Coping with the Crisis: Indonesia’S Experience
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Coping with The Crisis: Indonesia’s Experience DR Bambang Susantono Deputy Minister for Infrastructure and Regional Development Coordinating Ministry for Economic Affairs ABSTRACT 1. Up to now, the Indonesia macroeconomic performance is quite robust 2. The effect of Global Financial Crisis to PPP is not significant/ difficult to be measured since only limited PPP projects are under construction and most are under preparation 3. Stimulus Package on Infrastructure is designed to maintain the overall economic performance and not for PPP projects directly 4. The future of PPP role highly depends on the government policy and commitment Exchange Rate and Stock Market Rupiah has been appreciating steadily, meanwhile the stock price indices has increased. Condition As per Oct. 5th 2,480.41 As per Oct. 5th 9,575 3 Consumption Domestic Consumption increases….. 4 Indonesia’s Sovereign Bond Moody’s Credit Rate Ba2 Ba3 Ba3 B1 Oct‐07 Dec‐09 Feb‐08 Sep‐09 Indonesia’s credit rate showed a betterbetter performanceperformance from periodperiod to period for thethe past two years.years. A betterbetter rate means that thethe riskrisk level of investing environmentenvironment in Indonesia is decreasing.decreasing. 5 Source: World Bank, 2009 Indonesia marked 4% economic growth in 2nd of 2009 or higher than several industrial Countries such as Britain, US, South Korea, and Russia. Page 6 Mega Kuningan Bombing effects to severalseveral Indonesia’s macroeconomic indicators Indonesia’s Exchange Rates Movement May 1st – July 18th 2009 Indonesia economic fundamental is strong IHSG Movement enough to prevent the bad effect of JW Marriot July 1st –24th 2009 and Ritz Carlton bombing getting worsen. The bombing effects to IHSG only in short term. On A week after the bombing, Rupiah’s exchange the day when the bombing happen, IHSG fell to rate was appreciated. 2000 but a week after IHSG increased to the level of 2100. Page 7 Indonesia’s Infrastructure Index Movement July 1st –24th 2009 Infrastructure index was not affected at all. It Indonesia’s Property Index Movement even increased 1.36 points on the day of the July 1st –24th 2009 bombing. Property sector index was slightly affected. On the day of the bombing, it fell 0.37 point but increased 2.59 points again 3 days after the bombing. Page 8 Page 9 Infrastructure Policy STATUS Infrastructure Road Map 2005‐2009 DONE Policy and Sectoral Restructurization (Rearranging for Regulator and Operator) ON GOING RegulationRegulation Reformation New Sectoral Laws DONE New Implementation Regulation ON GOING Improving State Budget ON GOING Improving Improving State Budget the Multi‐year contract for priority projects ON GOING Effectivity of State Budget E‐Procurement to accelerate the procurement ON GOING Projects Implementation of Medium Term Expenditure Framework (MTEF) ON GOING Infrastructure Fund (PT. Sarana Multi Infrastruktur) DONE Risk Management Unit under Ministry of Finance DONE Government Guarantee Fund (PT. Penjaminan Infrastruktur Indonesia) ON GOING Support for PPP projects Land Revolving Fund and Land Capping ON GOING (Public‐Private Land Freezing and Independent Land Appraisal ON GOING Partnership) Project Development Facility –PDF to improve FS quality ON GOING Guidelines of Doing Business in Infrastructure NOT STARTED Page 10 1400 US$25B Allocation on Gov.Budget 2009 = 2 times of Allocation on Gov.Budget 2005 1200 APBN 17% (Rp.225T) 1000 US$30bn Domestic (Rp.270T) Fund 21% 800 US$ 88.611 145B Donor US$10B 600 (Rp.90T) 79.122 (Rp1305T) US$90B Funding Private 64.387 400 (Rp810T) Gap Sector (62%) US$80B (Rp720T) 200 47.813 41.868 0 *Calculated for Indonesia Infrastructure Summit 2005 Increasing government fund Notes: 1. This figure doesn't include APBN for Ministry of Agriculture and Ministry of National Education. 2. Included Ministry: Ministry of Public Works, Ministry of Transportation, Ministry of Energy and Mineral Resources, Ministry of Communication and Information, State Ministry of Public Housing. 3. State Owned Included: Angkasa Pura 1 & 2, Pelindo 1 & 2, Jasa Marga, PGN, Telkom and PLN. 11 REGULATIONS Completed In Progress LAW Law No. 7/2004 on Water Resources Law No. 38/2004 on Road and Toll Road Law No. 23/2007 on Railways Law No. 30/2007 on Energy Law No. 11/2008 on Information & Electronic Transaction Law No. 17/2008 on Sea Transportation Law No. 18/2008 on Garbage Management Law No. 1/2009 on Aviation Law No.4/2009 on Mineral and Coal Law 22/2009 on Road Traffic Law on Electricity (approved by DPR) Government GR No.1/2008 on Government Investment GR Draft on Operational of Information GR No.38/2008 on Asset Management and Electronic Transaction Regulation GR No. 42/2008 on Natural Resources Management GR Draft on Lawful Interception GR No. 43/2008 on Ground water GR Draft on Strategic Data Processing GR No. 75/ 2008 on Capital Injection of Government of Indonesia for Establishment of Infrastructure Financing GR Draft on Swam Corporation GR Draft on River GR No. 35/2009 on Capital Engagement of Government GR Draft on Basin and Dam of Indonesia for Establishment of Infrastructure GR Draft on Operational on Railways Guarantee Corporation Infrastructure GR No. 15/2005 on Toll Road GR Draft on Railways Traffic GR No. 28/2005 on Non‐Tax Government Revenue GR 16/2005 on Drinkwater Provision System GR Draft on Navigation Development GR Draft on Seaport GR No. 3/2005 on Electricity Provision and Utilization GR Draft on Water Transportation Page 12 Infrastructure Competitiveness 2008‐2009 World Competitiveness Report, 2008 – 2009 (134 countries) World Competitiveness Report, 2009 – 2010 (133 countries) Argentina Indonesia Philippines Brazil Korea China Vietnam Malaysia 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 Infrastructure 89 94 96 96 94 98 98 81 18 20 58 66 97 111 19 27 Roads 89 84 105 94 94 104 110 106 13 14 51 50 102 102 17 24 Railroad 76 78 58 60 85 92 86 86 7 8 28 27 66 58 17 19 Port 92 85 104 95 100 112 123 127 29 36 54 61 112 99 16 19 Air Transport 123 113 75 68 89 100 101 89 26 21 74 80 92 84 20 27 Electricity 102 97 82 96 82 87 58 55 21 21 68 61 104 103 71 39 Telephone 57 52 100 79 105 103 62 61 17 23 47 49 37 36 31 72 Source: World Competitiveness Report 2008‐2009 World Competitiveness Report 2009‐2010 Page 13 Indonesia : Overall Ranking and Competitiveness Factors 2005 2006 2007 2008 2009 Overall 50 52 54 51 42 Economic Performance 51 53 55 52 41 Government Performance 45 45 46 38 33 Business Efficiency 50 49 45 44 38 Infrastructure 51 53 54 53 55 Source: IMD World Competitiveness Book 2009 Page 14 15 Surabaya – Madura Bridge ( total span 5,4 km, longest span 818 m, approach access 11,4 km in Madura side and 5,4 km in Surabaya side , total investment Rp. 5,4 T (US$ 500 million), operated in June 2009) 16 Trans Jawa Toll Road DKI 652,32 KM Serang Jakarta Cikampek 397,20 KM 177,12 KM 78,00 KM Banten 1 Bogor Palimanan Pejagan Pemalang Semarang Ciranjang Kanci 2 (K) Demak Sukabumi Bandung 3 4 Batang 5 Ngawi Jawa Tengah Surabaya Jawa Barat (K) 6 Solo Mojokerto 10 7 8 9 Kertosono Gempol Pasuruan Yogyakarta Pandaan Probolinggo DIY Jawa TimurMalang Banyuwangi Kanci Pejagan Toll Road Project Land Project Project Preparation Acquisition Operation Tender (Toll Roads Only) Construction Project Guarantee Fund Land Revolving Fund Infrastructure Fund Development Facility Land Freezing Land Capping Land Revolving Fund is used for funding To Prepare for To handle contingent land acquisition for To foster Infrastructure liability of toll roads projects infrastructure Project’s Transaction Infrastructure If there is a cost financing availability. under PPP scheme Project difference above Fund might be 10% of initial land available for bridging cost estimation, will loan, equity or be covered by Land others Capping Page 17 1. Land Capping; The Government of Indonesia has allocated APBN with the total amount of IDR 4.89 T to support the Land Acquisition Process for 28 toll roads; (Based on MPW regulation No. 12/PRT/M/2008, dated 28 July 2008) In 2008, the realization of Landcapping is IDR 264.937 B, which is used by 3 section (Bogor Ring Road, Semarang – Solo, and Cinere‐Jagorawi ); In 2009, IDR 1 T has been allocated, and the rest will be allocated in 2010 (Ministry of Public Work has proposed to extend it until 2013). From IDR 1 T, IDR 178.42 Mhas been used for Cinere‐Jagorawi (IDR 62.89 M) and Semarang‐Solo (IDR 115.53 M) Policy and 2. Land Revolving Fund; To support the land acquisition process, GoI also has prepared the instruments to Land Revolving Fund; accelerate the The allocation for the Land Revolving Fund is IDR 1.44 T; land that will be used to financing 23 Toll Road section; acquisition (based on the agreement between BPJT (MPW) –PIP (MoF)) that will Until now, IDR 800 B has been allocated, and IDR 647 B has been support disbursed. 3. Land Freezing infrastructure Land that has been appointed to be used as a project by government isn’t development allowed to be traded unless there is a permission from governor/major Page 18 Indonesia Infrastructure Fund (PT. SMI) Minister of Finance PP 66/2007 Juncto PP 75/2008 100% ownership PT. SMI Third Parties: Founder: JV JV IIFF* •Public, private sector •PT. SMI •State Owned Enterprises *Indonesia •ADB Infrastructure •Banking Financing •IFC Facility •Local Government •DEG Benefits of the third parties involvement: •Multilateral Organization •Other Private (World Bank, ADB, etc.) • Increase the capability of financial sources Sector Investors •Private Funds • Increase the reputation & credit rating • Absorb the expertise, experience & other resources Page 19 PT.