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 in infrastructure development

The Role of PT. Sarana Multi Infrastruktur inInfrastructure Development

Presented at

“Strategy for Developing Infrastructure PPP in Indonesia” Seminar

Bali, 5 May 2009


The role of pt sarana multi infrastruktur in infrastructure development

OUTLINE

Background

Profile

Framework

Financing Policy

Challenges

Target


The role of pt sarana multi infrastruktur in infrastructure development

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


  • The role of pt sarana multi infrastruktur in infrastructure development

    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


    The role of pt sarana multi infrastruktur in infrastructure development

    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


    The role of pt sarana multi infrastruktur in infrastructure development

    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


    The role of pt sarana multi infrastruktur in infrastructure development

    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


    The role of pt sarana multi infrastruktur in infrastructure development

    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


    The role of pt sarana multi infrastruktur in infrastructure development

    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


    The role of pt sarana multi infrastruktur in infrastructure development

    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


    The role of pt sarana multi infrastruktur in infrastructure development

    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


    The role of pt sarana multi infrastruktur in infrastructure development

    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

    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


    The role of pt sarana multi infrastruktur in infrastructure development

    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


    The role of pt sarana multi infrastruktur in 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

    Thank you


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