Indonesia Infrastructure Investment Forum:

INVESTMENT OPPORTUNITIES IN INDONESIA

2017 - 2018

Prof. Dr. Bambang P.S. Brodjonegoro Minister of National Development Planning /

Head of National Development Planning Agency

20th September 2017

REPUBLIK INDONESIA

OUTLINE

Indonesia Macro Economic Outlook

Indonesia Infrastructure Development and Financing Framework

Public Private Partnership (PPP)

Non-Government Budget Investment Financing (PINA)

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2

3

4

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Indonesia Macro Economic and Policy Outlook

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1

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Why Should You Invest in Indonesia?

Source: BPS

Indonesia is a big market, and the …

16th Largest economy in the world

4th Most populous country in the world

5 Top Emerging markets with the best middle class potential

5.0 4.9

5.0 5.2

2014 2015 2016 2017**Outlook

Private consumption grows steadily

±5%

Indonesia’s economic growth is relatively high and stable with improving GDP per capita

Indonesian Economic Growth (%)

3,374

3,605

2015 2016

GDP per capita (US$)

Infrastructure development is progressive

4th Indonesia is projected to be the largest Economy in the World in 2050 (World in 2050, PwC)

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Most Prospective Investment Destination in 2017

Indonesia’s rank as investment destination has

improved significantly from 8 to 4 due to the strong

fundamentals and government reforms.

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Investment Facts of Indonesia

3 Top Destination for attracting investors in Asia (The Economist)

3 Top Japanese investment destination (JBIC Ratings)

91 Rank Jumped from rank 109 in

2015 for Ease of Doing Business (EoDB, World Bank)

BBB- / Positive

Baa3 / Positive BBB- / Stable

Indonesia’s investment grade from rating agencies

BBB- / Positive

BBB- / Positive

Abundant natural resources of investment realization in

Indonesia are FDI capital 65% ∞

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Indonesia is One of the Most Improved Countries

in Ease of Doing Business (EoDB) Rank 2017

Trading Across Borders

Enforcing Contracts

Resolving Insolvency

151

116

118

49

104

62

70

108

166

76

1

2

3

4

5

6

7

8

9

10

EoDB Indicator of Indonesia 91

167

113

123

61

115

70

69

113

171

74

106

Starting a Business

Dealing with Construction Permits

Registering Property

Getting Electricity

Paying Taxes

Getting Credit

Protecting Minority Investors

INDONESIA EoDB Indicator

109th 106th

91th

2015 2016 2017

15 rank improved from last year

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South Korean Direct Investment in Indonesia

39.0% metal, machine &

electronic industries

of South Korea’s total FDI realization in the period of

2012 to Q1.2017

-10.1% avg. growth (in IDR)

fluctuating investment realization values in the period of 2012 to 2016

27.0% portion

South Korean investment located outside Java Island

in the period of 2012 to Q1.2017

5.4% share

South Korean contribution to total FDI in 2012 –

Q1.2017, not including financial, upstream oil & gas

sectors

Investment Performance (from 2012)

Sources: The Investment Coordinating Board of The Republic of Indonesia (BKPM), PINA Center for Private Investment Analysis

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Investment Realization Based on Capital Expenditure

FDI realization in Indonesia 2012 – Q2.2017 (Excl. upstream oil, gas and financial sectors)

( Excl. financial sectors )

South Korea’s investment in the world 2012 – Q1.2017

Source: The Investment Coordinating Board of The Republic of Indonesia (BKPM)

# 6 (#2 in ASEAN)

# 1

# 2

# 3

# 1

# 2

South Korea Foreign Investment & FDI Realization Rank

Source: Financial Times 2017

Total FDI Realization in US$ million

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South Korea FDI Realization to Indonesia 2012 - 2016

8%

92%

8%

92%

Total Investment US$1.9 B

5%

95%

4%

96%

4%

96%

Total Investment US$2.2 B

Total Investment US$1.5 B

Total Investment US$1.2 B

Total Investment US$1.1 B

2012 2013 2014 2015 2016

Rest of the World South Korea

Ranking #3 #7 #5 #9 #4

South Korea investment is still far from its potential as a prominent investor in Indonesia

Source: The Investment Coordinating Board of The Republic of Indonesia (BKPM)

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2018 Economic Growth and Development Target

ECONOMIC GROWTH:

(5.2 – 5.6%)

HH Consumption : 5.1 – 5.2%

NPISH Consumption : 5.8 – 5.9%

Gov. Consumption : 3.8 – 4.0%

Investment (GFCF) : 6.0 – 6.6%

Export : 5.0 – 5.5%

Import : 4.4 – 4.8%

Expenditure Side

Manufacture : 4.8 – 5.3%

Construction : 6.7 – 7.1%

Trade : 5.4 – 6.0%

ICT : 10.5 – 11.5%

Financial Service : 9.2 – 9.6%

Agriculture : 3.5 – 3.8%

Production Side

Transportation : 8.0 – 8.5%

Mining : 0.8 – 1.0%

Electricity & Gas : 5.2 – 6.1%

Poverty Rate:

9.5 – 10.0% Unemployment Rate:

5.0 – 5.3%

Gini Ratio:

0.38

HDI:

71.5

Inflation: 2.5 – 4.5%

US$/IDR: 13,300 – 13,500

KRW/IDR: 11 - 12

Investment will be

the main driver of

Indonesia’s

Economic Growth

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National Priorities Development Goals

X. Politic, Law, Defense, And Security

27. Defense strenghtening; 29, Legal certainty;

28. Stabilized politic and security; 30. Bureaucratic reform.

IV. Business And Tourism Development

8. 3 tourism areas development (out of 10 areas);

9. 5 special economic areas development (out of 10 areas);

10. 3 industrial areas development (out of 14 areas);

11. Improving climate investment and creating jobs;

12. Increased export of high value-added goods and services.

V. Energy Security

13. Renewable and conservation energy;

14. Fulfillment of energy needs.

VI. Food Security

15. Increasing agriculture production;

16. Development of agriculture infrastructure.

I. Education

1. Vocational education;

2. Quality improvement for teachers.

II. Health

3. Health improvement for mothers and children;

4. Disease prevention and control;

5. Prevention and promotion (Healthy Living Community).

III. Housing and Settlements

6. Provision of decent housing;

7. Clean water and sanitation.

VII. Reducing Poverty

17. Social assurance and assistance;

18. Fulfillment of basic needs;

19. Expanding access of micro, small and cooperative enterprises.

VIII.Infrastructure, Connectivity, and Maritime

20. Development of transportation infrastructure;

21. Development of ICT infrastructure. IX. Regional Development

22. Development of border and disadvantaged area;

23. Rural development;

24. Agrarian reform;

25. Disaster response and prevention;

26. Acceleration of Papua's development.

Special Priority

Asian Games and Asian Para Games.

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Indonesia Infrastructure Development and Financing Framework 2

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Strategy on Infrastructure Development 2015-2019

Transportation Institutional integration

96.6% electrification ratio

100% drinking water access

100% sanitation access

Livable housing access

Border & underdeveloped regions accessibility

Fulfillment of Basic Needs

Infrastructure to Support Leading Sectors

Connectivity

Maritime

Highway + Intermodal

Broadband Development: • e-Government, e-Health, e-Education, e-Logistic, e-Commerce.

Energy Development: 35 GW • Target 1,200 kWh/Capita in 2019 (current facts:

Vietnam 1,300 kWh/Capita, Malaysia 4,400 kWh/Capita)

Leading Sector

Service and Tourism

Agriculture

Manufacturing

Urban Transport

Transportation safety & security

Development of road, rail-based mass transport system & intermodal

Improve the capacity and quality of the urban road network

Develop sustainable urban transport

Shift Improve

Network to support journey

efficiency

Increased share of public transport

Increased utilization

technology

Urban Transport Development Concept

Avoid

Regional Development/ Growth Center

Marine Highway Regional

Development/ Growth Center

Intermodal Intermodal

Port Area Developed Area

Under-Developed

Area

Transportation institutional integration

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Financing Infrastructure Development 2015-2019 Increasing the significant role of SOE & Private Sector through PPP Schemes

Private Participation:

US$ 131.1Bn

(36.5%)

Total Value of Investment Required in

Infrastructure*

2015-2019:

US$ 359.2Bn (IDR 4,796.2Tn)

SOE :

US$ 79.8Bn

(22.2%)

Government Budget:

US$ 148.2Bn

(41.3%)

Investment Value (Sources)

Source: BAPPENAS Internal Analysis

Weighted Average Cost of Capital

(WACC)

• Social security; • Education

security; • Health security.

• Drinking water material; • Mass public

transportation.

• Toll roads; • Ports.

Investment that does not possess direct investment feedback to the object.

Investment which is economically viable but less financially viable hence needing additional Government support.

Investment which is economically and financially viable but seen as less attractive or risky hence Government intervention is needed.

Investment which is more attractive hence the Government’s role in regulating and promoting is minimized.

• Electricity; • Airports; • Gas pipe.

Definition

Example

Source of

Funding

Category

Public Investment: Provision of Public Facilities

IRR low high

Government funding (APBN & APBD)

Government funding + commercial funding

Commercial funding promoted by the Government

Commercial funding

Non-Government Budget Investment Financing (PINA)

For Projects with IRR > 13%

Social Investment PPP Special Commercial

Investment

General Commercial

Investment

*) 1 : Calculation based on infrastructure investment (required) to be a middle income country by 2025. Sources: Bappenas- JICA, 2014: Background Study for RPJMN 2015-2019, Analyst team of Ministry of National Development Planning (BAPPENAS) RPJMN: National Medium-Term Development Planning

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Public Private Partnership (PPP)

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Public-Private Partnership Regulations in Infrastructure Provision

GOVERNMENT GUARANTEE • Presidential Regulation Number 78/2010 • Minister of Finance Regulation Number 260/PMK.011/2010 jo. Minister

of Finance Regulation Number 8/PMK.08/2016

GOVERNMENT SUPPORT Minister of Finance Regulation Number 223/PMK.11/2012 (VGF)

Presidential Regulation Number 38/2015

Ministry of National Development Planning Regulation

Number 4/2015 regarding General Guidelines

Head of National Public Procurement Agency Regulation

Number 19/2015 regarding Provision by Business Entity

AVAILABILITY PAYMENT

Minister of Finance Regulation Number 260 /PMK.08/2016

Minister of Home Affairs Regulation Number 96/2016

Aspects Regulation

Subject of

partnership

Government

1. Minister;

2. Head of Institution;

3. Head of Region;

4. SOE/ROE.

Business Entity

1. SOE/ROE;

2. Foreign Business Entity;

3. Limited Liability

Company;

4. Cooperative.

Object of

Partnership Economic and social infrastructures (19 sectors of

infrastructure)

Government

Contribution

1. Government in-kind;

2. Government support {i.e. Viability Gap Fund);

3. Government guarantee.

Investment

Return for

Business Entity

1. User charge (payment by user in the form of tariff);

2. Availability payment (payment of service availability);

3. Other forms as long as it doesn’t contravene with the

law.

Phases 1. Planning phase;

2. Preparation phase;

3. Transaction phase.

Subject matter of Presidential Regulation Number 38/2015

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19 Sector Covered for PPP in Infrastructure

Seaport

Airport

Railway

Road Transportation

Road

Toll Road

Toll Bridge

Traditional Market

Transportation

Road

Urban Facility

Localized Waste Water Management

Water Supply

Public Housing

Centralized Waste Water Management

Water Resources and Irrigation Zone

Education Facilities

Penitentiary

Health Sports, Art,

and Culture Facility

Tourism

Power Plant

Transmission

Street Lighting

Electricity Energy Conservation

Oil, Gas, and Renewable Energy

Telecommunications and Informatics

Fiber Optic

e-Gov

CONNECTIVITY

URBAN FACILITIES SOCIAL FACILITIES

Waste Management System

Offered Project Sectors

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PPP Scheme in Indonesia Indonesia’s Government has successfully implemented 6 schemes as benchmarks for future PPP projects

PPP Projects Based On Structure Development PPP Projects Based On Project Preparation

PPP with Government Guarantee

Coal-Fired Power Plant Central Java 2x1000 MW

(US$ 3,900.0 million)

PPP with Tariff and Viability Gap Fund

(VGF)

Umbulan Drinking-Water Facility

(US$ 140.7 million)

PPP with Availability Payment (AP) for

Investment Return

Palapa Ring Optic-Fiber Network

(US$ 583.4 million)

PPP with Government In-Kind (Construction

Support)

Solo – Kertosono Toll Road

(US$ 578.8 million)

Cisumdawu Toll Road

(US$ 1,050.0 million)

Balikpapan – Samarinda Toll

Road

(US$ 1,120.0 million)

Manado – Bitung Toll Road

(US$ 654.1 million)

PPP with Success Fee

Scheme

Coal-Fired Power Plant Central Java 2x1000 MW

(US$ 3,900.0 million)

Unsolicited PPP Project

Jakarta – Cikampek II Elevated Toll Road

(US$ 1,050.0 million)

Total: US$ 3,402.9 million

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PPP with Government Guarantee and Success Fee Mechanism

Special Purpose Company

PT. PLN (Off taker)

MoF and IIGF

Coal Supplier

EPC

Contractor Lenders

SPONSORS

PPA (25 years)

Guarantee Agreement

Project Finance

34% 34% 32%

Government Guarantee Objectives To enhance bankability and financial viability of PPP project. Key points: • Risk allocation; • Government guarantee is given with consideration to the

management of financial risk on State Budget (APBN). Legal Basis: • Presidential Regulation Number 78/2015 on Government

Guarantee on PPP Project; • Minister of Finance Regulation Number 260/2010 jo. Minister of

Finance Regulation Number 8/2016 on Government Guarantee Mechanism.

Central Java Power Plant 2x1000 MW (US$ 3,900.0 million)

Success Fee Mechanism IFC was the transaction adviser for this project and had been given success fee about 0.025% from project cost.

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PPP with Tariff and Viability Gap Fund (VGF)

Governor of East Java

SPC

IIGF

Central Government

MOPWPH MOF

PDAB

5 PDAM

Regress Agreement

Pasuruan Regency

Pasuruan Municipal

Sidoarjo Regency

Surabaya Municipal

Gresik Regency

Bulk Water Purchasing Agreement

Guarantee Agreement

Bulk Water Payment

PDAB Assignment

Government In-Kind

PT SMI

Project Preparation

Row Water Purchasing Agreement between PDAB

and PDAM

Raw Water Payment

Municipal /Regency

Gov. Support

Capitalization Regional Gov.

Agreement

PPP AGREEMENT

VGF

Viability Gap Fund • VGF is a Government support facility in the

form of fiscal contribution. • VGF is given to infrastructure projects

which are built under the PPP scheme and aims to improve the project's financial viability.

• The maximum value of VGF is 49% of project investment value.

• Tariffs are set by Regional Water Company (PDAB) based on a bulk water supply agreement with 5 Municipal Water Companies (PDAM).

Legal basis : • Ministry of Finance Decree Number

223/PMK.11/2012 concerning the Provision of Viability Support for Part of Construction Costs on Government Partnership Projects with Business Entities in the Provision of Infrastructure.

Umbulan Water Supply (US$ 140.7 million)

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PPP with Availability Payment (AP) for Investment Return

EQUITY

BP3TI SPC LOAN

Guarantee Agreement

USER

Access Charge

NETWORK SERVICES

Availability Payment

Regress Agreement

Return of Investment mechanism through

Availability Payment (AP)

Availability Payment (AP):

Periodic payment by GCA to SPC for the infrastructure

services provision according the quality and / or criteria

specified in the PPP Agreement.

Legal basis :

• Presidential Regulation Number 38 of 2015.

• MOF Regulation Number 190/PMK.08/2015.

General Requirement of AP:

• Infrastructure project with marginal commercial

viability;

• Economic infrastructure project or social infrastructure

project that has great benefits to society;

• The project procurement process is conducted through

fair, open and transparent procurement, as well as the

principles of fair business competition;

• The return of investment to a business enterprise does

not come from the tariff;

• Fixed rates may apply to service users, where the

collecting management is carried out by GCA.

Palapa Ring (US$ 583.4 million)

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PPP with Government in-Kind (Construction Support)

EQUITY MPWH via

TOLL ROAD AUTHORITY

SPC DEBT

Guarantee Agreement

USER

TOLL ROAD SERVICES

PPP AGREEMENT

Regress Agreement

TOLL ROAD PAYMENT

GOV. IN-KIND

Project Description: The 39 km toll road will connect the two largest cities in the North Sulawesi, namely Manado and Bitung. The project is divided into two stages: Section 1: Manado - Airmadidi (State Budget) Section 2: Airmadidi - Bitung (PPP) Overall operations of Section 1 and Section 2 (PPP-Concession).

Project Impact: The project is expected to support the increased traffic on the Manado - Bitung route, supporting the tourism sector as well as economic growth in Manado, North Minahasa and Bitung. This toll road will also become the main access road to the Special Economic Zone (SEZ) Bitung and Bitung International Hub Port to be built.

Manado - Bitung Toll Road (US$ 654.1 million)

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Unsolicited PPP Project

INITIATOR MPWH via

TOLL ROAD AUTHORITY

SPC INITIATOR AS

WINNING BIDDER

DEBT

Guarantee Agreement

USER

TOLL ROAD SERVICES

PPP AGREEMENT

Regress Agreement

TOLL ROAD PAYMENT

PT Jasa Marga

PT Ranggi Sugiron Perkasa

Initiator

1. PT Jasa Marga (80%)

2. PT Ranggi Sugiron

Perkasa (20%)

Duration of preparation

2 years

Compensation Right to Match

Jakarta-Cikampek Elevated II Toll Road (US$ 1,050.0 million)

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GOVERNMENT FACILITIES FOR PPP

GOVERNMENT

• VIABILITY GAP FUND;

• GOVERNMENT IN-KIND;

• PROJECT DEVELOPMENT FACILITY;

• SOURCE FOR AVAILABILITY PAYMENT;

• STATE/ REGIONAL ASSET AS UNDERLYING ASSET FOR PPP.

PT SARANA MULTI INFRASTRUKTUR

• TRANSACTION ADVISOR;

• PARTNERSHIP WITH PRIVATE/OR MULTILATERAL FINANCIAL INSTITUTIONS IN PPP PROJECT;

• DEVELOPS FLEXIBLE FINANCING PRODUCT.

PT PENJAMINAN INFRASTRUKTUR INDONESIA (IIGF)

• AS A “SINGLE WINDOW” IN PROVIDING GOVERNMENT GUARANTEE FOR INFRASTRUCTURE PROJECTS;

• ALSO VALUED FOR ITS STATE BUDGET’S RING FENCING FUNCTION.

……will be elaborated on Sectoral Policy Update I session

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Solicited PPP Project Scheme

Project

identification Preliminary

study Outline Business

Case (OBC)

Final Business

Case (FBC) Prequalification Request for

Proposal Bid Award

PPP

Agreement

Signing

Financial

Close

Construction

and

Operation

PLANNING PREPARATION TRANSACTION

1 – 3 YEARS

PPP OFFICE

GOVERNMENT OF INDONESIA KANTOR BERSAMA KPBU REPUBLIK

INDONESIA

CAPITAL PLACE, 8TH FLOOR

JALAN JENDERAL GATOT SUBROTO KAV. 18

JAKARTA SELATAN 12710-INDONESIA

PHONE: +62 21 27081111

www.pppoffice-indonesia.or.id

Private sector involvement:

• Debt financier.

Private sector involvement:

• Transaction advisory through success fee mechanism;

• Investor/bidder;

• Debt financier.

Private sector involvement :

• Project preparation and transaction

advisory through success fee mechanism;

• Project initiator under unsolicited scheme.

GCA submitted project document

Reviewed Preliminary Study

OBC in process or completed

FBC in process or completed

GCA announced the PQ

GCA has issued bidding document

GCA announced bidding winner

Cooperation agreement has been signed

Financial close

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Unsolicited PPP Project Scheme

Project proponent submits a proposal and pre-feasibility study (FS) document to GCA

• Pre-FS document evaluation to

get pre-FS approval;

• GCA gives rights to project

proponent to prepare feasibility

study (FS).

Business Entity

submits FS FS evaluation

Issuing approval letter: 1. Establishing the project as an

Unsolicited Project;

2. Establishing the business entity

as the project initiator;

3. The approved type of

compensation:

Procurement PPP

Agreement Signing

Compensation option

to the project initiator

Additional mark of 10% on the procurement score

Right to match The GCA purchase

the PPP initiative

CRITERIA OF EVALUATION:

•Technically integrated with the sector’s master plan;

•Economically and financially viable;

•The business entity that proposes the initiative has adequate financial capability to finance the project.

Example: Jakarta – Cikampek Elevated Toll Road

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PPP Project Pipeline

(43 projects with estimated total investment of US$ 23,300.4 million)

1. Probowangi Toll Road

2. Bandar Lampung Water Supply

Nambo Regional

Waste Management

Semarang – Demak Toll Road

1. Yogya - Solo Toll Road 2. Yogya - Bawen Toll Road 3. Bitung Port 4. Kuala Tanjung Port 5. Maloy Port and

Industrial Area 6. Surakarta Street Lighting 7. Multifunction Satellite 8. Pirngadi Hospital 9. University of Udayana

Teaching Hospital 10.Dharmais Cancer

Hospital 11.Polytechnic Batam

Education Facility Development

12.National Integrated Welfare System

13.Papua Sports Arena 14.Nusakambangan

Industrial Correctional Facility

15.Correctional Facility Relocation

1. Surabaya - Madura Toll Bridge

2. Tanjung Sauh Port 3. Batu Ampar Port 4. Hang Nadim Airport 5. Medan Municipal

Transport 6. Batam LRT 7. Pekanbaru Regional

Water Supply 8. Pondok Gede Water

Supply 9. West Semarang

Water Supply 10.Legok Nangka Waste

Treatment 11.Bandung Street

Lighting 12.University of Sam

Ratulangi Teaching Hospital

13.Sidoarjo General Hospital

1. Samarinda – Bontang Toll Road

2. North Bali Airport 3. Makassar -

Parepare Railway 4. SWRO Batam 5. Batam Sewerage

System Phase 2 6. Batam Industrial

Waste Treatment 7. Batam e-Gov

Phase 2 8. BP Batam Hospital

1. Manado - Bitung Toll Road

2. Balikpapan -Samarinda Toll Road

3. Pandaan - Malang Toll Road

4. Krian - Legundi - Bunder - Manyar Toll Road

5. Jakarta - Cikampek Elevated II Toll Road

6. Batang - Semarang Toll Road

7. Serpong - Balaraja Toll Road

8. Umbulan Water Supply

9. Central Java Power Plant

10. Palapa Ring

Project identification

Preliminary study

Outline Business Case (OBC)

Final Business Case (FBC)

PQ Request for Proposal

Bid Award PPP Agreement

Signing Financial Close

PLANNING PREPARATION TRANSACTION

Tender Preparation

1. Serang Panimbang Toll Road

2. Jakarta -Cikampek South Toll Road

Cisumdawu Toll Road

CONSTRUCTION & OPERATION

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HIGHLIGHT ON INVESTMENT OPPORTUNITIES (...will be elaborated on Sectoral Policy II session )

Sub Sector Project Name Project Cost (US$) Project Status PIC

Samarinda Bontang - Toll Road Under Calculation Project Identification

Yogya Bawen - Toll Road 933.8 million OBC

Surabaya Madura - Toll Bridge 24.0 million FBC

North Bali - International Airport 2.1 billion Project Identification Ministry of Transportation

Hang Nadim - International Airport 476.2 million FBC BP Batam/ BIFZA

Bitung - Port 2.5 billion OBC

Kuala Tanjung - Port 2.4 billion OBC

Maloy - Port and Industrial Area 642.6 million OBC

Tanjung Sauh - Port 952.6 million FBC

Batu Ampar – Port 250.0 million FBC

Batam - LRT 956.9 million FBC

Road

Airport

Port

Train

BP Batam/ BIFZA

Ministry of Transportation

Indonesia Toll Road Authority

(BPJT)

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Sub Sector Project Name Project Cost (US$) Project Status PIC

BP Batam - Hospital Under Calculation

PROJECT

IDENTIFICATION

Batam - Sewerage System Phase 2 157.3 million

Batam - Industrial Waste Treatment Under Calculation

Batam - SWRO Under Calculation

Batam - e-Government Phase 2 Under Calculation Technology

Water and Waste

Treatment

Hospital

HIGHLIGHT ON INVESTMENT OPPORTUNITIES (...will be elaborated on Sectoral Policy II session )

BP Batam/ BIFZA

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Non-Government Budget for Investment Financing (PINA)

Pembiayaan Investasi Non Anggaran-Pemerintah (PINA) 4

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Executive Summary

Non-Government Budget

Investment Financing

(PINA)

INTRODUCTION The lack of infrastructure project financing due to the limited government budget, requires the

SOEs and private sector’s involvement to fill the gap.

PINA was created to fulfil the equity portion of national strategic infrastructure and industry

project financing needs.

PINA Center optimizes the function of BAPPENAS in sourcing creative financing and the issuance

of financial instruments and relevant regulations that supports infrastructure investment including

but not limited to Direct Equity Participation, Discretionary Funds (RDPT), Perpetuity Notes, Asset

Backed Securities involving Financial Services Authority (OJK), Indonesian Accountants Association

(IAI) and various SOE Securities Companies.

PINA INVESTMENT OPPORTUNITIES PINA shall continue to increase the amount of long term institutional investors, both domestic and

international while continuing to facilitate the investment of infrastrucutre projects.

PINA scheme has been used as a financing solution of 12 projects, consisting of 7 projects under

identification, 2 projects under the process of financing valued at IDR 6.5 trillion/ US$ 490 million

and 3 projects in the facilitation phase valued at IDR 10 trillion/US$ 757 million.

PINA plays a major role in the acceleration of project financing up to financial close of some

propective projects.

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PINA Played a Major Role in Infrastructure Development in Indonesia

Facilitation Function

Pipelining Function

Ecosystem Function

Ministry of PPN / BAPPENAS through th

PINA Center for Private Investment

Team conducts 3 (three) main functions

in optimizing PINA scheme

Facilitation

PINA

Bring projects to financial close stage. Provide suggestions on project financing structure in collaboration with PT SMI & PT IIF. Promote projects pipeline through international roadshows and one-on-one meetings.

Prepare list of projects that are ready to be offered to investors and list of potential investors who will invest. Provide the latest information updates of projects to investors.

Create investment ecosystem which can encourage increased investment in Indonesia: • Assesment of investment regulations and policy recommendation and relaxation. • Accelerate implementation of creative financing instruments:

Discretionary funds (RDPT Equity) Perpetuity Notes, Asset Backed Securities, Securitization and LCS.

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Source: Bappenas-PINA Center for Private Investment Analysis

Non-Government Budget Investment Financing (PINA) Potential of capital gain at investment recycle stage

PINA Center for Private Investment at BAPPENAS Office Jl. Taman Suropati No.2, Menteng, Indonesia Tel: +62 21 3903916

s

Project Condition

Investment Financing Scheme PINA

Project

Investor

Equity

New Investor (Domestic and Foreign Investor)

Banks and Financial

Institutions

Loan

New PINA

Projects

GREENFIELD BROWNFIELD OPERATIONAL

Recycle

Equity

Investor

Loan

Banks and Financial

Institutions

PINA Project Bonds

Equity

New PINA

Projects

New Investor (Domestic and Foreign Investor)

Equity

Investor

Banks and Financial

Institutions

PINA Project

Securitization/Divestment Limited Concession Scheme

REPUBLIK INDONESIA

TOLL

ROADS

PORTS AIRPOR

TS

RAILWA

YS

OIL

INFRASTRUCTU

RE

COAL

INFRASTRUCTURE

LABOR

INTENSIVE

INDUSTRIES

AEROSPAC

E

TECHNOL

OGY

: Have entered into the PINA Scheme

There are currently 5 PINA project categories available for investment.

19 Projects – US$ 15.9 billion

CONNECTIVITY

ENERGY

MANUFACTURING & INDUSTRY

PINA PROJECTS OVERVIEW

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POWER GENERATION

& DISTRIBUTION

GAS-PIPELINE

NETWORKS

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PINA PROJECTS OVERVIEW

Have been financially closed

Toll road projects of PT Waskita Toll Road Phase I (February 2017)

Under preparation stage:

• Toll road projects of PT Hutama Marga Waskita Target of total collected funds IDR 4 trillion/

US$ 300 million. • Steam Gas Power Plant Projects of PT PLN

Target of total collected funds IDR 2.5 trillion/ US$ 190 million.

• Various types of Power Plant Project of PT PJB Target of total collected funds IDR 17.3 trillion/ US$ 1,315 million

IDR 23.8 trillion US$ 1,805 million

*) Target of completion : 2nd Semester of 2017

Under facilitation stage*:

• Toll roads projects of PT Waskita Toll Road Phase II Target of total collected funds IDR 8 trillion.

• West Java International Airport (BIJB) project Target of total collected funds IDR 1 trillion.

• Steam Coal Power Plants of PP Energi Target of total collected fund IDR 1 trillion.

IDR 10 trillion US$ 757 million

Under identification stage :

• Toll roads under PT Jasa Marga • Airports under PT Angkasa Pura I & II • Regional turboprop airplane of PT RAI • Power plants of PT Indonesia Power • Regional development of Flores Island by Flores Prosperindo, Ltd

IDR 3.5 trillion US$ 265 million

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Project Name

WTR

The development of Trans-Java and Non Trans Java toll road by

PT Waskita Toll Road

US$ 8.75 billion

Second Semester 2017 Target of total collected funds

US$ 606 million

WTR

The development of West Java International Airport (BIJB)

US$ 537 million (Phase 1)

Second Semester 2017 Target of total collected funds

US$ 75 million

WTR

The development of Coal-Fired Power Plant in Meulaboh, Aceh

US$ 227 million

Second Semester 2017 Target of total collected funds

US$ 75 million

Project Value

Financial Close

PINA’s role

• Facilitate the debottlenecking of transaction issues;

• Structuring of the financial scheme; • Identifying the potential investors.

• Initiated the use of Perpetuity Notes investment instrument for the first time;

• Identifying the potential investors.

• Initiate the use of Discretionary Funds (RDPT) as a source of fund;

• Structuring of the financial scheme; • Identifying the potential investors.

Projects Facilitated by PINA Targeted to be Completed by End of 2017

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PINA Has Improved the Investor’s Appetite to Invest in Indonesia

PINA conducts roadshows and socialization forum with various domestic and foreign investors.

Total Potential

Funds

± US$ 100

billion

Australia

The pension funds and private sector have strong interest to invest in airports, toll roads, power generation and integrated tourism. China The private sector is interested to invest in power generation, seaports, toll roads, industrial parks and integrated tourism.

Japan

The private sector has strong interest to invest in power generation, seaports, toll roads and airports.

Republic of Korea

Private sector is interested to invest in power generation and airports.

Canada

The pension funds and private sector are interested to invest in power plants and toll roads.

Singapore

The private sector is interested to invest in toll roads and seaports projects.

Domestic investors that have proven to commit to invest are :

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PINA Encourages a Better Investment Climate in Indonesia

PINA encourages the development of several

rules and regulation that improved investment

appetite

PINA becomes an alternative of investment schemes.

Act

ivit

ies

Imp

act

REGULATION ADVOCACY

• Coordinate with OJK, Indonesian Financial Services Authority, to relax the regulations & issue the new investment instrument(s);

• Coordinate with IAI, Indonesian Accounting Association for aligning of financial recording rules.

SOCIALIZATION AND COORDINATION

IMPROVEMENT OF GOVERNANCE & REGULATION

Investor friendly in Indonesian investment

climate

• Issuance of new investment instruments i.e. Discretionary funds (RDPT) and Perpetuity Notes/Bonds;

• Ensuring accountability of every investment scheme.

• Held PINA socialization forum with various stakeholders (PINA Day);

• Coordinate with various related associations that have potential of becoming investees or investors.

• Develop strategic plan and good governance guidelines of PINA;

• Conducting related research and studies to strengthen the functions and roles of PINA in investment funding schemes.

• Improved the quality of project offered and effectivity of scheme implementation;

• Issuance of several regulations related to PINA i.e. Government Regulation Number 17/2017, Presidential Regulation Number 58/2017, Presidential Regulation Number No 20/ 2016, etc.

• Improve the investor’s and investee’s appetite to use PINA scheme;

• Improve the positive image of Indonesia’s investment climate.

REPUBLIK INDONESIA

Terima Kasih

감사합니다

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