Infrastructure financing in Indonesia uses the collaboration principle
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Pembiayaan infrastruktur RI gunakan prinsip kolaborasi
25 August 2023
Jakarta - Transportation Minister Sri Mulyani explained that infrastructure financing in Indonesia used the collaboration principle that involves the central government and regional governments.
“The government has its own budget that we are allocating for infrastructure. Regarding expenditure, including investment, it will not be enough by itself. More capital is required. The government is not only the central government, but also regional governments,” Sri Mulyani said at High Level Dialogue on Promoting Sustainable Infrastructure Development in Jakarta on Thursday (24/8/2023).
The Finance Minister said that Indonesia has many regional governments with different capacities and fiscal spaces. Hence, other interventions are required to support the participation of regional governments. The government is also involving private companies. Private companies can play a role in the domestic infrastructure financing structure. However, Sri Mulyani continued that the different risks of the private companies are still the main challenge.
Hence, the government is preparing policy interventions in the collaboration space with private companies, which include the Project Development Facility (PDF). The scheme guarantees some of the risks, so projects can attract private companies. The government is also offering loan instruments to obtain funding to develop infrastructure, such as by issuing green bonds and sukuk.
“We are issuing green bonds and sukuk for the private sector that want to participate, but only with loans for the government,” Sri Mulyani explained.
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