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The Role of The Role of PT. Sarana Multi InfrastrukturPT. Sarana Multi Infrastruktur
in inInfrastructure DevelopmentInfrastructure Development
Presented at Presented at ““Strategy for Developing Infrastructure PPP in Indonesia” Strategy for Developing Infrastructure PPP in Indonesia”
SeminarSeminarBali, 5 May 2009Bali, 5 May 2009
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OUTLINEOUTLINE
BackgroundBackground BackgroundBackground
ProfileProfile ProfileProfile
FrameworkFrameworkFrameworkFramework
Financing PolicyFinancing Policy Financing PolicyFinancing Policy
TargetTarget TargetTarget
ChallengesChallengesChallengesChallenges
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BACKGROUNDBACKGROUND
RationaleRationale
1.1. Global economic conditionGlobal economic condition
2.2. The important role of infrastructure development as one of the stimuli of the economic growthThe important role of infrastructure development as one of the stimuli of the economic growth
3.3. Significant funding gapSignificant funding gap
4.4. Needs to support the infrastructure development Needs to support the infrastructure development
Follow Up:Follow Up:
1.1. The government has provided various strategies to attract private investors to finance the project The government has provided various strategies to attract private investors to finance the project with the issuance of the regulatory frameworks: with the issuance of the regulatory frameworks:
PT SMI establishment through the Government Regulation No. 66/2007 as amended by PT SMI establishment through the Government Regulation No. 66/2007 as amended by Government Regulation No. 75/2008 Government Regulation No. 75/2008
Infrastructure Financing Company through Presidential Regulation No. 9/2009 Infrastructure Financing Company through Presidential Regulation No. 9/2009
Draft Minister of Finance Regulation on Infrastructure Financing Company Draft Minister of Finance Regulation on Infrastructure Financing Company
Continuous improvement of the Law/Regulation on each sectorContinuous improvement of the Law/Regulation on each sector
2.2. Government will establish Guarantee Fund Company Government will establish Guarantee Fund Company
3.3. Coordination with multilateral institutions to raise fund Coordination with multilateral institutions to raise fund
4.4. Establishment of PPP CUEstablishment of PPP CU
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PROFILE
Minister of FinanceMinister of Finance
PP 66/2007 Juncto PP 75/2008PP 66/2007 Juncto PP 75/2008
PT SMIPT SMI
100% ownership100% ownership
Third Parties:
•Public, private sector
•State Owned Enterprises
•Banking
•Local Government
•Multilateral Organization (World Bank, ADB, etc.)
•Private Funds
Third Parties:
•Public, private sector
•State Owned Enterprises
•Banking
•Local Government
•Multilateral Organization (World Bank, ADB, etc.)
•Private Funds
Benefits of the third parties involvement:
• Increase the capability of financial sources
• Increase the reputation & credit rating
• Absorb the expertise, experience & other resources
JVJV JVJV IIFF*IIFF*Founder:
•PT SMI
•ADB
•IFC
•DEG
•Other Private Sector Investors
Founder:
•PT SMI
•ADB
•IFC
•DEG
•Other Private Sector Investors
*Indonesia Infrastructure Financing Facility
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PROFILE
• To serve as a leading catalyst of the national infrastructure development acceleration
VISION
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
MISSION
MOTTO Spirit – Motivation - IntegritySpirit – Motivation - Integrity
PT SMI was established in February 2009
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PROFILE
Purpose of the establishment of PT SMIPurpose of the establishment of PT SMI::
• To become one of the agencies of the Government of Indonesia in To become one of the agencies of the Government of Indonesia in
promoting infrastructure development growthpromoting infrastructure development growth
• To provide alternative source of fund to financing the projectTo provide alternative source of fund to financing the project
• To address the scarcity of long term debt for infrastructure To address the scarcity of long term debt for infrastructure
development.development.
• To be responsive to market needs by working with all participants To be responsive to market needs by working with all participants
(government, private investor, banking, multilateral organizations, (government, private investor, banking, multilateral organizations,
regulator) to create appropriate financing solutionregulator) to create appropriate financing solution
• To increase the size of PT SMI and its effectiveness through the To increase the size of PT SMI and its effectiveness through the
partnerships to extend the capacity of infrastructure fundpartnerships to extend the capacity of infrastructure fund
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THE ROLE OF PT SMITHE ROLE OF PT SMI
Project OwnerProject OwnerProject OwnerProject OwnerPT SMIPT SMIPT SMIPT SMI Financiers/ InvestorsFinanciers/ InvestorsFinanciers/ InvestorsFinanciers/ Investors
FRAMEWORKFRAMEWORK
Project IdentificationProject Identification
Project PreparationProject Preparation
Government Support IdentificationGovernment Support Identification
Inter-department CoordinationInter-department Coordination
Project MarketingProject Marketing
Project SocializationProject Socialization
Project Financing SchemeProject Financing Scheme
Project SocializationProject Socialization
Project Marketing Project Marketing (Investor Forum)(Investor Forum)
Feasibility Study Review/ Feasibility Study Review/ Due DiligenceDue Diligence
Financing Scheme ReviewFinancing Scheme Review
Project Financing ExecutionProject Financing Execution
FF
AA
CC
II
LL
II
TT
AA
TT
OO
RR
CC
AA
TT
AA
LL
YY
SS
AA
TT
OO
RR
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PT SMIPT SMI
FACILITATOR/CATALYSATORfor Project Owner & Investors
Human Resources Development
Poverty Reduction
Job Creation
Distribution Improvement
Industrial Competitiveness Improvement
Improving the capacity of the Infrastructure Development Acceleration
GoalsRelated Parties
II
NN
FF
RR
AA
SS
TT
RR
UU
CC
TT
UU
RR
EE
DD
EE
VV
EE
LL
OO
PP
MM
EE
NN
TT
FRAMEWORKFRAMEWORK
Regulator:Government Bodies
Project Owner:•Ministry/ Bureau•Local Government•BUMN/BUMD•BPJT•etc
Investors:•Lenders•Local Investor •Foreign Investor •Multilateral•Private Sectors•Banking•Infrastructure Pool of Fund•PIP
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
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FINANCING POLICYFINANCING POLICY
Key ParameterKey ParameterKey ParameterKey Parameter
To enable PT SMI to be as flexible as possibleTo enable PT SMI to be as flexible as possible To enable PT SMI to be as flexible as possibleTo enable PT SMI to be as flexible as possible
To provide effective & useful products that can To provide effective & useful products that can be run on a commercial basisbe run on a commercial basis
To provide effective & useful products that can To provide effective & useful products that can be run on a commercial basisbe run on a commercial basis
Financing size, Financing size, coverage and tenorcoverage and tenor
Financing size, Financing size, coverage and tenorcoverage and tenor
• According to MoF Regulation (being According to MoF Regulation (being finalized):finalized):• Maximum equity participation from each Maximum equity participation from each LenderLender• Maximum equity portion at borrower siteMaximum equity portion at borrower site
• Infrastructure related project Infrastructure related project • Flexible tenor with appropriate grace periodFlexible tenor with appropriate grace period
• According to MoF Regulation (being According to MoF Regulation (being finalized):finalized):• Maximum equity participation from each Maximum equity participation from each LenderLender• Maximum equity portion at borrower siteMaximum equity portion at borrower site
• Infrastructure related project Infrastructure related project • Flexible tenor with appropriate grace periodFlexible tenor with appropriate grace period
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FINANCING POLICYFINANCING POLICY
Eligible CompaniesEligible CompaniesEligible CompaniesEligible Companies Majority private sector entityMajority private sector entity Majority private sector entityMajority private sector entity
Majority public sector entityMajority public sector entity Majority public sector entityMajority public sector entity
Eligible ProjectEligible ProjectEligible ProjectEligible Project PPP & Non PPP ProjectPPP & Non PPP Project PPP & Non PPP ProjectPPP & Non PPP Project
Eligible SectorEligible SectorEligible SectorEligible Sector
PT SMI may support project in the following sectors:PT SMI may support project in the following sectors: Energy supplyEnergy supply Water/ waste servicesWater/ waste services TransportationTransportation TelecommunicationTelecommunication Oil/ GasOil/ Gas Road/ toll roadRoad/ toll road Other activities that impact positively on Other activities that impact positively on the development of basic infrastructurethe development of basic infrastructure
PT SMI may support project in the following sectors:PT SMI may support project in the following sectors: Energy supplyEnergy supply Water/ waste servicesWater/ waste services TransportationTransportation TelecommunicationTelecommunication Oil/ GasOil/ Gas Road/ toll roadRoad/ toll road Other activities that impact positively on Other activities that impact positively on the development of basic infrastructurethe development of basic infrastructure
Eligible ProductEligible ProductEligible ProductEligible Product Loan: Loan:
• the terms will reflect the relevant risk profile , the terms will reflect the relevant risk profile , • flexible tenor, etc.flexible tenor, etc.
Loan: Loan: • the terms will reflect the relevant risk profile , the terms will reflect the relevant risk profile , • flexible tenor, etc.flexible tenor, etc.
EquityEquity EquityEquity
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1.1. Project Identification Project Identification 1.1. Project Identification Project Identification
3. Risk Analysis, Risk Management 3. Risk Analysis, Risk Management & Mitigation& Mitigation
3. Risk Analysis, Risk Management 3. Risk Analysis, Risk Management & Mitigation& Mitigation
2. Financing Scheme Analysis2. Financing Scheme Analysis2. Financing Scheme Analysis2. Financing Scheme Analysis
4. Agreement/ Documents4. Agreement/ Documents4. Agreement/ Documents4. Agreement/ Documents
5. Project Financing Implementation 5. Project Financing Implementation 5. Project Financing Implementation 5. Project Financing Implementation
6. Exit Strategy6. Exit Strategy6. Exit Strategy6. Exit Strategy
Preference:Preference:
• Positive impact on social/ society & Positive impact on social/ society & PT SMIPT SMI
• Feasible/Viable Business Plan Feasible/Viable Business Plan
• No legal problems No legal problems
• Reasonable return Reasonable return
• Clear exit strategy Clear exit strategy
Preference:Preference:
• Positive impact on social/ society & Positive impact on social/ society & PT SMIPT SMI
• Feasible/Viable Business Plan Feasible/Viable Business Plan
• No legal problems No legal problems
• Reasonable return Reasonable return
• Clear exit strategy Clear exit strategy
• Loan or EquityLoan or Equity
• TenorTenor
• AmountAmount
• InterestInterest
• Loan or EquityLoan or Equity
• TenorTenor
• AmountAmount
• InterestInterest
• Terms & Conditions /CovenantsTerms & Conditions /Covenants
• Security/ Collateral Security/ Collateral
• Cash Control Regulation (cash Cash Control Regulation (cash sweep mechanism, etc.)sweep mechanism, etc.)
• Regulation on even of defaultRegulation on even of default
• Terms & Conditions /CovenantsTerms & Conditions /Covenants
• Security/ Collateral Security/ Collateral
• Cash Control Regulation (cash Cash Control Regulation (cash sweep mechanism, etc.)sweep mechanism, etc.)
• Regulation on even of defaultRegulation on even of default
• For LOAN For LOAN finding lenders to finding lenders to refinancingrefinancing
• For EQUITY For EQUITY strategic strategic sale/Private Placement, IPOsale/Private Placement, IPO
• For LOAN For LOAN finding lenders to finding lenders to refinancingrefinancing
• For EQUITY For EQUITY strategic strategic sale/Private Placement, IPOsale/Private Placement, IPO
FINANCING POLICYFINANCING POLICY
PROJECT PROJECT FEASIBILITY FEASIBILITY
STUDYSTUDY
PROJECT PROJECT FEASIBILITY FEASIBILITY
STUDYSTUDY
Feasible/Feasible/
viableviable??
YESYES
NONO
The Cycle of The Cycle of Financing Steps Financing Steps
of PT SMIof PT SMI
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FINANCING POLICYFINANCING POLICY
PT SMIPT SMI
CAPITAL MARKET CAPITAL MARKET
loan/equityloan/equityloanloan
loanloan
IPO, IPO, Marketable Marketable SecuritiesSecurities
loan/equityloan/equity
IPO, IPO, Marketable Marketable SecuritiesSecurities
IPO, Marketable SecuritiesIPO, Marketable Securities
loanloan
loan/equityloan/equity
loan/equityloan/equity
Infrastructure Financing Scheme Infrastructure Financing Scheme
Multilateral InstitutionsMultilateral Institutions Infrastructure Pool of FundInfrastructure Pool of Fund Private (PFI/PE)Private (PFI/PE) BUMN/BUMDBUMN/BUMD InsuranceInsurance Pension FundPension Fund Local/Foreign BanksLocal/Foreign Banks
SOE/SOE/LOCAL GOVTLOCAL GOVT JVJV
JVJV
SOURCE OF FUNDSOURCE OF FUND
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CHALLENGES
C
H
A
L
L
E
N
G
E
S
C
H
A
L
L
E
N
G
E
S
1. Legal protection of investors1. Legal protection of investors 1. Legal protection of investors1. Legal protection of investors
2. Clear, transparent & stable legal & regulatory framework2. Clear, transparent & stable legal & regulatory framework 2. Clear, transparent & stable legal & regulatory framework2. Clear, transparent & stable legal & regulatory framework
3. Transparency of the procurement process3. Transparency of the procurement process 3. Transparency of the procurement process3. Transparency of the procurement process
4. Integration of donor aid, multilateral institutions and private sectors4. Integration of donor aid, multilateral institutions and private sectors 4. Integration of donor aid, multilateral institutions and private sectors4. Integration of donor aid, multilateral institutions and private sectors
5. Involvement of domestic players, investors, banking, lenders and 5. Involvement of domestic players, investors, banking, lenders and commercial participants commercial participants
5. Involvement of domestic players, investors, banking, lenders and 5. Involvement of domestic players, investors, banking, lenders and commercial participants commercial participants
6. Resistance from vested interest6. Resistance from vested interest 6. Resistance from vested interest6. Resistance from vested interest
7. Project profile:7. Project profile: 7. Project profile: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
• Business and policy rationale for concession• Sustainable cash flow• Incentives for equity to perform • Mitigation of completion risk• Mitigation of environmental impacts
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TARGETTARGET
• Identification on infrastructure project priorityIdentification on infrastructure project priority• Inter department/ related parties coordinationInter department/ related parties coordination• Partnership with banking, multilateral/private sector investors:Partnership with banking, multilateral/private sector investors: • Establishment of IIFF/JVs together with multilateral institutions Establishment of IIFF/JVs together with multilateral institutions • Socialization activities Socialization activities • Project Financing ExecutionProject Financing Execution
• To promote Infrastructure Revolving Fund/ Pool of Fund through To promote Infrastructure Revolving Fund/ Pool of Fund through partnership with multilateral/ private sector investorpartnership with multilateral/ private sector investor• To facilitate & promote creation of sustainable finance for To facilitate & promote creation of sustainable finance for infrastructure projectinfrastructure project• To facilitate & ensure a supportive regulatory frameworkTo facilitate & ensure a supportive regulatory framework
• To increase the size of capability to financing the projectTo increase the size of capability to financing the project• To extend the role of the company as one of the agencies To extend the role of the company as one of the agencies of the Government to promote infrastructure developmentof the Government to promote infrastructure development• Ultimately, to improve the growth of infrastructure developmentUltimately, to improve the growth of infrastructure development
Short TermShort Term
Medium TermMedium Term
Long TermLong Term
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CONTACT DETAILCONTACT DETAIL
For further information, please contact us at the following address:For further information, please contact us at the following address:
PT Sarana Multi Infrastruktur (Persero)PT Sarana Multi Infrastruktur (Persero)
Gedung BRI II, Floor 29Gedung BRI II, Floor 29thth- Suite 2905- Suite 2905
Jl. Jend. Sudirman Kav. 44-46 Jakarta 10210Jl. Jend. Sudirman Kav. 44-46 Jakarta 10210
Phone: +6221 5785 1313 Fax: +6221 570 9460Phone: +6221 5785 1313 Fax: +6221 570 9460
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Thank youThank youThank youThank you
