Transcript Preparation Study on Project of P3CU/PPP Network

PPP CENTRAL UNIT: GLOBAL NETWORK
By
Bastary Pandji Indra
Director for Public-Private Partnership Development
National Development Planning Agency (BAPPENAS) - Indonesia
III ASTANA ECONOMIC FORUM , Astana , 1-2 July 2010
Indonesia Robust Macroeconomic Outlook
• Economy grew 4.4% in 2009 compared to 6.1% in 2008. Government
target average annual growth at 7% during 2010-2014;
• Target predicated especially in infrastructure sector as it is a key
element in Indonesia’s medium term development plan 2010-2014;
• 7% growth target requires about US$ 1.1 trillion of investments during
2010-2014, meanwhile Government budget can only cover 20-30% of
total investment;
• Standard & Poor’s raised Indonesia’s sovereign credit rating to BB
from BB- on 12 March 2010, with a positive outlook. S&P and
Moody’s Investors Service both rank Indonesia two levels below
investment grade, while Fitch Ratings on 25 January 2010 raised its
rating to one step below investment.
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Indonesia Institutional Framework in PPP Implementation
to Generate “Bankable” Projects
Donor
•Foreign loan for portion
of infrastructure
•Grant for study
•Backstop fund
CMEA
Policy improvement and
coordiantion support
BAPPENAS
P3CU
Budgeting for
government support; e.g.
land, vertical split,
horizontal split,
•Priority
commitment(*1)
PROJECT
POOL
•Direct
support
commitment
(*3)
MOF/RMU
IIGF
PDF
•GCA
commitment(*2)
•Guarantee
commitment
(*4)
•Recourse
commitment(*5)
Market Sounding
Financier
Multistakeholder
alignment
Preliminary financial structuring
PPP
node
Unsolicited Projects
Private Investors
*1: Support for budgeting, preferencial PDF fee
*2: GCA’s responsibilities such as land procurement, licensing
*3: Tax incentives, funding for public portion
*4: Compulsory guarantee menu defined by sector plus add-on guarantee negotiated by project
*5: GCA’s share of risk such as regulatory risk
Government
Contracting
Agency
(GCA)
•Technical consultants by sector
•PPP consultants
Consultants
CMEA: Coordinating Ministry
of Economic Affairs
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PPP Challenges in Indonesia: Institution
1
MoF/RMU
CMEA
Champion
Sectoral
Department
Guarantee
Fund
Bappenas
Local
Government
Infrastructure
Fund
Land
Agency
GCA
One Stop
Window
Management
Power/Authority
PPP Center Unit
Multi Institutions
2
Decentralized PPP
Implementation
PPP Nodes establishment
and strengthening
Leads to
Project Bundling
Incremental and Small
Scale PPP Project
Regional Approach
• PPP development authority is spread into many institutions, moreover P3CU is not yet officially
established.
• PPP needs a “champion” in streamlining PPP Process (Project identification, preparation,
transaction, land acquisition and government support). Thus, P3CU needs to be equipped with
more power/authority.
• Apply single window management.
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PPP Challenges in Indonesia: Fund
Lack of Fund to support PPP
projects
Land provision
Association of World
PPP Center
Establishment of a Land
Fund for PPP projects
Government Guarantee
PDF Revolving Fund
Pool of Fund
Government Support
Project Development Facility
World/Regional
Infrastructure Fund
Other Donors
Projected total investment in the next
5 years:
US$ 47,298.93 Million (100 Projects)
requires US$ 946 Million, while
available PDF Fund is US$ 38 Million
(0.04% of the needs).
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PPP Challenges in Indonesia: Capacity Building
Private
ISSUES
Public Institution
Profit Oriented
Decentralized PPP
implementation
Public Service Oriented
High Standard in securing
investment
Incremental and Small
Scale PPP Project
Good governance in PPP
process
Provision of design, construction,
financing, operation, and
management
Insufficient institutional
capacity
Regulation and Policy setting
Project Preparation
Lack of coordination
Knowledge and
Information Center
Regular Investment
Forum
Association of World
PPP Center
Standardized/acceptable PPP process
for both public and private party
Establishing a common understanding
of “Bankable” Project
Improve Private and Public
communication
6
Jakarta Declaration 2010: Consideration for
Association of World PPP Center Establishment
• Lack of capacity to develop PPPs is a regional phenomenon.
Jakarta Declaration was signed on 17 April 2010 at the AsiaPacific Ministerial Conference;
 Calls for greater regional cooperation, especially in capacity building and
infrastructure financing.
• Jakarta Declaration is being converted into a resolution for
ratification by the United Nations;
 Recommending The UN to take the lead to develop the means for regional
cooperation through a Task Force.
• However, the Asia-Pacific region needs to work with the Task
Force to develop a system of mutual self help;
 Cooperation could cover a knowledge-exchange program, technical support
between member countries, and a regional infrastructure fund.
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Concluding Remarks

Government of Indonesia (GoI) are welcoming international cooperation in
supporting PPP development. We do think Association of World PPP Center will
greatly helpful in enhancing each member capacity and accelerating lesson learned,
whilst broaden PPP market in the region as well as attractiveness to global financiers.

A proper scheme of world/regional cooperation between PPP Center should help the
members in overcoming barriers in PPP development and not to increase the cost of
PPP project development/transaction.

Proposed area of cooperation:
 Development of financial cooperation for project development facility and
infrastructure fund;
 Integrated information system;
 Knowledge sharing and technical support exchange;
 Building best practices as well as consensus among countries in providing fair
respective government supports and assessment of fiscal risk.

We do need to assure that any PPP Projects adopt good governance principles.
Association of World PPP Center shall play the role encouraging the implementation of
this principle whilst still respecting each member authority.
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THANK YOU
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