Non-Government Budget Innovative Financing Facilitation: PINA Center for Private Investment Signs Heads Of Agreement with Investors And Investees
October 14, 2019 3:40 pm

JAKARTA – One of the ways to achieve President Joko Widodo’s aspiration in increasing economic competitiveness is achievable only through massive infrastructure development. This is reflected by the allocation of IDR 4,667 trillion in infrastructure financing equivalent to USD 359 billion in the National Medium-Term Development Plan (NMTDP) for 2015-2019. In the 2020-2024 NMTDP, this figure increases by 23 percent to IDR 6,174 trillion equivalent to USD 441 billion. Out of this total amount of infrastructure financing need, only around 40 percent can be supported by the National Budget. The remaining 60 percent will be supported by non-government budget financing.

“On that account, the Government of Indonesia through the Ministry of National Development Planning/Bappenas in accordance with Presidential Regulation No. 58/2017 (regarding the acceleration of the realization of the National Strategic Projects) has established a facilitating unit, namely the Non-government Budget Investment Financing, which is called PINA Center for Private Investment, in the middle of 2017 which mainly seeks ways of creative financing on a non-government budget basis. Until the end of 2018, the PINA Center for Private Investment had booked a financial close amounting to IDR 47 trillion equivalent to USD 3.3 billion encompassing 11 toll-road, renewable energy, plantation, fiber optics and airport projects,” said Minister of National Development Planning/Head of Bappenas Bambang Brodjonegoro at the Signing Ceremony for the Heads of Agreement between PT Jasa Marga (Persero) Tbk and PT China Communications Construction Indonesia (CCCI), and among PT Wijaya Karya (Persero), PT Jasa Sarana and PT ICDX Logistik Berikat (ILB) which took place Monday (14/10) in the Benny S. Muljana Meeting Room at the Bappenas Building.

During the ceremony, Minister Bambang explained that the financing structure facilitated by the PINA Center for Private Investment comprises direct equity financing secured by PT Jasa Marga (Persero) Tbk from PT CCCI amounting to IDR 23.3 trillion. Additionally, PT Wijaya Karya (Persero) Tbk and PT Jasa Sarana signed a Heads of Agreement with PT ILB whereby the financing structure applies to customized supply chain financing amounting to IDR 5 trillion and IDR 1 trillion for PT Wijaya Karya and PT Jasa Sarana, respectively. This customized supply chain financing structure is the latest financing scheme innovation from the PINA Center for Private Investment which is expected to add room for state-owned/provincial owned enterprises’ (BUMN/BUMD) working capital needs as well as more flexibility in leverage and cashflow through tenor and repayment flexibility provided by such a scheme, Minister Bambang emphasized.

Another innovation by the PINA Center for Private Investment in creative infrastructure financing is facilitation in structuring a financial instrument which mainly serves to add equity (equity financing) for infrastructure financing. Lately, the PINA Center for Private Investment has succeeded in promoting a Perpetual Notes instrument which was issued by PT PP (Persero) Tbk in 2017 and PT Wijaya Karya (Persero) in 2018. Minister Bambang said this was achieved only through the substantial efforts of the PINA Center for Private Investment in involving various stakeholders, encompassing regulatory bodies and financial institutions, ministries/government bodies/provincial governments, SOEs and national and multinational private corporations either in their position as investees or investors in the nation’s infrastructure financing needs. The coordination among ministries and government bodies is most important for the successful facilitation of the PINA Center for Private Investment.

“At all times, the PINA Center for Private Investment collaborates with the Investment Coordinating Board (BKPM) in attracting potential foreign investors by conducting a number of roadshows. The Ministry of Public Works and the Ministry of State-Owned Enterprises support the PINA Center for Private Investment’s roles in liaising with SOEs as the owners of projects facilitated by the PINA Center for Private Investment. Government bodies such as the Toll Road Regulatory Agency assist the PINA Center for Private Investment in mapping out related sector issues of the SOEs under the PINA Center for Private Investment’s facilitation,” said Minister Bambang. Moreover, he said the PINA Center for Private Investment will continuously promote private investment in the infrastructure, connectivity, energy, industrial and housing sectors. “Innovation is the key word in promoting creative financing to support massive infrastructure financing. Without such innovation, it will be a daunting task to realize the infrastructure development target across the Indonesian archipelago,” he added.

As of October 2019, the PINA Center for Private Investment has facilitated a financial close, amounting to IDR 52 trillion out of a target of IDR 84 trillion or USD 6 billion for 2019. To date, there are 29 projects amounting to IDR 630 trillion equivalent to USD 44 billion which are pipelined in the PINA Center for Private Investment’s facilitation. Regarding investors within the PINA Center for Private Investment’s facilitation, there are a number of prominent investors from domestic and international markets including PT Taspen (Savings, Insurance and Pension Corporation), BPJS Ketenagakerjaan (Social Security for Employees Body) and the Canada Pension Plan Investment Board (CPPIB). “I am proud to have witnessed the achievements of the PINA Center for Private Investment despite only two years since its establishment. Going forward, I hope the PINA Center for Private Investment will always be able to develop innovative financing ecosystems, which support the acceleration of excellent development and economic growth,” Minister Bambang said in his closing remarks.