The Role of Non-Government Budget Investment (PINA) for Infrastructure Development in Indonesia

Transcription

1 REPUBLIK INDONESIA The Role of Non-Government Budget Investment (PINA) for Infrastructure Development in Indonesia Ekoputro Adijayanto CEO PINA Center for Private Investment Special Staff to the Minister of National Development Plannning/Head of Bappenas Presented to: Indonesia Infrastructure Investment Forum London, 15 March 2018

2 Why Invest in Infrastructure and Why Now? Closing the infrastructure gap and providing a stronger foundation for economic growth in the future Indonesia infrastructure stock is below average global standard and tends to decline Infrastructure stock gap/gdp 49 % 38 % 32 % 70 % Strong commitment in policy and implementation level by President Jokowi administration Some breakthroughs Umbulan drinking water facility planned during Dutch colonial era Jakarta Mass Rapid Transit planned 30 years ago many more Why now? Takes time - years from planning, construction and operation Future value of money increased capex when the project is delayed Benefit for future generation the impacts are in the medium and long-term (IMF) 2 nd Real results Best Countries to Invest In 2018 Based on U.S. News survey (9 March 18) above Poland, Malaysia, and Singapore Source: The World Bank (2015) & McKinsey (2013) Lowering competitiveness and economic growth Multiplier effect from infrastructure development Additional economic growth Boosting activities in various sectors Infrastructure Global Competitiveness from 60 th to 52 nd Global Competitiveness from 41 st to 36 th Source: Global Competitiveness Report , WEF 2

3 Financing Infrastructure Development Increasing the significant role of SOEs & the private sector through PINA & PPP schemes Total value of investment required for infrastructure in USD bn Investment value sources: Government Budget: 41.3% 22.2% 36.5% Private USD bn SOEs : USD 79.8 bn Participation: USD bn Calculation based on infrastructure investment (required) to be a middle income country by Sources: BAPPENAS- JICA, 2014: Background Study for RPJMN , Analyst team of Ministry of National Development Planning (BAPPENAS) RPJMN: National Medium-Term Development Planning 3

4 Non-Government Budget Equity Financing in Other Countries Practice of non-government budget equity financing in China, Canada, dan Australia FORM OF GOVERNMENT SUPPORT INSTITUTIONS INVOLVED TOTAL FUND INFRASTRUCTURE INVESTMENT PROJECTS UNDER MANAGEMENT China National Development & Reform Commission (NDRC) is pushing infrastructure financing policies from non-state capital Financing of 303 infrastructure projects National Council for Social Security Fund (SSF) Rp. ~38,158 Trillion Rp. ~12,638 Trillion (33%) Shanty Town Rebuilding di Xi an Speedway di Chongqing & Subway di Shenyang, Yangpu Economic Zone di Hainan Joint-cooperation between Ministry of Canada Pension Plan Investment Board Rp. ~2,848 Trillion Rp. ~586 Trillion (20.6%) Toll-Highway 407 di Greater Toronto Canada Infrastructure and Economic Advisory Council of Canada with funds Institutions Involvement of pension fund institutions in direct investment of infrastructure financing Ontario Municipal Employees Retirement System (OMERS) Ontario Teacher s Pension Plan (OTPP) Rp. ~753 Trillion Rp. ~2,249 Trillion Rp. ~263 Trillion (35%) Rp. ~197,2 Trillion (8,9%) District Heating Operator di Toronto Scotia Gas Networks Intergen (electricity generation facilities) High Speed 1 (HS1) Australia Establised by the government to identify infrastructure financing issues Mobilization of long-term funds to be invested in greenfield and brownfield assets Future Fund Australian Super Rp. ~961 Trillion Rp. ~566 Trillion Rp. ~50.9 Trillion (5,3%) Rp. ~50.9 Trillion (9%) Perth Airport Sydney Airport QML Toll Road Melbourne Airport Brisbane Airport Sumber: 1: China - Reuters (2016), Kanada - Financial Times (2016), Australia - OECD Report (2013) 2: China Corporate Annual Report (2015), Canada Corporate Annual Report (2015), Australia - OECD Report (2013) 4

5 5 5 Acceleration of National Strategic Project Presidential Decree No. 58/2017 is government effort to accelerate PSN Coordinating Ministry for Economic Affairs Evaluation The National Strategic Project (PSN) has a strategic nature to increase growth and equitable development in improving the welfare of the community as a whole There are 245 projects and 2 programs from various infrastructure sectors that are included in the National Strategic Project List Committee for the Acceleration of Priority Infrastructure(KPPIP) Provision Monitoring and Assessment National Strategic Projects National Strategic Project funded by Non-Government Budget, coordinated by Minister of National Development Planning (PPN)/Head of BAPPENAS PPN Minister/Head of BAPPENAS may propose changes to the National Strategic Project sourced from the Non-Government Budget Funding to the Committee for the Acceleration of Priority Infrastructure Provision (KPPIP) Ministry of PPN/ BAPPENAS Project Coordinator Non-Government Budget Source of Fund Government Budget

6 Financing Infrastruture Development Increasing the significant role of SOEs & the private sector through PINA & PPP schemes 6 PUBLIC INVESTMENT: PROVISION OF PUBLIC FACILITIES 1 Social Investment Investment that does not cause direct investment return to the object. Social security; Education security; Health security. Source of fund : Government funding (APBN & APBD) 2 Special Commercial Investment Investment which is economically and financially viable but seen as less attractive or risky hence Government intervention is needed. Toll roads; Ports. Source of fund : Commercial funding promoted by the Government low Internal Rate of Return (IRR) high 3 Public Private Partnership Investment which is economically viable but less financially viable hence needs additional Government support. Drinking water facility; Mass public transportation. Source of fund : Government funding & commercial funding 4 General Commercial Investment Investment which is more attractive hence the Government s role in regulating and promoting is minimized. Electricity; Airports; Gas pipe. Source of fund : Commercial funding

7 Non-Government Budget Equity Financing Pembiayaan Investasi Non Anggaran Pemerintah (PINA) 7 7

8 Non-Government Budget Equity Financing (PINA) PINA plays a significant role in accelerating project s financial close 8 Investment appetite INVESTOR Investment focus areas Project pipeline Project readiness Investor Equity participation Loan Project structure Investment instrument options Investee PINA Facilitation Function Pipelining Function Ecosystem Function

9 9 How PINA Facilitates Investors in Equity Financing Direct Equity Financing Direct equity participation in an infrastructure company (investment platform) Equity investment Investor purchases equity instruments issued by infrastructure company (investment platform) such as discretionary funds, perpetuity notes, and callable preferred stocks or other near-equity related instruments deepening capital markets

10 Non-Government Budget Equity Financing (PINA) Potential investment recycle at each stage PROJECT CONDITION GREENFIELD BROWNFIELD OPERATIONAL NEW INVESTOR (Domestic and Foreign Investor) NEW INVESTOR (Domestic and Foreign Investor) INVESTMENT FINANCING SCHEME INVESTOR EQUITY PINA PROJECT Recycle EQUITY BOND Securitization/Divestment Limited Concession Scheme INVESTOR INVESTOR EQUITY PINA PROJECT NEW PROJECT EQUITY PINA PROJECT NEW PROJECT LOAN BANKS AND FINANCIAL INSTITUTIONS LOAN BANKS AND FINANCIAL INSTITUTIONS LOAN BANKS AND FINANCIAL INSTITUTIONS Source: BAPPENAS-PINA Center for Private Investment Analysis 10 10

11 Non-Government Budget Equity Financing (PINA) Success stories 11 PT Nusantara Infrastructure Tbk Investment partnershipwithstrategic internationalpartner IDR1.81 trillion(usd 134 mn) (equityparticipation) 1 Waskita TollRoad-15 Toll Roads IDR3.5 trillion(usd mn) (equityparticipation) Central Package of PALAPA Ring Fiber Optic Project IDR174 billion(usd 13.0mn) (shareholderloan) 2 PT Bandara Internasional Jawa Barat (BIJB) -KertajatiInternasional Airport IDR932.0 billion(usd 69.7mn) (discretionary fund -equity) 2 Financially closed Targeted to be completed by Q PT PP Energi The development of Coal-Fired Power Plant in Meulaboh, Aceh Project value: USD 540 mn Target Collected Funds : USD 74.0 mn (equity first stage) 1 2 PT Waskita Toll Road (phase 2) The development of Trans-Java and Non Trans Java toll road Project value: USD 10,000 mn Target Collected Funds : Equity participation max 20 % in WTR based on agreed valuation

12 PINA s Facilitation Achievements in Infrastructure Projects PINA activities to secure Investment commitment from Investors from various nations in Infrastructure Projects 12 INFRASTRUCTURE SECTORS IN INTEREST POTENTIAL INTERESTED INVESTORS POTENTIAL INVESTMENT VALUE COOPERATION ACHIEVEMENTS China Toll-road Tenaga Power Listrik Plant Integrated Tourism Resort Airport Pesawat Aerospace Udara Industry Huatsing Housing Holding Co., Ltd China Power Roland Berger China > USD 25.8 million/ 348 trillion Singing Investment Agreement with Huatsing for funding opportunities for 4 (four) high priority infrastructure projects Waskita Toll Road PLTU Meulaboh 2x200 MW West Java International Airport (BIJB) Kelas Menengah Apartments Commitment of initial investment amounting to USD 1.8 million in the months of January, March, and September 2018 Creating a Joint Venture between Huatsing with a business corporation (Kopelindo) in Indonesia as a foreign investment center from Huatsing

13 PINA s Facilitation Achievements in Infrastructure Projects PINA activities to secure Investment commitment from Investors from various nations in Infrastructure Projects INFRASTRUCTURE SECTORS IN INTEREST POTENTIAL INTERESTED INVESTORS POTENTIAL INVESTMENT VALUE COOPERATION ACHIEVEMENTS Japan Toll-road Power Plant Airport Sojitz Corporation Osaka Gas Itochu Corporation > USD 20.7 million/ 280 trillion Preparation of cooperation in operating and airport management between Sojitz and West Java International Airport Preparation of cooperation in the Private Power Plants (IPP) sector with strategic partners in Indonesia Cooperation in the renewable energy development sector in Indonesia Kansai Electric Co. Tenaga Listrik Ukraine Pesawat Udara Aerospace Industry > USD 1.6 million/ 21.6 trillion The final preparation between PT Regio Aviation Industry and Tucana Engineering on the signing of the Strategic Partner Framework Agreement relating to the detailed design of the aircraft 13

14 PINA s Facilitation Achievements in Infrastructure Projects PINA activities to secure Investment commitment from Investors from various nations in Infrastructure Projects 14 INFRASTRUCTURE SECTORS IN INTEREST POTENTIAL INTERESTED INVESTORS POTENTIAL INVESTMENT VALUE COOPERATION ACHIEVEMENTS Canada Toll-road Power Plant Canada Pension Plan Investment Board (CPPIP) Ontario Municipal Employees Retirement System (OMERS) > USD 18.5 million/ 250 trillion Preparing the financing for toll roads with strategic partners located in Indonesia Preparation of cooperation in the Private Power Plants (IPP) sector with strategic partners in Indonesia Ontario Teacher s Pension Plan (OTP) Australia Toll-road Power Plant Airport Integrated Tourism Resort Whitehelm Capital Lendlease Macquarie Capital > USD 23.5 million/ 317 trillion Preparing the financing for toll roads with strategic partners located in Indonesia Preparation of cooperation in the Private Power Plants (IPP) sector with strategic partners in Indonesia Preparation of cooperation in the development of Integrated Tourism sector located in Labuan Bajo, Flores, NTT

15 PINA s Facilitation Achievements in Infrastructure Projects PINA activities to secure Investment commitment from Investors from various nations in Infrastructure Projects 15 INFRASTRUCTURE SECTORS IN INTEREST POTENTIAL INTERESTED INVESTORS POTENTIAL INVESTMENT VALUE COOPERATION ACHIEVEMENTS South Korea Toll-road Airport Hana Financial Samtan > USD 20.7 million/ 280 trillion Signing of the Memorandum of Understanding (MoU) between Raon Engineering and PT Regio Aviasi Industry (R80) in relation to aircraft financing and technology Preparation of cooperation in the Private Power Plants (IPP) sector with strategic partners in Indonesia Power Plant Korea Electric Power Corporation D-Raon Engineering

16 PINA s Facilitation Achievements in Infrastructure Projects PINA activities to secure Investment commitment from Investors from various nations in Infrastructure Projects 16 INFRASTRUCTURE SECTORS IN INTEREST POTENTIAL INTERESTED INVESTORS POTENTIAL INVESTMENT VALUE COOPERATION ACHIEVEMENTS Hotel and Tourism State General Reserve Fund > USD 100 million/ 1.3 trillion Preparation of cooperation with business groups operating hospital and/or hotel chains Oman Hospital

17 17 PINA Projects Pipeline PINA Projects All Over Indonesia Waskita Toll Road Trans Java and Non-Trans Java Toll Road (18 Projects) (IDR trillion/ USD 10,000 million) 4 BIJB (Development Stage 2 and Aerocity 2 Projects) (IDR 30.0 trillion / USD 2,237 million) 2 PT PJB Power Plants (2 Projects) (IDR 14.5 trillion / USD 1,071 million) 5 PT RAI R-80 Airplane (IDR 21.6 trillion / USD 1,600 million) 3 PT PLN Power Transmission (IDR 27.5 trillion / USD 2,040 million) 6 Flores Prosperindo, Ltd. Area Development Flores Island (IDR 13.5 trillion /USD 1,000 million)

18 PINA Project Pipeline: 10 New Balis Development of Top-10 Tourism Priority Destinations Called 10 New Bali Source : Ministry of Tourism, Republic of Indonesia, 2018 Lake Toba Area : 1175 Ha Investment : USD 1,6Billion Tanjung Kelayang Area : 324 Ha Investment : USD 1.4Billion Borobudur Area : 309,5 Ha Investment : USD 1.5Billion Wakatobi Area : 532 Ha Investment : USD 1,5Billion Morotai Area : 300 Ha Investment : USD 2,9Billion Tanjung Lesung Area : 1500 Ha Investment : USD 4Billion Kep. Seribu & Kota Tua Area : 1009 Ha Investment : USD 1,5Billion Bromo Tengger Semeru Area : 325 Ha Investment : USD 1,4Billion Mandalika Area : 1175 Ha Investment : USD 3Billion Labuan Bajo Area : 400 Ha Investment : USD 1,2Billion Tourism Authority Tourism Special Economic Zone National Strategic Tourism Zone 18

19 Potential Financing Scheme for 10 New Balis Combination of PPP and PINA Scheme for Project Implementation Private as the project innitiator (UNSOLICITED) Government as the project innitiator (SOLICITED) 19 PLANNING PREPARATION TRANSACTION Preliminary study Outline Business Case (OBC) Final Business Case (FBC) Tender Preparation PQ Request for Proposal Bid Award Agreement Signing Financial Close CONSTRUCTION PPP Scheme for Infrastructure Development PINA Scheme for Equity Financing Project proponent submits a proposal and pre-fs document to GCA Business Entity submits FS FS evaluation Procurement Agreement Signing Financial Close. Construction Pre-FS document evaluation to get pre-fs approval; GCA gives the rights to project proponent to prepare FS Issuing approval letter: 1. Establishing the project as an Unsolicited Project; 2. Establishing the business entity as the project initiator.

20 PINA Encourages a Better Investment Climate in Indonesia PINA advocates several new rules and regulations that improves investment appetite Regulation Advocacy Coordinate with OJK, Indonesian Financial Services Authority, to relax the regulations & issue new investment instrument(s); Coordinate with IAI, Indonesian Accounting Association for aligning of financial recording rules. Improvement of Governance & Regulation Develop strategic plan and good governance guidelines of PINA; Conducting related research and studies to strengthen the functions and roles of PINA in investment funding schemes. Socialization & Coordination Continues to hold PINA socialization forum with various stakeholders (PINA Day); Coordinate with various related associations that have potential of becoming investees or investors

21 21 Contact us PINA Center for Private Investment Ministry of National Development Planning / BAPPENAS Jalan Taman Suropati 2, Menteng Jakarta Pusat, Indonesia Tel: info@pina.bappenas.go.id