Indonesia needs to invest $143 billion in infrastructure over the next 5 years, but the government budget can only cover $37.2 billion (31%). To encourage private sector involvement to finance the $82.8 billion gap (69%), the government established financing facilities like the Land Fund, Guarantee Fund, and Infrastructure Fund. The Land Fund provides bridging finance for land acquisition, while the Guarantee Fund and Infrastructure Fund aim to improve project creditworthiness and attract long-term private capital respectively.

1. Infrastructure Finance in Indonesia
Fiscal Policy Office,
Ministry of Finance of the Republic of Indonesia
Presented at
The 7th APEC Senior Finance Officials Meeting (ASFOM7),
Tokyo, Japan, 18-19 February 2010

2. Indonesia Infrastructure Financing
2
 Indonesia needs to invest US$143
billion in infrastructure development US$ 120 billion
over the next 5 years (2010 – 2014). 1600
However the Government has limited
budget to fullfill it. 1400
Financing Gap:
 Due to this budget limitation, a large- 1200 US$ expected to be
82.8 covered through
scale private sector participation is 1000 bio PPP, CSR,
community
essential to fill the gap. We expect (69%)
800 participation
that almost 70% of it will come from
the private sector. 600
US$
 To encourage private sector 400 37.2
Estimated GOI
Financing
involvement, the Government has 200
bio Capacity
(31%)
developed financing facilities such as
Land Fund, Guarantee Fund, and 0
Infrastructure Fund. Source: Bappenas, 2009
2

3. Infrastructure Financing Facilities
3
Capital
Guarantee Fund Infrastructure Fund
Land Fund (PT. PII)
market and
(PT. SMI-IIFF)
regulatory
reform
Land Acquisition Cost Recovery / Project
& Clearence Policy Risks Cost of financing Financing Refinancing
Preparation Bidding Construction Operation

4. Land Fund
4
 Land Revolving Fund (LRF)
 Established to provide bridging finance for toll road
investors in acquiring the land.
 Managed by the Government Investment Unit, Ministry
of Finance and will be forwarded through Toll Road
Regulatory Agency, Ministry of Public Works.
 Until 2009, US$ 154 million has been allocated to
Land Revolving Fund.
 Land Capping
 Introduced to cover the risk of increasing cost of
land acquisition above certain level
 Government has allocated US$ 523 million for 5
years.

5. Infrastructure Guarantee Fund
5
 Indonesia Infrastructure Guarantee Fund is established to satisfy
the following objectives:
 Improving the creditworthiness of Infrastructure PPP projects.
 Improving the management of the Government’s contingent
liability
 The Government has established the fund under the name PT.
Penjaminan Infrastruktur Indonesia (Persero) on December
30th, 2009. PT. PII is being established as a State-Owned
Company and owned 100% by Government.
 The Government has allocated US$ 105 million as the company’s
initial capital in 2009.
 Due to the operational needs and to increase confidence level of
investors and lenders, the capital will be added US$ 105 million
in the Government’s Budget 2010.
 World Bank has committed to provide backstop facility to support
the operational of PT PII.

6. Infrastructure Fund
6
 Indonesia Infrastructure Fund is intended to be the
provider of long term rupiah financing to infrastructure
projects in Indonesia.
 Its objectives are:
 to offer a range of specialized financial products / services
 to address the financing gaps in the financial sector
 to un-bundle and re-package risks
 to complement the role of the existing financial institutions
and banks
 to attract private long-term capital into commercially viable
projects
 Implemented by the establishment of PT. Sarana Multi
Infrastruktur on February 26th, 2009 and PT. Indonesia
Infrastructure Finance (Persero) on January 15th, 2010.

7. Infrastructure Development Coverage
7
 Development of infrastructure project is designed to accelerate domestic
economic activities as well as to improve access for intra-regional trades.
 In Presidential Decree No 67/ 2005, there are 8 sectors that are
financed by Public Private Partnerships scheme:
 Transportation
 Road
 Irrigation
 Drinking Water
 Waste Water
 Telecommunication
 Electricity
 Gas and Oil
 To serve the intra-regional activities, Indonesia is currently promoting
developments of ports such as in Jakarta (Cengkareng), Medan
(Kualanamu), and many more others.

8. Thank You