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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

The Role of PT. Sarana Multi Infrastruktur inInfrastructure Development

Presented at

“Strategy for Developing Infrastructure PPP in Indonesia” Seminar

Bali, 5 May 2009

slide2

OUTLINE

Background

Profile

Framework

Financing Policy

Challenges

Target

slide3

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
slide4

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
slide5

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

slide6

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
slide7

F

A

C

I

L

I

T

A

T

O

R

C

A

T

A

L

Y

S

A

T

O

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

slide8

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

slide9

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

slide10

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

slide11

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

slide12

FINANCING POLICY

Infrastructure Financing Scheme

SOURCE OF FUND

lMultilateral Institutions lInfrastructure Pool of Fund

lPrivate (PFI/PE) lBUMN/BUMD

lInsurance lPension 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
slide14

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
slide15

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

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