The role of pt sarana multi infrastruktur in infrastructure development
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The Role of PT. Sarana Multi Infrastruktur in Infrastructure Development. Presented at “Strategy for Developing Infrastructure PPP in Indonesia” Seminar Bali, 5 May 2009. OUTLINE. Background. Profile. Framework. Financing Policy. Challenges. Target. BACKGROUND. Rationale

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The Role of PT. Sarana Multi Infrastruktur in Infrastructure Development

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The Role of PT. Sarana Multi Infrastruktur inInfrastructure Development

Presented at

“Strategy for Developing Infrastructure PPP in Indonesia” Seminar

Bali, 5 May 2009


OUTLINE

Background

Profile

Framework

Financing Policy

Challenges

Target


BACKGROUND

Rationale

  • Global economic condition

  • The important role of infrastructure development as one of the stimuli of the economic growth

  • Significant funding gap

  • Needs to support the infrastructure development

    Follow Up:

  • The government has provided various strategies to attract private investors to finance the project with the issuance of the regulatory frameworks:

    • PT SMI establishment through the Government Regulation No. 66/2007 as amended by Government Regulation No. 75/2008

    • Infrastructure Financing Company through Presidential Regulation No. 9/2009

    • Draft Minister of Finance Regulation on Infrastructure Financing Company

    • Continuous improvement of the Law/Regulation on each sector

  • Government will establish Guarantee Fund Company

  • Coordination with multilateral institutions to raise fund

  • Establishment of PPP CU


  • PROFILE

    Minister of Finance

    100% ownership

    PP 66/2007 Juncto PP 75/2008

    PT SMI

    JV

    JV

    IIFF*

    • Founder:

      • PT SMI

      • ADB

      • IFC

      • DEG

      • Other Private Sector Investors

    • Third Parties:

      • Public, private sector

      • State Owned Enterprises

      • Banking

      • Local Government

      • Multilateral Organization (World Bank, ADB, etc.)

      • Private Funds

    *Indonesia Infrastructure Financing Facility

    • Benefits of the third parties involvement:

    • Increase the capability of financial sources

    • Increase the reputation & credit rating

    • Absorb the expertise, experience & other resources


    PROFILE

    PT SMI was established in February 2009

    • To serve as a leading catalyst of the national infrastructure development acceleration

    VISION

    MISSION

    • To become a strategic partner of the government in promoting and accelerating the infrastructure development growth in Indonesia.

    • To establish the synergy with the third parties, e.g. private institutions, banking, Local Governments, State Owned Enterprises, or multilateral organizations in order to increase the capacity of infrastructure fund

    MOTTO

    Spirit – Motivation - Integrity


    PROFILE

    Purpose of the establishment of PT SMI:

    • To become one of the agencies of the Government of Indonesia in promoting infrastructure development growth

    • To provide alternative source of fund to financing the project

    • To address the scarcity of long term debt for infrastructure development.

    • To be responsive to market needs by working with all participants (government, private investor, banking, multilateral organizations, regulator) to create appropriate financing solution

    • To increase the size of PT SMI and its effectiveness through the partnerships to extend the capacity of infrastructure fund


    F

    A

    C

    I

    L

    I

    T

    A

    T

    O

    R

    C

    A

    T

    A

    L

    Y

    S

    A

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    R

    FRAMEWORK

    THE ROLE OF PT SMI

    Project Owner

    PT SMI

    Financiers/ Investors

    Project Identification

    Project Socialization

    Project Preparation

    Project Marketing

    (Investor Forum)

    Government Support Identification

    Inter-department Coordination

    Feasibility Study Review/

    Due Diligence

    Project Marketing

    Financing Scheme Review

    Project Socialization

    Project Financing Execution

    Project Financing Scheme


    FRAMEWORK

    Improving the capacity of the Infrastructure Development Acceleration

    Related Parties

    PT SMI

    Goals

    Regulator:

    Government

    Bodies

    FACILITATOR/CATALYSATOR

    for Project Owner & Investors

    Job Creation

    • Internal Capacity Building

      • Fund Management

      • Fund Raising

      • Development of the fee-based income,

      • e.g.: Investment advisory

    • External Capacity Building

      • Identification of Infrastructure Project

      • Priority

      • Inter-departmental Coordination

      • Partnership with other entities to form

      • JVs specializing in the infrastructure

      • financing

      • Direct financing to other legal entities, in

      • the form of loan or equity

      • Partnership with other parties in the

      • form of BOT or BOO

      • Socialization on the infrastructure

      • financing activities

    I

    N

    F

    R

    A

    S

    T

    R

    U

    C

    T

    U

    R

    E

    • Project Owner:

    • Ministry/ Bureau

    • Local Government

    • BUMN/BUMD

    • BPJT

    • etc

    Poverty Reduction

    D

    E

    V

    E

    L

    O

    P

    M

    E

    N

    T

    Human Resources

    Development

    • Investors:

    • Lenders

    • Local Investor

    • Foreign Investor

    • Multilateral

    • Private Sectors

    • Banking

    • Infrastructure

    • Pool of Fund

    • PIP

    Industrial

    Competitiveness

    Improvement

    Distribution

    Improvement


    To enable PT SMI to be as flexible as possible

    Key Parameter

    To provide effective & useful products that can

    be run on a commercial basis

    • According to MoF Regulation (being

    • finalized):

      • Maximum equity participation from each

    • Lender

      • Maximum equity portion at borrower site

    • Infrastructure related project

    • Flexible tenor with appropriate grace period

    Financing size,

    coverage and tenor

    FINANCING POLICY


    Majority private sector entity

    Eligible Companies

    Majority public sector entity

    • PT SMI may support project in the following sectors:

      • lEnergy supply

      • lWater/ waste services

      • lTransportation

      • lTelecommunication

      • lOil/ Gas

      • lRoad/ toll road

      • lOther activities that impact positively on

      • the development of basic infrastructure

    Eligible Sector

    FINANCING POLICY

    Eligible Project

    PPP & Non PPP Project

    • Loan:

      • the terms will reflect the relevant risk profile ,

      • flexible tenor, etc.

    Eligible Product

    Equity


    FINANCING POLICY

    • Preference:

    • Positive impact on social/ society & PT SMI

    • Feasible/Viable Business Plan

    • No legal problems

    • Reasonable return

    • Clear exit strategy

    • Project Identification

    The Cycle of Financing Steps of PT SMI

    2. Financing Scheme Analysis

    3. Risk Analysis, Risk Management & Mitigation

    • Loan or Equity

    • Tenor

    • Amount

    • Interest

    PROJECT FEASIBILITY STUDY

    NO

    Feasible/

    viable?

    • Terms & Conditions /Covenants

    • Security/ Collateral

    • Cash Control Regulation (cash sweep mechanism, etc.)

    • Regulation on even of default

    YES

    4. Agreement/ Documents

    5. Project Financing Implementation

    • For LOAN  finding lenders to refinancing

    • For EQUITY  strategic sale/Private Placement, IPO

    6. Exit Strategy


    FINANCING POLICY

    Infrastructure Financing Scheme

    SOURCE OF FUND

    lMultilateral InstitutionslInfrastructure Pool of Fund

    lPrivate (PFI/PE)lBUMN/BUMD

    lInsurancelPension Fund

    lLocal/Foreign Banks

    loan/equity

    loan

    PT SMI

    loan

    loan/equity

    loan

    SOE/

    LOCAL GOVT

    JV

    IPO, Marketable Securities

    loan/equity

    JV

    loan/equity

    IPO, Marketable Securities

    IPO, Marketable Securities

    CAPITAL MARKET


    CHALLENGES

    C

    H

    A

    L

    L

    E

    N

    G

    E

    S

    • 1. Legal protection of investors

    • 2. Clear, transparent & stable legal & regulatory framework

    • 3. Transparency of the procurement process

    • 4. Integration of donor aid, multilateral institutions and private sectors

    • 5. Involvement of domestic players, investors, banking, lenders and

  • commercial participants

    • 6. Resistance from vested interest

    • 7. Project profile:

    • Business and policy rationale for concession

    • Sustainable cash flow

    • Incentives for equity to perform

    • Mitigation of completion risk

    • Mitigation of environmental impacts


    TARGET

    Short Term

    • Identification on infrastructure project priority

    • Inter department/ related parties coordination

    • Partnership with banking, multilateral/private sector investors:

    • Establishment of IIFF/JVs together with multilateral institutions

    • Socialization activities

    • Project Financing Execution

    Medium Term

    • To promote Infrastructure Revolving Fund/ Pool of Fund through

    • partnership with multilateral/ private sector investor

    • To facilitate & promote creation of sustainable finance for

    • infrastructure project

    • To facilitate & ensure a supportive regulatory framework

    Long Term

    • To increase the size of capability to financing the project

    • To extend the role of the company as one of the agencies

    • of the Government to promote infrastructure development

    • Ultimately, to improve the growth of infrastructure development


    CONTACT DETAIL

    For further information, please contact us at the following address:

    PT Sarana Multi Infrastruktur (Persero)

    Gedung BRI II, Floor 29th- Suite 2905

    Jl. Jend. Sudirman Kav. 44-46 Jakarta 10210

    Phone: +6221 5785 1313 Fax: +6221 570 9460


    Thank you


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