The Indonesian Transportation Ministry presented six weighbridge revitalization projects worth IDR 330.66 billion (USD 22.80 million). The projects will comprise of three weighbridges in Sumatra – Muara Tembesi (Jambi), Merapi (South Sumatra) and Blambangan Umpu (Lampung) – and three others in Java – Tanjung and Subah (Central Java) as well as Guyangan (East Java).
The Indonesian government invites the private sector to join the pilot projects, which will be financed through the public-private partnership (PPP) scheme. A 15-year contract for the companies will be issued with investors required to design, finance, build and maintain the weighbridges for a specified period of time in accordance to regulations. Through the state-owned infrastructure financing guarantee company, PT Penjaminan Infrastruktur Indonesia (PII), the ministry would give guarantees for the investors in all six projects.
Currently, the ministry is in the midst of checking the weighbridges’ condition. The tender prequalification will be carried out in the middle of 2019.
(Source: Jakarta Post)
State-owned electricity company PLN has successfully obtained syndicated loan facilities of USD 1.62 billion from 20 international banks to finance its 35,000 MW power generation program. The Syndicated Loan Facilities consisted of term loan facilities worth USD 1.32b with a five-year tenor and a revolving credit facility worth USD 300 million with a three-year tenor.
The Syndicated Loan facility was initiated with PLN’s presentation to banks in Tokyo and Singapore. Subsequently, PLN appointed seven banks as its Mandated Lead Arranger and Bookrunners (MLABs). They are Australia and New Zealand Banking Group Limited, Bank of China Limited, Citigroup Global Markets Singapore Ltd, Mizuho Bank, Ltd., Oversea-Chinese Banking Corporation Limited, Sumitomo Mitsui Banking Corporation (SMBC) Singapore Branch / PT Bank Sumitomo Mitsui Indonesia and United Overseas Bank Limited.
The successful credit indicates investors’ confidence in PLN’s credit ability, as the company managed to obtain fund exceeding its initial request of USD 1.5 billion. PLN’s credit rating is Baa2, BBB (Fitch Ratings) and BBB- (Standard & Poor’s).
(Sources: Ministry of Energy and Mineral Resources of the Republic of Indonesia; The Jakarta Post)
PT Len Indonesia and Thales have signed a Memorandum of Understanding (MoU) to collaborate on delivering advanced signaling systems for railway projects in Indonesia. Jakarta is currently home to 10 million people and is facing challenges coming with rapid urbanization. With growing population of 3.7% per year, there is a need for a more efficient and safer modes of transport such as Mass Rapid Transit (MRT) and Light Rail Transit (LRT).
The MoU is an extension of Thales' and PT Len's collaboration beyond the defence sector. Its primary aim is the development, delivery and deployment of an integrated signalling system for potential local MRT. Beyond this, the joint development between the two companies will allow Thales to continue building local capabilities in the Indonesian workforce through transfer-of-technology. It will also help PT Len to bring locally-developed, high-technology systems worldwide and to become a regional player in transportation.
The partnership will help build transport infrastructure of the future and support Indonesia's 2020 Go Digital vision.
(Source: Thales; Business Insider)
Indonesia unveiled infrastructure projects worth an estimated USD 13.2 billion during a market sounding event in Guangzhou in southern China. The event was organized through cooperation between the Indonesian Investment Coordination Agency (BKPM) and the country's Consulate General in Guangzhou. The projects on offer include power plants under the independent power producer (IPP) scheme and toll roads.
Indonesia is actively looking for domestic and international investors to take part in these projects and it is providing support in the form of guarantees and also, fiscal and non-fiscal incentives. Through the infrastructure financing guarantee agency PT Penjaminan Infrastruktur Inodnesia (PII), Indonesia government has the ability to give guarantees for any companies who are eager to take part in the government-to-business cooperation (KPBU) scheme.
Since January 2016, the Beijing-based Asian Infrastructure Investment Bank (AIIB) has approved loans amounting to USD 691.5 million for four infrastructure projects in Indonesia: two irrigation improvement projects, a slum improvement and a regional infrastructure development fund. The loans are co-financed with the World Bank and the Indonesian government. AIIB is also currently finalizing the approval process of another USD 260 million loan for the Mandalika urban and tourism infrastructure development on Lombok Island. Mandalika Resort Area is an under-construction integrated resort area in the island of Lombok, Indonesia. It is designated as a Special Economic Zone (KEK) on Mandalika Beach
(Sources: Straits Times; The Jakarta Post)
The state-owned Indonesia Infrastructure Guarantee Fund (IIGF) welcomes domestic and international investors to bid for its four national strategic projects worth IDR.4.75 trillion (USD 330.8 million). The four projects offered are Trans Sulawesi railway project connecting Makassar-Parepare valued at IDR 1 trillion (USD 69.6 million), tower 2 Dharmais cancer hospital valued at IDR 650 billion (USD 45 million), non-toll road preservation of South Sumatra's eastern cross roads and Riau (Jalintim) valued at IDR 3.1 trillion (USD 215.9 billion). Currently, the four projects are at the pre-qualification stage for bidding and will be under the Public Private Partnership-Availability Payment funding scheme.
In the 2019 state budget draft, Indonesia will fund its cities under the Public Private Partnership (PPP) funding scheme, where a mixture of investors and bankers are considered. A total of 19 projects will be rolled out under the PPP funding scheme. The government is currently working on setting the standard for PPP preparation, process, transaction and operation. It also continues to seek private investment funding for railway construction project which will require up to IDR 92 trillion (USD 67 billion) by 2030.
(Source: Antara News)
Indonesia aims to become a new global trans-shipment hub on China’s maritime Silk Road. Currently, Singapore dominates the region's trans-shipment business.
After taking office in October 2014, Indonesian President, Joko Widoko, endorsed a five-year plan worth IDR 700 trillion (USD 50.6 billion) to develop the country’s maritime sector. This included IDR 243 trillion for developing 24 strategic ports. Following a slow start, the infrastructure development began to gather pace in 2017.
The Java Integrated Industrial and Ports Estate (JIIPE) is one key project, located on the eastern edge of Java. It will be an industrial centre with an area of 3,000 hectares, and would include a seep-sea port and a residential estate. The JIIPE complex is developed by the state-owned port operator, Pelindo III, and the private partner, AKR Corporindo. It is expected to accomodate nearly 200 companies atfer completed in 2030. With the integration of a deep-sea port, this park will also have direct access to domestic and international markets.
Other projects include the expansion of Tanjung Priok, the country’s busiest port in Jakarta; Kuala Tanjung Port at North Sumatra that will significantly increase container capacity; and port projects in cities, such as Makassar and Sorong, meant to reduce logistics costs which today stand at an equivalent of 24% of Indonesia’s GDP – significantly higher than in most countries in the region.
The government can cover a third of the IDR 4,800 (USD 348 billion) cost required for the port infrastructure development, and it has been seeking investors worldwide. Some success has been achieved. The Port of Rotterdam Authority provided consulting to Pelindo I on the Phase 1 development of Kuala Tanjung and is reportedly planning to invest in the next phase. The Japanese government has signed a JPY 118.9 billion (USD 1 billion) loan in November 2017 for the construction of the Patimban deep-sea port. Singapore’s port operator, PSA International, has also been involved in one project and could join another. From China, Ningbo Zhoushan Port and China Communications Construction Engineering Indonesia have signed memorandums of understanding with Indonesian port operators to jointly develop New Priok and Kendal International Port, respectively. The investments are yet to be made.
Indonesia was ranked 46th in the World Bank's Logistics Performance Index for 2018, lagging behind neighors such as Thailand, Malaysia and Vietnam.
(Sources: Port Today; Nikkei Asian Review)
According to the Transportation Minister Budi Karya Sumadi, the development project for Patimban Seaport in Subang, West Java, will break ground in July 2018, with the seaport targeted to start operations in 2019. The project will be managed by three contractors – Japansese Penta Ocean Construction Co. and two state-owned construction companies, PT Wijaya Karya and PT PP. The project is funded through a 118.9 billion yen (USD 1.07 billion) loan from the Japanese government. According to JICA Indonesia, the loan covered 83% of the total 144 billion yen funding for the project, as land procurement and taxes were the responsibility of the Indonesian government.
The new port will be situated roughly 70 kilometres from the Kawawang Industrial Estate in West Java, where many Japanese automotive companies have built factories. Once the project’s first phase of development is completed, Patimban Seaport will have a container capacity of 1.5 million 20-foot equivalent units (TEUs), which will expand to 7.5 million TEUs once the second and final phase of construction is completed. The port is expected to become a key international seaport in Indonesia.
The Patimban seaport will be operated by a consortium consisting of both Indonesian and Japanese companies, with a 51%-49% shareholding respectively. Indonesian companies that have expressed interest in joining the tender include Pelindo II, Astratel Nusantara, and Samudera Indonesia. Six Japanese companies also want to join the tender reportedly.
(Sources: The Jakarta Post; Indonesia Investments)
During Chinese premier, Li Keqiang's visit to Indoneisa, the Indonesian Coordinating Minister for Maritime Affairs, Luhut Binsar Panjaitan, and his counterpart from the Chinese National Development and Reform Commission signed a Memorandum of Understanding (MoU) for the promotion of cooperation in the development of regional comprehensive economic corridors within China's Belt and Road Initiative and Indonesia's vision to be the 'Global Maritime Fulcrum framework'.
Another MoU was signed between the National Development and Reform Commission of China and the Ministry of State Owned Enterprises of the Republic of Indonesia on providing support for the continuous and smooth implementation of the Jakarta-Bandung High-Speed Rail Project. The project will cut travel time between the two cities from about three hours by car to just 40 minutes. The USD5.9 billion project is 75% funded by a loan from China. PT KCIC (PT Kereta Cepat Indonesia China), which is 60% held by Indonesian state-owned enterprises and China Development Bank (CDB) signed the loan agreement in May last year and construction is expected to commence in May 2018.
Exchange of Letter was conducted between the China International Development Cooperation Agency and the Ministry of Public Works and Housing of the Republic of Indonesia on Design Review for the Construction of Jenelata Dam Project and the Riam Kiwa Dam Project. The Jenelata Dam with a planned capacity of 224.7 cubic metre, is located in South Sulawesi province, in the district/city of Gowa. It will be used for watering 24,400 hectares, control floods and generate hydro power. The Riam Kiwa dam in South Kalimantanwill accomodate 127 cubic meters of water. It will supply water to 5,000 hectares of paddy field, supply raw water of 0.1 cubic meter per second and generate 2.7 MW of hydro power plant. The Indonesian government offered Chinese companies IDR 4.5 trillion (USD 337 million) for 4 dam projects, including these two. The other two are Pelosika Dam in Southeast Sulawesi, Rokan Kiri Dam in Riau.
A Preferential Buyer Credit Loan Agreement was reached on Cisumdawu Toll Road Phase III Project between the Export-Import Bank of China and the Government of the Republic of Indonesia Represented by the Ministry of Finance.
Both sides agreed to move ahead with cooperation in key areas of trade, infrastructure, production capacity, investment, industry, and financing, as well as in emerging areas like e-commerce and the internet economy. China agreed to encourage its enterprises to increase import of palm oil and other Indonesian products in accordance with market rules. China also welcomed Indonesia to participate in the First China International Import Expo to be held in Shanghai this November.
(Sources: AntaraNews, Xinhuanet, pwc, Today, RambuEnergy)
United Overseas Bank Limited (UOB) today signed a Memorandum of Understanding (MOU) with PT Sarana Multi Infrastruktur (Persero) (PT SMI) to support infrastructure development initiatives in Indonesia. Under the MOU, both parties will collaborate on infrastructure financing, corporate financing and project financing for national and provincial infrastructure projects. The agreement deepens UOB’s long-standing partnership with SMI which began in 2013 to provide term loans to help accelerate the completion of infrastructure projects including toll roads and power plants.
Both parties will collaborate in supporting Indonesia infrastructure project financing, and not limited to credit syndication and mezzanine financing. PT SMI will support and work with UOB in project preparation and infrastructure advisory services in going beyond the scope of Government and Company collaboration. To fulfill Indonesia’s infrastructure development fund, PT SMI will also collaborate with UOB in equity investment and infrastructure fund management, especially in developing financing tools including but not limited to potential credible international investor identification, such as sovereign wealth funds or pension funds.
According to the Indonesian Government, there is a funding gap of approximately IDR 2,877 trillion needed to complete the infrastructure projects outlined in the country’s national development plans by 2019. As a state-owned infrastructure financing company under the Indonesia Ministry of Finance, PT SMI works with local and international financial institutions through Public-Private Partnerships (PPP) to provide infrastructure financing.
Despite the fact that Indonesia has been expanding its infrastructure budget each year, the government is unable to shoulder the entire infrastructure bill required by the country. The country estimates that it needs USD 450 billion in infrastructure development investment up to 2019. As such, the private sector is being called on to play an increasingly important role in infrastructure development in Indonesia. Tourism infrastructure is of particular interest to the country, as it is seeks to catch up with its neighbours in terms of tourism arrivals and receipts.
In 2017 a total of 5.7 million foreign visitor arrivals and about 14-15 million domestic visitors entered the resort island of Bali through the Ngurah Rai International Airport. Considering that the airport is operating at full capacity and that the number of visitors continues to rise, there is an urgent need to address the situation. Bali is now planning to develop a USD 2 billion offshore airport in the northern part of the resort island with the name of Bandara International Bali Baru (BIBU) or the New Bali International Airport. The new airport is designed to accommodate 32 million passengers annually, equipped with a 230,000-square-meter terminal and a 4,100 meter runway.
Another airport that is operating over capacity is the Adisutjipto International Airport, which serves Yogyakarta on the main island of Java. Yogyakarta has benefited from a surge in tourism, with consistently strong double-digit growth figures for foreign arrivals at the tiny and overcrowded Adisucipto airport, which is serving 7 million visitors when it was actually designed to accommodate only 1.2 to 1.5 million per year. State-owned airport operator Angkasa Pura I has announced this month that land acquisition process for the New Yogyakarta International Airport has been completed and it is now doing land deployment. The new airport, known as NYIA, will be built in Kulon Progo, a district in the Special Region of Yogyakarta.
(Sources: Jakarta Globe; Indonesia Investments; Tempo.co)
Indonesian state-owned enterprises (SOE) minister Rini Soemarno has invited developers in Europe to invest in infrastructure projects in Indonesia. The minister said that the government needed USD 500 billion of funds to develop infrastructure projects from 2015 to 2019, during a recent investor gathering held in Zurich. On offer were various infrastructure projects including airports, seaports, roads, telecommunications and electricity. Projects included the construction of power plants with a combined capacity of 35,000 MW; 2,650 kilometers of new highways; 1,800 km of toll roads; digital infrastructure as well as fiber optic networks. The development construction will cover eastern Indonesia, a region that had received less attention in the past. The event was attended by investors from Switzerland, Qatar, China, Azerbaijan, Malaysia and Norway.
(Sources: The Jakarta Post; MMIndustri)
Indonesia's National Development Planning Agency (Bappenas) and Spanish urban spatial planning consultant Fundacion Metropoli have inked a memorandum of understanding (MoU) to develop 10 new tourist destinations in Indonesia. The agreement will last 5 years and will start with Bintan Island. The agreement consists of 5 key areas of cooperation that include knowledge co-creation in urban solutions; sustainable cities and communities policy networking; a joint fellowship program; Indonesia future regional and cities lab alliance; and a pilot project (incubation) of sustainable cities and region concept. As Metropoli works on the planning and implementation, the government will focus on the financial side by seeking investors to develop the areas.
This initiative is part of the President's plan to develop the Indonesian tourism sector, as well as to increase the number of tourists in Indonesia. Bali, being the most famous tourist destination in Indonesia, had nearly four million tourists in the first eight months of 2017 and generated IDR 172 trillion (USD 17 billion) to Indonesia’s GDP. The government plans to replicate this success in other destinations like Lake Toba (North Sumatera), Tanjung Lesung (Banten), Kepulauan Seribu (Jakarta), Tanjung Kelayang Beach (Bangka Belitung), Borobudur Temple (Central Java), Mount Bromo (East Java), Mandalika (West Nusa Tenggara), Labuan Bajo (East Nusa Tenggara), Wakatobi (South Sulawesi) and Morotai Island (North Maluku).
(Sources: Antaranews; The Jakarta Post; The Strait Times)
Indonesia has achieved remarkable success in bringing electricity to its people. Despite being an archipelagic nation of some 17,000 islands spanning 5,000 km, Indonesia has attained a 93% electrification ratio. In the past 10 years alone, PLN, the national electric utility, has managed to connect approximately 20 million households, or some 78 million people.
Given the benefits of electrification, the government aims for near-universal access by 2020. Public investment for electrification is currently channeled through three sets of programs: (i) grid extension executed by PLN, (ii) off-grid programs executed by line ministries, and (iii) off-grid programs executed by Pemda. PLN accounts for some 97% of all household connections, whereas the remaining 3% have been delivered principally by line ministries and the Pemda.
Presently, more than 12,000 villages have yet to be supplied with proper electricity, many in the T3 eastern part of Indonesia, where the electrification ratio is below 60%. While the challenge of electrification is most acute in East Indonesia, the province of West Java, has nearly as many unelectrified households—some 2.4 million—as all of eastern Indonesia combined.
The Indonesian government is currently executing a series of programs to increase access to electricity, notably for people living in the outermost and disadvantaged regions, such as Papua and East Nusa Tenggara. One of these programs is the 35000 MW electrification megaproject. In addition to building power plants, it is also developing infrastructure for distributing electricity, namely transmission lines, power substations and distribution networks.
(Sources: Asian Development Bank; PLN; The Jakarta Post)
The Indonesian government has opened the tender procedure for the development of the Tatimban Port in Subang, West Java that is worth USD 1.3 billion. The secretary of the Transportation Ministry's Patimban Port development group said that three bundles were being offered for this project: terminal, breakwater and seawall and connecting breach. The winning bidders would be declared in March and the development will start towards the beginning of April 2018. The government requires each organization to bid for one bundle out of the three.
Japan’s government has made a USD 1.04 billion loan agreement to fund the Patimban deep seaport venture. Japanese International Cooperation Agency (JICA) Indonesia Office has advised that land acquisition and taxes were not included in the loan, which covers 83% of the total project value. The disbursement of the 40-year loan, which has a 0.1% interest rate and a 12-year grace period, has a requirement for the project to be built by a Japanese firm or an Indonesian company that has a partnership with one.
(Source: The Jakarta Post)
The Indonesian Public Works and Public Housing Ministry will focus on building infrastructure in four sectors in 2018, namely transportation, food supply, waste management and housing. The ministry is set to obtain IDR 106.9 trillion (USD 7.83 billion) from the proposed 2018 budget once it is approved, the highest amount of all ministries and government institutions. Of that figure, IDR 41.3 trillion (USD 3 billion) would be allocated to building new roads and bridges as well as maintaining existing ones, while another IDR 37.3 trillion (USD 2.7 billion) was earmarked for the construction of dams and irrigation networks. A further IDR 15.9 trillion (USD 1.16 billion) would be spent on facilities pertaining to wastewater treatment and clean water management, while the rest would be funneled to develop affordable housing. The planned infrastructure projects will be located across the archipelago.
(Source: The Jakarta Post)
The Japanese government has expressed its wish to take part in several major infrastructure projects in Indonesia. One of the key projects is the construction of Patimban port in Subang, West Java and a 70-kilometer toll road, connecting the port with Karawang Industrial Estate. The Patimban port is designed to have a container capacity of 1.5 million 20-foot equivalent units (TEUs) once it is partially completed in 2019 and 7.5 million TEUs by 2027, about half the capacity of the country’s busiest port, Jakarta’s Tanjung Priok. The construction of Patimban Port is financed by Japan’s loan through the Japan International Cooperation Agency (JICA) at USD 1.03 billion and domestic funding of USD 90 million. The USD 1.03 billion loan from JICA will be disbursed gradually until 2023.
Japan is also seeking involvement in the construction of the medium speed Jakarta-Surabaya railway; the Trans Sumatra Toll Road – particularly the Bukit Tinggi-Padang and the Bukit Tinggi-Pekanbaru section; the Greater Jakarta East-West MRT line project, development of several outer islands and the construction of a waste management system.
(Source: The Jakarta Post)
An agreement was signed yesterday between Dubai-headquartered port operator DP World and Indonesian government and port officials to advise on the development of the Kuala Tanjung Greenfield Port and logistics zone and Belawan Port in North Sumatra. As part of a Technical Assistance Contract, DP World will share its expertise and experience in increasing efficiencies, training and development for employees and develop multi-modal transport hubs. The agreement was signed by DP World Group and state-owned port operator PT Pelabuhan Indonesia I.
DP World will be reviewing operations at Belawan port and advising on efficiency improvements, and plans for the Kuala Tanjung Greenfield port and logistics zone to reduce costs, which will positively impact prices of goods sold in the local market. The agreement is expected to have a far-reaching positive impact on the social and economic growth of the region. DP World's PT Terminal Petikemas Surabaya (TPS) is located on the northern shore of eastern Java along the edge of Madura Strait, and is the gateway to Eastern Indonesia.
Indonesia is taking new measures to improve the economics and efficiency of its maritime logistics sector. The country is implementing a plan to enable the country’s ports to capture a larger share of transshipment business related to domestic cargo. The country has four dominant state-owned port operators, which have been told to make operations more efficient, increase berth productivity, and improve intermodal linkages and cargo tracking. They have also been told to find ways to reduce handling and clearance fees.
(Sources: DP World; JOC.com)
President Joko Widodo has targeted to complete the development of Trans Sumatera toll road that will connect Pekanbaru and Dumai in 2019. Pekanbaru – Dumai toll road will be divided into six sections, which are section I Pekanbaru – Minas (9.5 km), section II Minas – Petapahan/Kandis Selatan (24 km), section III Petapahan – Kandis Utara (17 km), section IV Kandis – Duri Selatan (26 km), section V Duri Selatan – Duri Utara (28 km), and section VI Duri Utara – Dumai (25 km).
Besides Pekanbaru – Dumai toll road, Jokowi has targeted to complete about 825 kilometers of Trans Sumatera toll road that will have the total distance of 2,818 km in 2019.
The government is targeting to build 60 iron suspension bridges to improve access in mountainous villages across the country. The regions most in need of suspension bridges are Papua and Sulawesi Island. The President of Indonesia, made a point to inaugurate the opening of a small suspension bridge, to show his commitment to improve logistics and mobility between small villages and sub-districts, and to develop infrastructure equally across the country without showing favoritism.
Hong Kong’s MTR Academy has signed a Memorandum of Understanding (MoU) with MRT Jakarta to support the development of Indonesia's first mass transit railway system, which is targeted to open in 2019. Under the MoU, the MTR Academy will render support to the new railway operator by sharing experience on operations, maintenance and human resources aspects. It will also help with the establishment of a railway academy for MRT Jakarta.
The Mass Rapid Transit (MRT) Jakarta is a major infrastructure project that will provide a new railway service to relieve traffic congestion and foster economic development in Indonesia's capital city. The MTR Academy was set up in Hong Kong in 2016 with the aim of sharing railway knowledge and expertise with railway operators and authorities worldwide as well as becoming a world-class training hub for railway professionals from the Belt and Road region and around the world.
(Source: MTR Academy)
Tidal Bridge BV, a joint venture of Strukton International and Dutch Expansion Capital, has started the feasibility study for the Palmerah Tidal Bridge project in Indonesia. The Palmerah Tidal Bridge project has the National Strategic Project status, emphasizing the national interest. The project includes the construction of a floating bridge together with the world’s largest tidal power plant.
The first scope of the plan consists of the construction of the 800 meter Palmerah Bridge at Larantuka Strait, East Flores, and a tidal energy power plant with an installed capacity of 18 MW to 23 MW, providing energy for more than 100.000 people.
The combination of the bridge with the tidal energy power plant makes this project unique in its kind. The planned location, Larantuka Strait, is highly suitable for the generation of tidal energy due to the water flows, and makes it possible for local people to benefit from the bridge in multiple ways.
(Source: Tidal Bridge)
The Indonesian Infrastructure Partnership has awarded US-based civil engineering and construction company Morrison Knudsen a USD 1.2 billion contract in Kalimantan, Indonesia. The contract is for the engineering and construction of a new harbor and load out facilities for the country's expanding pulp and paper industry. Included in the work is the construction of a 600 acre load out/storage yard, 35 miles of new resource roads, 12 stationary dock cranes and a standalone power station to sustain the new harbor.
The project is a vote of confidence for the aggressively expanding pulp industry in Indonesia. After its completion it will increase the country's pulp and paper export capacity by 7%. Additionally it will open up close to 1200 square miles of country for further development in the mining and energy industries. The Company anticipates hiring 1200 Indonesians for the 3 year project.
(Source: Morrison Knudsen)
The government of Indonesia has highlighted that approximately IDR 2,877 trillion (60% of total infrastructure funding needs) is required to fill the gap of total infrastructure funding needs. It is keen to improve the private participation in accelerating infrastructure development in Indonesia, so as to achieve 40% funding through Public Private Partnership (PPP) schemes. It has prepared detailed information about ongoing and upcoming PPP projects in a publication called Public Private Partnerships – Infrastructure Projects Plan in Indonesia – 2017. The publication has information on 22 projects, of which 21 are under preparation, and 1 ready-to-offer project. In addition, there is information on 17 projects that are already tendered.
Hyundai Rotem has announced that it had been selected to supply rolling stock for the first phase of the light metro network under construction in Jakarta. Hyundai Rotem will work with Woojin Industrial Systems for the supply of eight two-car trainsets. Deliveries are due to take place between July and October next year, with entry into service expected in 2018.
Construction of the initial 5·8 km section between Kelapa Gading and Velodrome began in June 2016. This will serve five stations and is scheduled to open in time for the Asian Games in August 2018, which Jakarta is hosting.
The rolling stock contract includes options for up to 110 cars to operate on further phases of the network. The light metro is a separate project from the underground heavy metro currently under construction in Jakarta, for which a consortium of Sumitomo Corp and Nippon Sharyo is supplying rolling stock.
(Source: Messe Frankfurt – Raillog Korea)
The Indonesian government has offered its Japanese counterpart to review the medium-speed train project to be developed as a high-speed train network on the Jakarta-Surabaya route. The project aims to increase the speed of the rail connecting the two cities, from around 90 kilometers per hour to 160 kilometers per hour. There are approximately 1,000 railroad crossings along the route, making it necessary to construct an elevated railway track. Indonesia is seeking a private company to fund the high-speed train project, as the cost will be doubled for building an elevated railway network. The 750-kilometer track — estimated to cost IDR 150 trillion (USD 12 billion) — will trim travel time between the country’s two largest cities to 2.5 hours from 10 hours now.
(Sources: The Jakarta Globe, Antara news)
Despite being a top-priority initiative, infrastructure development in Indonesia has stalled amid construction and funding delays stemming in large part from efforts by the government to control its own spending. Many infrastructure projects are underway in the country, including a new port, railway modernization and power plant construction -- each worth the equivalent of hundreds of billions of yen, or billions of dollars. But fundraising and other challenges are hampering progress. Indonesia wants to build high-quality infrastructure without adding to its fiscal deficit. So it has been bent on shouldering no outlays by employing public-private partnerships as a funding vehicle. But having private companies undertake projects often means delays in funding and the start of construction.
(Source: Nikkei Asian Review)
The tender process for four major toll road projects in Indonesia will commence during 2017. The Indonesian Government is partnering with the World Bank to handle the four projects. The new Bali toll road will improve transport links in Bali, while the construction of the Tegal-Cilacap toll road will provided a much-needed new link in Central Java. Also being planned are the Jogya-Bawen toll road and the Sukabumi-Ciranjang-Padalarang toll road. Indonesia’s Toll Road Regulatory Agency is working on costings for the four projects while feasibility studies are also being carried out. The four toll roads are expected to become part of Indonesia’s National Strategic Projects programme.
KADIN (the Indonesian Chamber of Commerce and Industry), BKPM (the Indonesian Investment Coordinating Board) and BAPPENAS (the Ministry for Naational Development Planning) will hold an ASEAN G2B Infrastructure Investment Forum 2016 and Indonesia Infrastructure Week. There will be a number of infrastructure projects to be offered at the event for the 18,000 foreign investors that will be attending. Some of the projects include the Kuala Tanjung port, the Soekarno-Hatta railway, the Jakarta-Surabaya high speed train (HST), the Yogjakarta-Solo toll road, the acceleration of three power plants projects yielding 35GW, Kertajati Airport, among others.
Minister of BAPPENAS, Bambang Brodjonegoro, said that the investment format will be in the form of a joint venture with state-owned enterprises. The government admittedly needs funding totaling around USD 439 billion for the infrastructure projects, while funding from the national budget only covers about 30% of its needs. To address this, Brodjonegoro said that funding for infrastructure development is from three sources, which are the government (42%), state-owned enterprises (22%), and private corporations (36%).
(Sources: BKPM, Detik)
The Ministry of Economy will provide funding assistance through the “Dana Proyek Pemerintah Daerah dan Desentralisasi” (P2D2) project for 11 provinces and 180 regencies/cities. The funding totals USD 14.92 million. The allocation of the fund has been detailed in the Ministry of Economy Regulation Number 160/PMK.07/2016. The fund will be allocated for basic infrastructure development, in particular the clean water supply, irrigation, roads, and sanitation.
Road infrastructure will get the biggest share of the fund, totaling around USD 8.32 million, followed by irrigation at around USD 4.13 million, and clean water at around USD 1.64 million. The provinces involved are Jambi, Bengkulu, Lampung, West Java, Central Java, East Java, West Kalimantan, Central Kalimantan, North Sulawesi, South Sulawesi, West Sulawesi, West Nusa Tenggara, East Nusa Tenggara, and North Maluku, while the regencies included are those in all of the provinces except West Java, Central Java, and West Nusa Tenggara. The ministry informed that the funding will be delivered no later than 14 working days after the regulation is signed.
(Source: BBC Indonesia)
Indonesian President Joko Widodo has recently signed a new regulation, which aims to reduce the allocated budgets for some of its ministries. Under the new regulation, the Public Works and Public Housing Ministry received the largest budget cuts, from USD 758.77 million to USD 599.92 million. The Minister of Public Works and Public Housing Basuki Hadimuldjono said that the ministry needs about USD 143.61 million for infrastructure development, while its budget from the national budget is about USD 96.661 million, thus they have to cover the shortage of about USD 46.94 million.
To address this problem, the Public Works and Public Housing Ministry has invited private companies to engage in infrastructure development based on the PPP model, known in the country as “Kerjasama Pemerintah Badan Usaha” (KPBU), to close the gap between funding requirement and availability.
One of the obstacles to encourage the private sector’s participation in infrastructure provision is the government’s readiness in preparing attractive projects for the private sector. This occurs because the processes of planning, preparation, and transactions of cooperation projects between the government and business entities have not been carried out with a clear policy, whilst inter-agency coordination is still not yet optimal. Each ministry will now be required to appoint a working unit to serve as a PPP node, in accordance with Presidential Regulation Number 38 of 2015.
(Sources: Setkab, Tribunnews, Detik, Indonesia Infrastructure Initiative)