A brief on current Indonesia s PPP Program Directorate General of Budget Financing and Risk Management - Ministry of Finance Republic of Indonesia 1
Indonesia has been striving to close infrastructure gap but the budget is not sufficient, hence private sector participation is needed Indonesia are behind peers in terms of growth in public capital stock per capita Average annual growth in public stock per capita 2005-15 However, the financing needs cannot be provided by the government, leaving the huge gap to be fulfilled Infrastructure financing needs 2015-2019 Philippines Indonesia BRICS Malaysia China Government budget (41.3%) ~ USD 148 bio Vietnam 2 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 0% 2% 4% 6% 8% 10% 12% Indonesia have been tremendously increasing spending on infrastructure and reducing energy subsidy Infrastructure and Energy Subsidy Spending 2013-2018 Infrastructure Δ 2018:2014 130.9% Energy Subsidy Δ 2018:2014 2013 2014 2015 2016 2017 2018 73% Total financing needs: USD 358 bio Financing gap SOEs (22.2%) PPPs (36.5%) ~ USD 80 bio ~ USD 131 bio
Institutional Settings of Indonesia PPP Comprehensive and coordinated supports in bringing GCAs moving forward with PPP Institution Objectives Project Planning Bappenas, GCAs Providing initiation of projects and early economic assessment. Delivering preliminary studies. Project Preparation Ministry of Finance, PT. SMI and other SOEs Helping and assisting GCA to develop OBC to FBC until getting the winning bidder and reaching Financial Close. Project Development Facility (PDF) Managed by MoF and implemented by SOEs, mainly PT. SMI. Viability Gap Fund Ministry of Finance Increasing project viability and social-economic value Government Guarantees IIGF and MoF Improving project bankability and arranging better risk allocation Land Acquisition LMAN-Ministry of Finance Providing Land Financing for National Priority Projects Coordination PPP Joint Office Forum for coordination among PPP Stakeholders to assist GCAs and monitor PPP projects progress. KPPIP Debottlenecking PPP Projects issues which need coordination among cross sectoral institution 3
PPP Scheme and Fiscal Facilities Comprehensive supports in terms of regulation and funding to attract private participation Government Support and Facilities Return on PPP Investment Project Development Fund (PDF) A facility to help GCAs in ensuring credible business case in preparation and competitive process of transactions. User Payment Viability Gap Fund (VGF) A facility to improve financial viability of PPP projects, provided as contribution for parts of construction. Government Guarantees A facility to improve projects bankability by providing sovereign guarantees for certain project risks. Availability Payment Periodic payment to private partners by the GCAs based on the availability of contracted infrastructure services Regulatory supports in term of procurement, land acquisition etc. 4
Current Policy Updates on PPP A set of government efforts in improving PPP implementation Shifting some infrastructure spending plan allocated in the 2019 budget (APBN) to PPP Availability Payment scheme. The main objective is to reduce negative primary balance in the budget to improve the soundness of fiscal sustainability Another objective is to encourage GCAs to procure projects through PPP AP scheme which provide more assurance of better link between budget and service performance. As a result, 4 projects of the Ministry of Public Works, 4 projects of the Ministry of Transport and 2 projects of the Ministry of Environment, have been agreed to be shifted from their budget to procurement through PPP-AP. The 2019 budget that can be shifted to PPP AP is valued at around Rp 9 trillion (USD 6.2 million). National Urban Transport Development Program The government is currently developing a more comprehensive policy framework to support the cities in developing urban transport. The program will be developed under PPP scheme, by utilizing the existing framework. The current structure of Medan Transport Project will be the main reference. It is expected that around 10 cities will be supported through this program 5
SDG Indonesia One for Blended Finance A platform to complement PPP implementation SDG Indonesia One (SIO) is established under PT. Sarana Multi Infrastruktur (PT. SMI), a State Owned Enterprise (SOE) 100% owned by MoF. SIO is intended to support financing for SDG projects in the process of development, construction, and de-risking. This platform is also aimed to link SDG projects activities with most suitable investors. Through this platform, PT. SMI can provide Grant, Loan and Equity, Technical Assistance, Capacity Building, Research for projects related to SDGs. MoF will ensure that SIO programme is inline with and supporting to other government programs. 6
Fast-moving sectors/types of infrastructure PPP pipeline is growing rapidly, but some sectors are moving faster than others Toll Roads National Roads Water Treatment Hospital Transport Has been regarded as the most matured PPP industry, toll roads will still be the favourite as some sections in Java as well as other islands are already in the pipeline. A number of non toll roads national PPP projects are being prepared this year (Riau, Papua etc) and many more will come. The success story of delivering 3 projects (Umbulan, Bandar Lampung and Semarang) will soon be replicated by other cities. As the ministry of health started to open opportunity to private sector, demands from regions as well as from education university will increase significantly. At the moment a framework on urban transport is being formulated and expectedly will drive cities to go for PPP option. Ministry of Transport also more supportive to PPP. 7
8 Projects Developed Under PDF PDF has successfully delivers various type of infrastructure No. PROJECT NAME Sector PROJECT COST (USD)* Status PDF Implementor 1. Public Transport of Medan City (LRT) Transportation 950 M Finalization of F/S PT SMI 2. Makassar-Parepare Railway Transportation 86 M RFP in progress PT SMI 3. Hang Nadim Airport Batam Transportation 163 M Finalization of F/S (PQ in Des) PT SMI 4. Sam Ratulangi University Hospital Education 28 M Update on F/S PT SMI 5. Krian Sidoarjo Regional Hospital Health 25 M PQ in progress (August to Oct) PT SMI 6. Medan City Hospital Health 68 M Finalization of the F/S PT SMI 7 Darmais Jakarta Cancer Hospital Health 165 M Preparation for PQ in Oct 2018 PT PII 8. Zainoel Abidin Hospital Aceh Health 143 M PDF request under evaluation MOF 9. Pekanbaru Water Supply Project Water 54 M Finalization of the F/S PT SMI 10. West Semarang Water Supply Project Water 85 M Bid awarded in Sept 2018 PT PII 11. Sumatera East Line National Road Road 228 M Preparation for RFP in Nov 2018 12. Integrated Social Security System IT 81 M PDF contract sign on Oct 2018 PT SMI 13. Public Road Lighting Energy Conservation PT SMI 36 M PDF request under evaluation MOF 14. Correction Center Prison PDF request under evaluation MOF 8
9 Projects Under Construction and Operation MOF Facilities has an important role in supporting the succeded of the projects reached financial close No. NAMA PROYEK NILAI PROYE K Sector STATUS 1. Central Java Power Plant 3 B Power Contruction (target COD 2019) 2. East Java Water Project 148 M Water Construction (target COD 2019) 3 Bandar Lampung Water Project 79 M Water Construction (target COD 2021) 3. Palapa Ring Fiber Optic West Part 90 M Telecomunication COD, Feb 2018 4. Palapa Ring Fiber Optic Middle Part 97 M Telecomunication Construction (target COD 2018) 5. Palapa Ring Fiber Optic East Part 361 M Telecomunication Construction (target COD 2019) 6. Batang Semarang 774 M Toll Road Construction (target COD 2019) 7. Rad Manado Bitung 359 M Toll Road Construction (target COD 2019) 8. Balikpapan Samarinda 697 M Toll Road Construction (target COD 2019) 9. Pandaan Malang 415 M Toll Road Construction (target COD 2019) 10. Serpong Balaraja 422 M Toll Road Construction (target COD 2019) 11. Jakarta-Cikampek 1,1 M Toll Road Construction (target COD 2020) 12. Krian-Legundi-Bunder-Manyar 859 M Toll Road Construction (target COD 2020) 13. Rad Serang-Panimbang 801 M Toll Road Construction (target COD 2020) 14. Cileunyi Sumedang-Dawuan 578 M Toll Road Construction (target COD 2020) 15. Probolinggo-Banyuwangi 1,5 B Toll Road Preparation for construction 16. Jakarta-Cikampek South Side 942 M Toll Road Preparation for construction 9
Future challenges of PPP implementation in Indonesia Multidimensional issues that need to be addressed to support the implementation Improving the capacity of public agencies in preparing projects, executing transactions and managing PPP contracts. Integrating PPP process (project selection and prioritisation, support provision, and payment) with budgeting (APBN) process Benchmarking PPP process and documentation with international standards (best practices) to attract more global investors 10
Thank You DIRECTORAT GENERAL OF FINANCING AND RISK MANAGEMENT MINISTRY OF FINANCE, GOVERNMENT OF INDONESIA Frans Seda building 1 st floor Dr. Wahidin 1, Jakarta 10710 Phone (+6221) 3510722; Fax (+6221) 3447386 www.djppr.kemenkeu.go.id/kpbu Email: pppindonesia@kemenkeu.go.id 11 11