Infrastructure procurement: To accelerate economic growth, infrastructure investment is highlighted as a priority in Indonesia’s National Medium‐Term Development Plan (RPJMN 2015–2019), National Long-Term Development Plan (RPJPN 2002-2025) and Masterplan for the Acceleration and Expansion of Indonesia’s Economic Development Plan (MP3EI 2011–2025).
The MP3EI sets targets for infrastructure funding and envisages a high degree of cooperation among central government, local governments, state owned enterprises and the private sector. The RPJMN estimates financing requirements of IDR 5300 trillion, of which 44% would be financed through national and local authorities, 22% from state-owned enterprises and the remaining 22% through private sector investments.
PPP projects: Despite the existence of a complete PPP framework, very few projects have so far reached completion. Until recently, PPPs were only a feature in the toll roads sector. Recent reforms have created enabling conditions for PPPs, with the establishment of an APEC Pilot PPP Centre in Indonesia (2013) aiming to improve the situation.
|Subsidies & Guarantees|
|Infrastructure Tax Incentives||The government offers incentives in the Income Tax Law to encourage investments in certain qualifying business sectors and regions. The main incentives are:
|Revenue Guarantees||Availability Payment is a scheme operated by the Ministry of Finance to reduce demand risks in PPPs.|
|Guarantees||Indonesia Infrastructure Guarantee Fund (IIGF)
The IIGF (in Indonesian: PT Penjaminan Infrastruktur Indonesia) was established in 2009 by the Government of Indonesia with support from the World Bank, with the aim to increase private participation in infrastructure provision by reducing political risks.
|Viability Gap Funding (VGF)||Established by the Ministry of Finance in 2012 (see Presidential Regulation (PR) No. 56/2011), VGF seeks to provide capital to help cover construction costs, in order to support the commercial viability of projects. Its objectives are:
|PT Sarana Multi Infrastruktur (SMI)||Established in 2009, AMI is a project development facility responsible for accelerating the supply of infrastructure financing through partnerships with banks and multilateral financial institutions. It further supports PPP projects through assisting in their preparation, providing advisory services and helping with negotiations.
|PT Indonesia Infrastructure Finance (IIF)||The IIF (in Indonesian: P.T. Sarana Pendanaan Infrastruktur Indonesia) is a private (non-bank) financial institution under the Ministry of Finance, which was jointly funded in 2010 by the government of Indonesia, Asian Development Bank (ADB), World Bank and two private financing institutions.
|Pusat Investasi Pemerintah (PIP)||The Government Investment Unit of Indonesia, or Indonesia Investment Agency/Pusat Investasi Pemerintah (PIP), is Indonesia’s sovereign wealth fund, managed by the Ministry of Finance.
|Others||The Geothermal Fund Facility finances geothermal exploration, which aims to increase the contribution of renewable energy resources and to make the geothermal projects become financially viable and bankable, by providing exploration data that is verified by reputable international institutions.|
|Other Public Support|
|Land Acquisition Support:||The Land Fund seeks to accelerate land acquisition for PPP projects through e.g. the Land Capping Fund and the Land Revolving Fund.|
|Project Development Facility||The Project Development Facility aims to strengthen private participation in infrastructure investment through: