The Role of PT. Sarana Multi Infrastruktur in Infrastructure Development 1
OUTLINE Background Profile Framework Financing Policy Challenges Target 2
BACKGROUND Rationale 1. Global economic condition 2. The important role of infrastructure development as one of the stimuli s of the economic growth 3. Significant funding gap 4. Needs to support the infrastructure development Follow Up: 1. The government has provided various strategies to attract private e investors to finance the project with the issuance of the regulatory frameworks: PT SMI establishment through the Government Regulation No. 66/2007 07 as amended by Government Regulation No. 75/2008 Infrastructure Financing Company through Presidential Regulation No. 9/2009 Draft Minister of Finance Regulation on Infrastructure Financing Company Continuous improvement of the Law/Regulation on each sector 2. Government will establish Guarantee Fund Company 3. Coordination with multilateral institutions to raise fund 4. Establishment of PPP CU 3
PROFILE Minister Minister of of Finance Finance 100% ownership PP 66/2007 Juncto PP 75/2008 PT PT SMI SMI Third Third Parties: Parties: Public, Public, private private sector sector State State Owned Owned Enterprises Enterprises Banking Banking Local Local Government Government Multilateral Multilateral Organization Organization (World (World Bank, Bank, ADB, ADB, etc.) etc.) Private Private Funds Funds JV JV JV JV IIFF* IIFF* *Indonesia Infrastructure Financing Facility Founder: Founder: PT PT SMI SMI ADB ADB IFC IFC DEG DEG Other Other Private Private Sector Sector Investors Investors Benefits of the third parties involvement: Increase the capability of financial sources Increase the reputation & credit rating Absorb the expertise, experience & other resources 4
PROFILE PT SMI was established in February 2009 VISION To serve as a leading catalyst of the national infrastructure development acceleration MISSION To become a strategic partner of the government in promoting and accelerating the infrastructure development growth in Indonesia. To establish the synergy with the third parties, e.g. private institutions, banking, Local Governments, State Owned Enterprises, or multilateral organizations in order to increase the capacity of infrastructure fund MOTTO Spirit Motivation - Integrity 5
PROFILE Purpose of the establishment of PT SMI: To become one of the agencies of the Government of Indonesia in promoting infrastructure development growth To provide alternative source of fund to financing the project To address the scarcity of long term debt for infrastructure development. To be responsive to market needs by working with all participants (government, private investor, banking, multilateral organizations, ns, regulator) to create appropriate financing solution To increase the size of PT SMI and its effectiveness through the partnerships to extend the capacity of infrastructure fund 6
FRAMEWORK Project Project Owner Owner THE ROLE OF PT SMI PT PT SMI SMI Financiers/ Investors Project Identification Project Preparation Government Support Identification Inter-department Coordination F A C I L I T C A T A L Y S Project Socialization Project Marketing (Investor Forum) Feasibility Study Review/ Due Diligence Project Marketing Project Socialization Project Financing Scheme A T O R A T O R Financing Scheme Review Project Financing Execution 7
FRAMEWORK Improving the capacity of the Infrastructure Development Acceleration Related Parties PT SMI Goals Regulator: Government Bodies Project Owner: Ministry/ Bureau Local Government BUMN/BUMD BPJT etc Investors: Lenders Local Investor Foreign Investor Multilateral Private Sectors Banking Infrastructure Pool of Fund PIP FACILITATOR/CATALYSATOR for Project Owner & Investors Internal Capacity Building Fund Management Fund Raising Development of the fee-based income, e.g.: Investment advisory External Capacity Building Identification of Infrastructure Project Priority Inter-departmental Coordination Partnership with other entities to form JVs specializing in the infrastructure financing Direct financing to other legal entities, in the form of loan or equity Partnership with other parties in the form of BOT or BOO Socialization on the infrastructure financing activities I N F R A S T R U C T U R E D E V E L O P M E N T Job Creation Poverty Reduction Human Resources Development Industrial Competitiveness Improvement Distribution Improvement 8
FINANCING POLICY To To enable enable PT PT SMI SMI to to be be as as flexible flexible as as possible possible Key Key Parameter Parameter To To provide provide effective effective & useful useful products products that that can can be be run run on on a a commercial commercial basis basis Financing Financing size, size, coverage coverage and and tenor tenor According According to to MoF MoFRegulation (being (being finalized): finalized): Maximum Maximum equity equity participation participation from from each each Lender Lender Maximum Maximum equity equity portion portion at at borrower borrower site site Infrastructure Infrastructure related related project project Flexible Flexible tenor tenor with with appropriate appropriate grace grace period period 9
FINANCING POLICY Eligible Eligible Project Project PPP PPP & & Non Non PPP PPP Project Project Eligible Eligible Sector Sector PT PT SMI SMI may may support support project project in in the the following following sectors: sectors: Energy Energy supply supply Water Water/ Water/ / waste waste services services Transportation Transportation Telecommunication Telecommunication Oil Oil/ Oil/ / Gas Gas Road Road/ Road/ / toll toll road road Other Other activities activities that that impact impact positively positively on on the the development development of of basic basic infrastructure infrastructure Eligible Eligible Companies Companies Majority Majority private private sector sector entity entity Majority Majority public public sector sector entity entity Eligible Eligible Product Product Loan: Loan: the terms will reflect the relevant risk profile, the terms will reflect the relevant risk profile, flexible tenor, etc. flexible tenor, etc. Equity Equity 10
FINANCING POLICY The Cycle of Financing Steps of PT SMI PROJECT PROJECT FEASIBILITY FEASIBILITY STUDY STUDY 1. 1. Project Project Identification Identification 2. 2. Financing Financing Scheme Scheme Analysis Analysis 3. Risk 3. Analysis, Risk Risk Analysis, Management Risk Management & Mitigation & Mitigation NO Feasible/ viable? YES 4. 4. Agreement/ Agreement/ Documents Documents Preference: Preference: Positive impact on social/ society & Positive impact on social/ society & PT SMI PT SMI Feasible/Viable Business Plan Feasible/Viable Business Plan No legal problems No legal problems Reasonable return Reasonable return Clear exit strategy Clear exit strategy Loan or Equity Loan or Equity Tenor Tenor Amount Amount Interest Interest Terms & Conditions /Covenants Terms & Conditions /Covenants Security/ Collateral Security/ Collateral Cash Control Regulation (cash Cash Control Regulation (cash sweep mechanism, etc.) sweep mechanism, etc.) Regulation on even of default Regulation on even of default 5. 5. Project Project Financing Financing Implementation Implementation 6. Exit 6. Strategy Exit Strategy For LOAN finding lenders to For LOAN finding lenders to refinancing refinancing For EQUITY strategic For EQUITY strategic sale/private Placement, IPO sale/private Placement, IPO 11
FINANCING POLICY Infrastructure Financing Scheme SOURCE OF FUND Multilateral Institutions Private (PFI/PE) Insurance Local/Foreign Banks loan PT SMI Infrastructure Pool of Fund BUMN/BUMD Pension Fund loan/equity loan loan/equity loan SOE/ LOCAL GOVT JV loan/equity JV loan/equity IPO, Marketable Securities IPO, Marketable Securities CAPITAL MARKET IPO, Marketable Securities 12
CHALLENGES C H A L L E N G E S 1. 1. Legal Legal protection protection of of investors investors 2. 2. Clear, Clear, transparent transparent & & stable stable legal legal & & regulatory regulatory framework framework 3. 3. Transparency Transparency of of the the procurement procurement process process 4. 4. Integration Integration of of donor donor aid, aid, multilateral multilateral institutions institutions and and private private sectors sectors 5. Involvement 5. of Involvement domestic of players, domestic investors, players, banking, investors, banking, lenders s and lenders and commercial participants commercial participants 6. 6. Resistance Resistance from from vested vested interest interest 7. 7. Project Project profile: profile: Business Business and and policy policy rationale rationale for for concession concession Sustainable Sustainable cash cash flow flow Incentives Incentives for for equity equity to to perform perform Mitigation Mitigation of of completion completion risk risk Mitigation Mitigation of of environmental environmental impacts impacts 13
TARGET Short Term Identification on infrastructure project priority Inter department/ related parties coordination Partnership with banking, multilateral/private sector investors: Establishment of IIFF/JVs together with multilateral institutions Socialization activities Project Financing Execution Medium Term To promote Infrastructure Revolving Fund/ Pool of Fund through partnership with multilateral/ private sector investor To facilitate & promote creation of sustainable finance for infrastructure project To facilitate & ensure a supportive regulatory framework Long Term To increase the size of capability to financing the project To extend the role of the company as one of the agencies of the Government to promote infrastructure development Ultimately, to improve the growth of infrastructure development 14
CONTACT DETAIL For further information, please contact us at the following address: PT Sarana Multi Infrastruktur (Persero) Gedung BRI II, Floor 29 th - Suite 2905 Jl. Jend. Sudirman Kav.. 44-46 46 Jakarta 10210 Phone: +6221 5785 1313 Fax: +6221 570 9460 15
Thank you 16