Building socially and environmentally sustainable infrastructure

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 - Membangun Infrastruktur Berkeberlanjutan Sosial dan Lingkungan

20 September 2021

Reynaldi Hermansjah, President Director of PT Indonesia Infrastructure Finance (IIF), won the award for The Most Inspiring CEO for Sustainable Development at Bisnis Indonesia Award (BIA) 2021.

Under his command, IIF continues to show their commitment in creating innovative financial products to support the government and private companies in building infrastructures in Indonesia while still paying attention to social and environmental aspects.

To know more about IIF’s contribution to infrastructure construction, here is Bisnis Indonesia’s interview with Reynaldi Hermasjah.

Most people may not be familiar with IIF. Can you briefly explain the functions and the roles of IIF in infrastructure construction in Indonesia?

IIF is a non-bank financial institution that is especially established to provide financing and advisory services for infrastructure projects in Indonesia that prioritise the sustainability aspect.

So, the projects financed by IIF are infrastructure projects that implement the social aspect and the environmental policy. So, this is our mandate, which is one of the biggest missions tasked by the Finance Minister as a shareholder that initiated IIF’s establishment with several other multilateral agencies. The Finance Ministry is present through PT Sarana Multi Iinfrastruktur (Persero) or SMI.

Until now, how do you see IIF’s journey?

We were established in 2010. One of our tasks is to boost the participation of private companies in infrastructure construction. So, we act as a catalyst and an enabler for the private sector.

In 11 years, there are many strategic milestones achieved by IIF. The first PPP (public-private partnership) project is Cikampek-Palimanan toll road, which is the first project financed by IIF in the toll road sector. In the project, we act as an enabler for the private sector to construct the infrastructure.

Next, we take on many roles in the renewable energy sector as we have a vision to advance sustainable infrastructures. We finance many renewable energy projects, such as mini hydro power plants, solar panels, biogas plants, as well as the wind farm in Sidrap that was inaugurated by President Joko Widodo. So, all renewable energy spectrums have been financed by IIF.

The five biggest sectors financed by IIF are energy, toll road, oil and gas, as well as water treatment, and telecommunications. For example, Umbulan SPAM (Drinking Water Supply System) is the first PPP project in the drinking water sector where private companies participated and IIF acted as one of the financiers.

What did the shareholders expect of you when you were appointed as the President Director of IIF?

I joined IIF at the start of 2019. At the time, shareholders expected to recover IIF to its former condition as they have been experiencing loss for 2 years.

The biggest expectation of the shareholders is to recover the financial condition and the performance of IIF to become positive and to be able to carry out their missions excellently.

Since I joined IIF, we successfully achieved a turn around. In 2019, IIF’s financial condition had recovered compared to its condition from 2017 to 2018. In 2020, the growth was maintained. InshaAllah (God willing), the growth can continue in 2021.

IIF is an excellent organisation as it is filled with adequate human capital in their respective sector. 2 years ago, our friends probably did not receive guidance. So, I provide a clear guidance on our purpose and on how we can achieve a turn around. With clear guidance, their ambition to achieve the vision will be ignited. Hence, I can say that the turnaround is thanks to the cooperation of all parties in IIF.

At Bisnis Indonesia Award (BIA) 2021, you received an award as The Most Inspiring CEO. Can you tell us what exactly do you do at IIF?

I am a glass-half-full person. The way I see it, previously, the advantage, understanding, and uniqueness of IIF in the social and environmental aspects were seen as problems.

I encouraged seeing those aspects as IIF’s added value, not as a hindrance. There are not many institutions that understand the sustainable financing concept that uses the international standards.

We can even say that the excellent added value is IIF’s biggest contribution to the advancement of the country. Besides seeing the economic aspect in infrastructure construction, we are also focusing on social and environmental aspects. It is not always loss or profit.

Many people reckon that socially and environmentally sustainable infrastructure financing is complicated. How do you respond to that?

In the short term, there are many homework and additional activities, but, based on the existing study, this approach makes infrastructure construction easier in the future. For example, for mini hydro power plants, if there is a contamination in the river in the future, citizens may file a complaint.

In the short term, this seems like extra weight, but infrastructures are long-term projects, and they will improve. Moreover, there is a study that states that, in the long run, return on investment or return on equity of projects with sustainable financing is better than other projects.

How do you see IIF in the next 5 or 10 years?

In the sector, infrastructures are still required by the country for the next 10 to 20 years. We are currently still working on basic infrastructures, such as roads, telecommunications services, and other basic infrastructures. Infrastructure is more than that, there are hospitals and educational facilities that are categorised as social infrastructure.

For IIF, in the next 5 to 10 years, I see it becoming a boutique firm. This means that IIF will improve thanks to its human quality and human capacity that continue to innovate.

The financing type that we provide is unique as our current longest financing period is 18 years and we can provide a fixed rate for tenors above 7 years. So, I imagine IIF will be an organisation that is filled with innovative human capital to be a catalyst and an enabler for infrastructure construction in Indonesia.

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