IIF spends Rp 1.5 trillion on new projects

JAKARTA. PT Indonesia Infrastructure Finance (IIF) will provide long-term financing facilities totalling Rp 1.5 trillion (US$157.6 million) this year for the development of the country’s infrastructure, the company’s senior executive says.

IIF president director Kartika Wirjoatmodjo said in Jakarta on Tuesday that the funding would mostly be directed at the development of toll roads, electricity and water projects.

Speaking on the sidelines of the Indonesia Investment Forum at the Four Seasons Hotel in Jakarta, Kartika said that the agency had provided about Rp 500 billion for a West Java toll road project.

For the electricity sector, Kartika said that the IIF would finance two types of initiatives: gas-fired power plants and hydroelectric power plants.

Kartika hoped that the IIF would be able to provide between $10 million and $20 million of the nearly $90 million needed for the construction of the gas-fired power plant. As for the hydropower plant project, she said that the IIF would provide about $30 million out of the total $350 million needed.

The IIF’s commitment to finance water provision projects may reach Rp 300 billion, while for the construction of telecommunications towers, it may reach Rp 500 billion.

PT IIF is a non-bank financial institution that focuses on providing long-term financing for infrastructure projects in Indonesia. The agency receives financial support from the Indonesian government and international financial agencies including the International Finance Corporation (IFC), the World Bank and the Asian Development Bank (ADB).

Kartika said that the agency’s financing capacity reached about Rp 3.8 trillion, comprising equity and loans from the World Bank and the ADB.

The Indonesian government has pledged to develop a number of major infrastructure projects within the country as part of its goal to become one of the top five global economic forces by 2025. The blueprint for this agenda was established in the Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI), which is estimated to cost around Rp 4,000 trillion through 2025.

Under the MP3EI, the government plans to integrate six economic corridors throughout the archipelago by improving connectivity among them through infrastructure projects.

Deputy Finance Minister Mahendra Siregar once said that Indonesia needed about $200 billion within the next five years to jump start the acceleration of infrastructure development and to achieve its MP3EI goals.

This means that the country would have to allocate a minimum of $40 billion or nearly Rp 400 trillion per year for infrastructure spending. However, due to massive subsidy spending, Indonesia can only allocate less than Rp 200 trillion for infrastructure spending next year. (Hans David Tampubolon/The Jakarta Post)