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Luky Eko Wuryanto Deputy Minister for Infrastructure &

Regional Development, Coordinating Ministry of Economic Affairs

Executive Secretary of KP3EI

MP3EI aims to accelerate Indonesia’s economic transformation through cross-entity synergy and collaboration

2010 GDP ~ US$ 700 B GDP/capita: US$ 3,005 17th largest economy

2014 GDP: US$ ~ 1,2 T GDP/capita: US$ ~ 4.800 14th largest economy

2025 GDP: US$ 3,8 – 4,5T GDP/capita: 13.000 –16.100 US$ 12th largest economy

1  Developing economic potential through economic corridors

2  Strengthening national connectivity

In creating economic transformation for Indonesia, MP3EI policy rests on three pillars…

… and to date, MP3EI has supported Indonesia’s economic growth through various initiatives

84 key projects groundbreaking since MP3EI launch in 2011

Cross-stakeholders coordination for sound projects implementation

Debottlenecking to resolve challenges in projects implementation

3 Strengthening national human resources capability and science & technology

MP3EI is abbrevia)on of the Masterplan for Accelera)on and Expan)on of Indonesia’s Economic Development (in Indonesian language) 

MP3EI infrastructure projects offer potential opportunities of ~USD 64 billion for private sector participation

Funding Gap

599 (28%)

APBN

152 (7%)

PPP

400 (19%)

SOE

536 (25%)

41%

24%

Funding gap calculation based on: •  MP3EI Database per 31 August 2012 (477 Projects) •  Funding gap formula: Investment value – (allocated State Budget + SOE). Private sector funded projects are assumed 100% fully covered. •  ICT sector is not included in the calculation as the projects list still under progress of validation •  Energy funding gap requires further validation with PLN

MP3EI Infastructure Project Funding Sources* MP3EI Infrastructure Project Funding Gap per Infrastructure Sector

1%

8% 24%

27% 41%

Water (logistics);

0.2%

Airport; 10.6%

Energy; 34.3% Road &

Bridges; 11.0%

Railway; 22.5%

Seaport; 21.5%

Potential PPP opportunities are largest in the energy, railway and seaport sector. There are also opportunities in the road, airport and water sector.

Funding Gap: ~ USD 64 Billion

State-Owned Enterprise Funds

State Budget (APBN)

Private Funds

Mixed Funds

The government will lead the infrastructure development by funding 15 projects that will ground break in 2014

The 15 infrastructure projects funded by the Government will be a significant development for infrastructure development in Indonesia and improve Indonesia’s competitiveness through a significant reduction of

logistical costs

The 15 Infrastructure projects to be funded by the Government have a total investment value of US$ ~ 3.72 Billion

2014:

15 Infrastructure

Projects (38%)

2017:

25 Infrastructure Projects (62%)

Sumatra: 3 Projects US$ 1.13 Billion

Kalimantan 2 Projects US$ 988.8 Million

Sulawesi 2 Projects US$ 659.2 Million

Papua-Maluku 1 Project US$ 164.8 Million

Bali-Nusa Tenggara 2 Projects US$ 144.2 Million

Java: 4 Projects US$ 350.2 Million

National ICT Project (Palapa Ring): US$ 288.4 Million

2014 

25 Priority Projects that are planned for groundbreaking before 2017 have large potential to be funded through PPP schemes

16 High Priority Projects with groundbreaking before 2017 will be offered to the private sector through Private-Public Partnership (PPP) schemes.

2014:

15 Infrastructure

Projects (38%)

2017:

25 Infrastructure

Projects (62%)

5 projects directly funded through State Budget (20%)

3 projects indirectly funded through State Budget (Loans) (12%)

1 project funded by State-Owned Enterprise (4%)

Those 25 projects, which will be groundbreaking before 2017, have a total investment value of US$ ~32 Billion

MP3EI High Priority Projects in 2017 Road  12 Projects 

Water Supply  2 Projects Railway  3 Projects Airport  1 Projects Energy  3 Projects Seaport  4 Projects 

Sumatra: 9 Projects US$ 10.3 Billion

Kalimantan 3 Projects US$ 3.9 Billion

Sulawesi 5 Projects US$ 5.6 Billion

Papua-Maluku 1 Project US$ 175.1 Million

Bali-Nusa Tenggara 1 Project US$ 278.1 Million

Java: 6 Projects US$ 10.7 Billion

16 Potential PPP Projects (20%)

Funding sources for infrastructure projects planned for groundbreaking in 2017:

2017 

Kalimantan

Sumatra

Java

Bali – Nusa Tenggara

Sulawesi Papua-Maluku

Sumatra Investment

Value (US$ Mill)

Toll Roads Medan–Binjai (15.8 km) 210.4 Palembang–Indralaya (22 km) 179.6 Pekanbaru–Kandis–Dumai (135 km) 1,529.9 Bakauheni–Terbanggi Besar (150 km) 2,372.4 Tebing Tinggi–Kisaran–Rantau Prapat (178 km) 1,396.2 Panimbang–Serang (83 km)** 1,191.0 Lubuk Pakam–Tebing Tinggi (43.5 km)* 707.8 Seaports Hub Kuala Tanjung 2,794.5 Tanjung Sauh at Batam Not yet available

Java Investment

Value (US$ Mill)

Access Road to Purwakarta Industrial Area (7.8km)* 71.2 Umbulan Water Supply* 211.3 Cilamaya Port and Access Road (30km) 4,175.6 Karawang Airport & Access Road 3,746.5 Railway Madiun–Surabaya (165 km Double Track) 429.5 Coal-Fired Power Plant Indramayu 4 (1 x 1000 MW)* 2,116.0

Kalimantan Investment

Value (US$ Mill)

Toll Road Balikpapan-Samarinda (99.02 km)

 1,260.5  

Purukcahu–Bangkuang–Mangkatip Railway (290 km)

 2,277.0  

Coal-Fired Power Plant Asamasam 5-6 (2x100 MW)*

 331.2  

Sulawesi Investment

Value (US$ Mill)

Road Palu–Parigi (37.4 km) 103.5 Toll Road Manado–Bitung (46 km) 353.1 International Hub Bitung 3,208.4 Railway Makassar–Pare-Pare (136.3 km)*

621.0

Hydro Electric Power Plant Karama (4x112.5 MW)*

1,375.5

Bali-NT Investment

Value (US$ Mill)

Water Supply South Bali** 282.2

Papua-Maluku Investment

Value (US$ Mill)

Road Enarotali–Tiom (240 km)** 173.9

Notes: Blue-marked projects are potential PPP-projects. All projects are expected to groundbreak (GB) in 2017, except: *) GB in 2015 and **) GB in 2016

25 High Priority Projects will be ready for groundbreaking between 2015 and 2017 and 16 projects of these projects have potential to be

funded through a PPP scheme

Key project information

•  Total length of aproximately 2,800 km

•  Target time: partially GB in 2014 and 2017

•  Implementing entity: Ministry of Public Works and Local Governments

•  Total project value (see table below)

Project Profile: Trans Sumatera High Grade Highway

The Highway lies along the east coast of Sumatera, connecting 7 major cities, 8 national activity centers, 5 airports, and 6 seaports. As part of ASEAN Highway network to support rapid and fair economic growth in the island.

LEGEND: Green line : Phase 1 Red line : Phase 2 Blue line : Phase 3

Section Land acq. Construction Investment (US$ mill) (US$ mill) (US$ mill)

A. Main Corridor A1. Lampung - Palembang 157.4 1,380.8 2,398.2 A2. Palembang - Pekanbaru 255 2,067 3,627 A3. Pekanbaru - Medan 253.4 1,869.2 3,319.7 Total Main Corridor 665.8 5,317.0 9,344.9

B. Connection Corridor B1. Medan - Banda Aceh 231.6 1,659.2 2,982.3 B2. Palembang - Bengkulu - - - B3. Pekanbaru - Padang - - - B4. Medan - Sibolga - - - Total Connection Corridor 231.6 1,659.2 2,982.3

GRAND TOTAL 897.4 6,976.2 12,327.2

Key project information

•  Total length of aproximately 99.4 km

•  Target time: Tender in 2016, Groundbreak in 2017

•  Implementing entity: Ministry of Public Works

•  The estimated project cost is US$ 1200.00 million, which includes:

a) Construction Cost: US$ 656.50 million b) Land Acquisition Cost: US$ 124.20 million

•  Project Status:

Project Profile: Samarinda – Balikpapan Toll Road

The road network in Kalimantan is part of the priority BIMP-EAGA Multi Modal Transportation System, with the objective primarily of enhancing the efficiency of distribution of goods and services. This toll road has been designated by Government decree and is a component of the ASIAN Highway as well as the ASEAN Highway network.

Section Length (km)

Acquired Land (km) Status

I 25.14 8 About 1.5 km of toll road Right of Way (ROW) has been constructed

II 23.26 0.3 Required total area calculation and sum of cut plant

III 22.6 2 Required total area calculation and sum of cut plant

IV 16.9 1.9 Road facility inventorying

V 16.9 2.3 Price negotiations between P2T and BPN with landowner BIMP‐EAGA is the "Brunei Darussalam‐Indonesia‐Malaysia‐Philippines East ASEAN 

Growth Area" 

Project Profile: West Semarang Water Supply

Key project information

•  Total capacity of 1,050 liter/sec (from Jatibarang Dam*

•  Target time: Tender in 2013, Groundbreak in 2014.

•  Implementing entity: Municipality Government of Semarang

•  Estimated Project Cost is US$ 79.7 Million. •  Estimated FIRR: 10.9% •  Estimated EIRR: 24.3%

•  Project Status: •  OBC/Review of Pre-FS completed. •  PDF activities have been done by PPP

Network Enhancement Project (JICA). •  The project is currently entering the

transaction stage. Transaction activities are handled by IIF and Bappenas (IRSDP).

Central Java

The Project Service Area covers 31 sub-districts in 3 District, below 100 m above sea level. Existing services serve ± 25,000 HH PDAM users. Planned services will serve ± 80,000 HH, 3 big industrial zones and an international airport. Zone 1, 2, and 3 are residentialand industrial area. Zone 4 & 5 are mixed used area. *Jaitbarang Dam is currently under construc)on, will be completed in 2013 and 

fully opera)onal in 2014. 

Project Profile: Hydro Electric Power Plant Karama

Key project information

•  Total capacity: 4 x 112.5 MW Hydropower with reservoir of 1445 million m3

•  Target time: Groundbreak in 2015.

•  Implementing entity: PLN (State-Owned Electricity Company)

•  Estimated Project Cost is US$ 1,376.5 Million, which consists of:

•  Land Acquisition Costs of US$ 113.8 Million •  Construction Costs of US$ 1,262.7 Million.

•  Project Status: •  Review of Pre-FS completed •  Consortium ANZ has done review of FS,

preliminary market sounding and coordination with PT PII for government guarantee

•  In progress of determining compensation option for initiator and preparation of transaction.

Connection to South Sulawesi Grid

Connection to Central Sulawesi Grid

The Hydro Electric Power Plant of 450 MW in Karama River, West Sulawesi province, support the provision of electricity in West, Central and South Sulawesi.

The current progress of Public-Private Partnership (PPP) scheme in Indonesia

•  New land law (UU no.12/2012) guarantees land acquisition for public necessity, that would iron out the hurdle of land acquisitions

•  Allocation of Land Revolving Fund as a land acquisition fund to provide bridging finance for toll road investors in acquiring the lands.

•  Uncertainty on the process of land settlement with land owners; bottleneck for many infrastructure projects, esp. roads

•  Unclear implementing authority; difficulty in coordinating acquisition process and financing

No specific support for land acquisition Regulatory preparation support

•  Government Support (Direct and Contingent) is the most critical issue impacting potential investors’ ability and willingness to participate in PPP transactions.

•  Existing viability gap funding mechanism is unwieldy and not conducive to the potential investors

Fiscal support was not guaranteed

•  Perpres 56/2011 specifically contemplates direct (fiscal and non-fiscal) government support, including land acquisition, and government guarantee

•  Regulation of MOF no.223/2012, regulating Viability Gap Funding

•  Infrastructure fund to finance commercially viable project

Enactment of regulatory fiscal support

•  General provisions of PPP for Toll road projects requires further defined tangible government’s support

•  Need more incentives to commit investment

•  Perpres 13/2010 PPP incorporates government’s guarantee in tendering & concession design

•  Allowing annual tariff increase •  Extension of concession period up to 40 years

More supportive PPP scheme

Project Preparation

Financial Support

Specific improvement – Toll Road

General PPP scheme

REPUBLIC Of INDONESIA COORDINATING MINISTRY FOR ECONOMIC AFFAIRS

Luky Eko Wuryanto Deputy Minister for Infrastructure & Regional Development

Coordinating Ministry of Economic Affairs

Executive Secretary, KP3EI

Jalan Lapangan Banteng Timur No. 2 – 4, Jakarta Pusat - Indonesia

Phone: +62 21 351 1462; Fax: +62 21 351 1644 email: lukyeko@gmail.com 

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