Constructing sustainable infrastructure is one of Indonesia’s highest priorities to realise the sustainable development goals by 2030. To realise the goal, Indonesia needs an investment of Rp6 trillion in the next five years.

Budget Financing and Risk Management Director General Luky Alfirman said that constructing sustainable infrastructure was currently one of the main priorities of President Joko Widodo.

“Acceleration of sustainable infrastructure construction in Indonesia is one of the main priorities of President Joko Widodo in his second term. Around 37% of the total cost is paid for by the 2020 state budget. Hence, the involvement of private investors for construction is crucial,” Luky said at Indonesia Stock Exchange (IDX) in Jakarta on Tuesday (3/12).

According to Luky, his agency will fund sustainable infrastructures by tapping insurances, capital market, and long-term domestic investors. Meanwhile, OJK (Financial Services Authority) Investment Management Licensing Deputy Director I Made Bagus Tirthayatra said that interests for capital market products had increased in the last three years. “Until now, there are 2.7 million investors, which is a significant growth,” he said.

Luky added that there were many instruments for infrastructure construction, such as attracting investors. According to him, the contribution of private investors must be at 44% or 45%.

To attract the investors, his agency will design a new scheme, which is a PPP (Public-Private Partnership) scheme that involves private investors and makes business in infrastructure interesting.

“This [scheme] is for long term as it is not easy to attract investors for infrastructure construction. Hence, our focus is designing a complete and comprehensive ecosystem which uses the PPP scheme,” Luky said.

Indonesia still has much homework in infrastructure construction. Its financials and rating are still below neighbouring countries.

KIK-EBA and KIK-Dinfra

Meanwhile, PT Jasa Marga Tbk (JSMR) is studying two funding options from the capital market, namely Collective Investment Contract of Asset-Backed Securities (KIK-EBA) and Collective Investment Contract of Infrastructure Investment Fund (KIK-Dinfra). These funding options will be implemented before the end of 2019.

PT Mandiri Manajemen Investasi (MMI) Director Endang Astharanti said that her agency was assisting Jasa Marga in developing the two products. Her agency is currently in the socialisation stage, so she cannot disclose the [amount of] fund that is set to be received from the instruments yet. “We will gather demands first,” she said recently.

The underlying asset for the Sharia KIK-EBA is Jakarta Outer Ring Road (JORR) toll segment. “As for Dinfra, there will be no new product, but there will be a fund raising for the development requirement,” he said.

Meanwhile, Jasa Marga Corporate Finance Group Head Eka Setya Adrianto agrees with the plan. She said that her company would issue every financial instrument that were suitable for toll road business. “There are several plans to issue capital market products, but all of them are still in process of acquiring a permit,” she said.

Last April, the company tapped Mandiri Manajemen Investment to issue the KIK-Dinfra titled Toll Road Mandiri-001 worth Rp1 trillion. The company has chosen Gempol-Pandaan toll road as the underlying asset for KIK-Dinfra. This toll road connects Surabaya-Gempol toll segment with Pandaan-Malang toll segment which has a concession period of 37 years and has been operational since 2015.

In this financing scheme, investors will invest in the KIK-Dinfra, then the investments will be managed by the investment manager, or the KIK-Dinfra Participation Unit. Then, the fund will be used by the investment manager to buy PT Jasamarga Pandaan Tol shares, which is the concession owner of Gempol-Pandaan toll segment.

Previously, Jasa Marga, through PT Jasa Marga Pandaan Tol, has issued a medium-term sukuk ijarah worth Rp785 billion. Jasa Marga Pandaan Tol offered a sukuk ijarah that consisted of two series.

Series A is worth Rp100 billion with a coupon rate of 8.5% and a tenor of 3 years. Meanwhile, Series B is worth Rp685 billion with a coupon rate of 9.00% and a tenor of five years.

PT Mandiri Sekuritas and PT Bahana Sekuritas are the arrangers for the issuance of the sukuk of Jasa Marga Pandaan Tol. Meanwhile, PT Bank Mega Tbk is the monitoring agent.

92.2% Jasa Marga Pandaan Tol shares is owned by Jasa Marga, while 7.8% is owned by PT Jalan Tol Kabupaten Pasuruan.

This company is the operator of Gempol-Pandaan toll segment which spans 13.61 kilometres. The total investment for this segment reaches Rp1.47 trillion, while its concession period starts from 2012 to 2049.

This year, the company has allocated a capital expenditure of up to Rp27 trillion. Jasa Marga is focusing to absorb the capital expenditure to finish around five new toll segments, such as the Cinere-Serpong and the Serpong Kuningan toll segments of Jakarta Outer Ring Road (JORR) 2. Then, the company will also build the elevated Jakarta-Cikampek toll segment, as well as Balkpapan-Samarinda, Manado-Bitung, and Pandaan-Malang toll segments.

Jasa Marga has operated a total of 1,000 km of toll roads. Out of the 944 km of Trans-Java toll road that is operational, Jasa Marga is operating 584 km or 62% of Trans-Java toll road.