevelopmentPlan2015­2019

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NationalMedium­TermDevelopmentPlan2015­2019

Elabora$onGuidance

Dimensions of Human Development

Education

HealthHousing

Mental/Character

Dimension of MainSector Development

Food Sovereignty

Sovereignty Energy and Electricity

Maritime and Marine

Tourism and Industry

Dimension of Equalization

Among income groups

Among Regions: (1) Village; (2)Borders; (3) Outer; (4) Eastern Region

3 DIMENSIONS OF DEVELOPMENT

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IndonesiaInfrastructureDevelopment2015­2019

Water, Food, and Energy Security to

support National Security

Streghtening National

Connectivity in Balancing

Development

Urban Mass Transportatioan

System Development

Basic Infrastructure

Improving Private Sector

Role

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INFRASTRUCTURESTRATEGICISSUES(2015­2019)

INDONESIAINFRASTRUCTUREDEVELOPMENTTARGETS2015­2019

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Growthofmanufactureindustries(4,7%8,6%)

EconomicgrowthReduceLogis$cCost(23,5%

19,2%)

Damdevelopment(49dams)

MainSectorDevelopment

ImproveIrriga$on

system(7.145ha7.914ha)

100%cleanwateraccess,0%slumarea,100%accesstodecentsanita$on(100‐0‐100)

BasicPublicFacili;es

Reducehousing

backlog(7.65million)

INDONESIAINFRASTRUCTUREDEVELOPMENTTOIMPROVEASEANCONNECTIVITY

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Na$onalCompe$$veness&ASEANConnec$vity

Roadinborderareas

Airport&Seaport

Cross‐borderelectricity

interconnec$on(powergrid)

InfrastructureFinancingNeeds2015­2019

INFRASTRUCTUREFINANCINGNEEDS2015­2019

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StateBudget(APBN)Financing

StateBudget2015 USD21billion

StateBudget2016 USD23billion

Note:IDR/USDbasedonRAPBN2016=13.400

(USDbillion)

*)StateBudget(APBN)andRegionalGovernmentBudget(APBD)

SECTOR Government*) SOEs Private Total

Transporta$on 86,8 21,431,6 139,7

Electricity 7,834,733,9 76,4

Energy(Oil&Gas) 0,311,626,9 38,8

Informa$on,Technology,andTelecommunica$on

2,12,117,2 21,4

PublicBasicFacili$es 76,1 3,910,3 90,3

TOTAL 173,1 73,7119,9 366,7

SECTOR0%

Government47%

SOEs20%

Private33%

USD366,7billion

THEROLEOFGOVERNMENT,PRIVATE,ANDSOEsININFRASTRUCTUREFINANCING

Government

Transporta$on(ie.Road&bridge,Railways)

BasicPublicFacili$es(ie.cleanwater&sanita$on,

health,educa$on)

WaterResources&Irriga$on(ie.Dam,irriga$onnetworks)

Private/SOEs

Electricity

Energy(Oil&Gas)

Informa$on,Technology&Communica$on

PublicTransportModes(ie.Bus,Aeroplane)

SpecialEconomicZones(SEZs)Facili$es

PPP/Private

TollRoad

Electricity(ie.Powergenera$on)

WaterSupply(ie.PDAM/MunicipalWaterworks)

Airport&Seaport

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SOURCEOFFINANCING

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APBN/APBD

• TaxRevenue• ForeignLoan(incl:IDB)• GovernmentSecuri$es(incl:Sukuk)

PPP

Private• Bank/Non‐Bank• InternalPrivateFinancing

SourceofFinancingforInfrastructure

IslamicFinanceforInfrastructureProjects

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ISLAMICFINANCEFORINFRASTRUCTURE

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DEVELOPMENTCOOPERATION

ENHANCEPRIVATE

FINANCING

SBSN/SUKUK

SBSN/SUKUK

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  SUKUKforinfrastructureprojectsfinancingisknownasProjectBasedSukuk(PBS)accountedforUSD5.9Billion.  Thepropor$onofPBSis3.5%totheTotalAllGovernmentSecuri$es/SBN(USD168Billion)

ImprovetheroleofSUKUKtofinanceInfrastructureProjects:

  Increasethepropor$onofPBSintheporholioofGovernmentSecuri$es.

  IssuetheunderlyingSUKUK(earmarkedforinfrastructureprojectfinancing).

  DevelopinfrastructureBondthroughSUKUK/SBSN  It is supported by Law no 19/2008 on SBSN in ar$cle 4 : “SBSN is intended to finance State Budget including for

developmentprojects“

*)asof5November2015(exchangerateIDR/USD=13.603)Source:adoptedfromGov’tDebtProfile&Gov’tSecuri$esProfile(MoF)2015

UnderlyingRp.15,1billion(72%)

PBSUSD5,9billion(28%)

2010 2011 2012 2013 2014 2015

SBSN/SUKUK 3,3 5,79,112,415,221,0

Tradable 2,34,06,510,112,718,5

NonTradable(SDHI)

0,91,72,62,32,42,6

OutstandingSUKUK(asofNovember2015)

Country Development Plan (2015-2019) Proposed Areas for IDB Group/ (2015-2019)

IDB Group 10 Year Strategy

Infrastructure/ Sectoral Development •  Energy and Power

Sovereignty •  Maritime and Marine •  Tourism •  Industry •  Infrastructure

Development to support Special Economic Zone and 14 Industry Area

•  SMEs •  Food Sovereignty

Human Development •  Education •  Health •  Housing

Regional Development •  Rural areas •  Border areas •  Disadvantaged regions

  Economic and Social Infrastructure

  Inclusive Social Development

  Islamic Finance Sector Development

  Capacity Development

  Private Sector Development

  Cooperation Between Member Countries

DEVELOPMENT COOPERATION: IDB Group

Sustainable Support for Economic and Social Infrastructure

• Transport (roads, railways and ports) • Power (i.e. generation and transmission) • Integrated Community Driven Development (ICDD-Phase IV) and Sanitation • Higher and Islamic Education and TVET • Science and Technology Parks

Strengthen Islamic Finance and Financial Inclusion

• Establish Islamic Microfinance Fund (IMFI)• Establish Inclusive Islamic Financial Board (IIFSB)• Set-up the World Islamic Investment Bank• Support the Creation of OJK Center for Microfinance• Capacity Building in Islamic Banking and Finance• Support for Waqf Development

Enhanced Support for Private Sector Development • Focused Investment in Real Sector • Industry and Business Advisory Services • Development of Special Economic Zones and SMEs • Public Private Partnership (PPP) • Trade Financing and Facilitation • Trade Credit and Political Risk Business Insurance

Support Regional Integration & Reverse Linkages Programs • More Reverse Linkage Programs • Support to Intra-regional Integration • Support to Cross-border Investment

Source:WorkshopMCPSIDBIndonesia

PRIVATE:ENHANCETHEROLEOFPRIVATEFINANCING

SupportSOEsandCorpora$ontoissueRetailSukukprogramelinkedtoinfrastructureprojectbysimplifyingtheissuanceprocess,providingnewincen$ves(offeringtaxincen$ves)andlaunchingCorporateSukukGuaranteeFund.

LaunchnewspecialRetailSukukprogrammeslinkedtospecificinfrastructurethatmaybeofferedforIslamiccommercialBank/BMT

IntroduceIslamicinvestmentbankstofillthegapinthebankingsectorandleadingonmajordevelopmentprojects

Improvecoopera$onwithinvestorfromIslamiccountries(MiddleEast)tofinanceinfrastructureprojectinIndonesia.

LaunchanewSUKUKprogrammedirectedspecificallytowardsreligiousfund(Hajjfund,ZakatandWaqf)thatcanbelinkeddirectlytofinancethegovernment’sinfrastructureprojects.

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