PUBLIC PRIVATE PARTNERSHIP IN TRANSPORTATION SECTOR MINISTRY OF TRANSPORTATION REPUBLIC OF INDONESIA @Kemenhub151 MINISTRY OF 2019 TRANSPORTATION Center of Partnerships and International Organization PUBLIC PRIVATE PARTNERSHIP IN TRANSPORTATION SECTOR 1 PUSAT FASILITASI KEMITRAAN DAN KELEMBAGAAN INTERNASIONAL FORE WORD I Encourage Private Sector to Contribute to large Infrastructure Projects such as the Building of Sea Port, Airport and Railway The private sector involvement in transportation infrastructure is greatly expected not only to fulfil financial resources but also to share knowledge and expertise in the development, operation and management of transport infrastructure projects, that are needed for national transportation and economic development and gain access to higher value for money for Indonesia government. Ministry of Transportation will continued to show it strong commitment to create more conducive environment for investor to invest in transportation infrastructure project. BUDI KARYA SUMADI MINISTER OF TRANSPORTATION REPUBLIC OF INDONESIA PUSAT FASILITASI KEMITRAAN DAN KELEMBAGAAN INTERNASIONAL 2 Indonesia at a Glance • Area: 2 million+ km2 [7th largest], 79% waters, 17,508 islands • Capital City: Jakarta • Population: 258 million, 4th most populous • Ethnic Groups: Javanese 40,22%, Sundanese 15.5%, others 44.28% • National Language: Indonesia • Religion: 87.2% Islam, 9.9% Christianity, 1.7% Hinduism, 0.7% Buddhism, 0.2% Confucianism, 0.3% others • Motto: Bhinneka Tunggal Ika ["Unity in Diversity”] • Government: Unitary Presidential Constitutional Republic • National Ideology: Panca Sila [Five Principles] • President: Joko Widodo, Vice President: Jusuf Kalla • GDP nominal: $1.092 trillion [16th], per capita $4,116 3 PUSAT FASILITASI KEMITRAAN DAN KELEMBAGAAN INTERNASIONAL Why Indonesia? Indonesia has shown progressive achievement in the past years Indonesia’s Ease of Doing Business Rank, 2013-2018 Target in 2019 Rank 40 PUSAT FASILITASI KEMITRAAN DAN KELEMBAGAAN INTERNASIONAL 4 The Global Competitiveness Index 2017-2018 edition Source: Word Economic Forum Population GDP GDP per Capita Million US $ billions US $ 258.7 932.4 3,604.3 36th /137 The Word Economic Forum (WEF) report that Indonesia's rankings were increasingly rising in competitiveness (ranked 36 out of 137) due to improved performance on all of its pillars, including the 2nd pillar, the increase in Indonesia's competitiveness position is mainly because of it’s large market size (9th) and it’s relatively strong macroeconomic environment (26th). Ranked 31st and 32nd in innovation and business innovation, Indonesia is included as one of the top innovators among other developing countries. 2nd Pilar: Infrastructure Rank/137 Value Quality of overall infrastructure 68 4.1 Quality of roads 64 4.1 Quality of railroad infrastructure 30 4.2 Quality of Port infrastructure 72 4.0 Quality of air transport infrastructure 51 4.8 5 PUSAT FASILITASI KEMITRAAN DAN KELEMBAGAAN INTERNASIONAL PUBLIC PRIVATE PARTNERSHIP Financial Planning Preparation Transaction Close Projects Business Case Procurement PPP Identificatión Development Process Agreement and and Project Signing, and Prioritisation Readiness Financial Report Close PPP TRANSPORTATION SECTOR DEFINITION Advantages • Reducing the State fiscal burden as a capital contribution from the Risk PPP is a cooperation which can be shared with the Business between the government Entity and business entities for • Maintained Efficiency in infrastructure the utilization of provision. transportation • PPP schemes can be carried out in infrastructure for public various models according to the use based on characteristics of the project specifications set by the • SPV can use project financing Minister which resources derive partially or wholly from business entities by Disadvantages taking into account the risk sharing among the • Government control of assets is limited parties • The procurement process requires a lot of time • Requires support from the Government Ministerial Regulation • Strong government regulations and Number 58/2018 supervision are needed 6 PFKKI INDONESIA PUBLIC PRIVATE PARTNERSHIP PROJECT FACILITIES PROJECT DEVELOPMENT FUND EQUITY LENDERS INVESTORS VIABILITY GAP FUND (VGF) GOVERNMENT GUARANTEE DBFOM(T)+LI EPC AVAILABILITY GCA Concession SPV PAYMENT (AP) O & M SERVICES TARIF SUB ORDINATE LOAN ASSET TRANSFER USER LAND SETTLEMENT Source: Ministry of Finance Republic of Indonesia 7 PUSAT FASILITASI KEMITRAAN DAN KELEMBAGAAN INTERNASIONAL PFKKI GOVERNMENT GUARANTEE FOR INDONESIA PPP PROJECT Pre Construction Construction Operation Payment Risk Tariff Adjustment Risk Land Acquisition Budget Allocation Approval - Discriminatory change in law (Project Specific) - Delay in necessary approval - Early termination by the Government Risk Allocation Principles Risk should be allocated to the party who: 1. Has greater ability to assess the risk; 2. Has higher capacity to reduce the probability of the occurrence of a risk; 3. Has higher capacity to mitigate the consequences of the risk occurring; and 4. Has capability to manage the risk better and apply an incur lower costs. PUSAT FASILITASI KEMITRAAN DAN KELEMBAGAAN INTERNASIONAL 8 Ministry of Transportation PPP Institutional Frame Work CPFIO : Center For Partnership Facilitation and Minister of International Transportation Organization Project Contracting Agency CPFIO As PPP Node Perform policy formulation, synchronization, coordination, supervision and evaluation of all PPP activities at the Ministry Transportation Project PPP Team Procurement Team Prepare Business Case, Formation Prepare and carry out the ensure preparation and Procurement process of a transaction activities after the specific business entity on a Implementing Business Entity Coordination is set up to achieve a PPP project Financial Close specific to a PPP project CENTER FOR PARTNERSHIP • Coordinate and monitor the FACILITATION AND INTERNATIONAL implementation of Government ORGANIZATION PPP • PPP Policy Formulation in the Transportation sector In accordance with the Minister of Transportation Decree KP 145/2018 regarding • Assisting Contracting Agency in the establishment of PPP Nodes within the the preparation stage and Ministry of Transportation of the Republic of ensuring the implementation of Indonesia, the Head of the partnership PPP policies in the transportation facilitation and International Organization , is sector appointed as the Head of the PPP Knot which • Carry out monitoring and performs the following tasks: evaluation of PPP implementation in the Ministry of Transportation for further development needs 129 PUSAT FASILITASI KEMITRAAN DAN KELEMBAGAAN INTERNASIONAL MoT Stages of Public Private Partnership Business Entity Procurement Process through the PPP Scheme 01 02 03 04 PLANNING STAGE PREPARATION STAGE TRANSACTION STAGE FINANCIAL CLOSE Priority and Development of Business Entity The signing of the Identification of related documents, Procurement Process cooperation PPP Project such as feasibility contract and studies (OBC and financial close by FBC) and project the Business readiness criteria Entity PUSAT FASILITASI KEMITRAAN DAN KELEMBAGAAN INTERNASIONAL 10 Ministry Of Transportation PPP Frame Work Ministry of Transportation Achievement and Target to strengthen its PPP Frame Work 02 01 Regulatory Frame Work • Ministerial Regulation Number 145 of 2018 concerning the Formation of MoT PPP Process Frame Work Nodes • Ministerial Regulation Number 58/2018 on • Creating Standard Operational procedures for implementing PPP in the Procedure (SOP) for the Ministry of Transportation implementation of each PPP • KP 386/2018 concerning delegation of stages in MoT authority as Contracting Agency to • Formulation of SOP for PPP Echelon I Officials Project Identification and • Draft Ministerial regulation Concerning Prioritization PPP Project Management Organization • Early identification for customize (PMO) project Initiation Road Map in • Draft Ministerial Regulation on types of cooperation With Infrastructure Support that Ministry of Transportation Project Authority UK can provide concerning transportation • Identification of 6 PPPs Pipe Line infrastructure project Projects 04 Stake Holder Frame Work • MoU between the Ministry of 03 Transportation and ADB in regards PPP capacity Building and Project Assistant • MoU between the Ministry of Institutional Frame Work Transportation and Monash University regarding Transportation Sector • Institutionalization of MoT PPP Node • The Publishment of Transportation • The Formation of PPP Team per Project Investment Book • The Formation of PPP Procurement • Conducting Business Forum with Team per Project Business association and financial • PPP Capacity Development / Building Institution for civil Servant • Design System for MOT Public Private Partnership Project Website 1211 PUSAT FASILITASI KEMITRAAN DAN KELEMBAGAAN INTERNASIONAL PPP Projects In Transportation Sector 1. The Development of 7. Belang-belang Port 18. Tanjung-Banjarmasin 25. Jakarta Elevated Ferry Port in West 8. Kaimana Port Railway Loop Line Preliminary Papua Province 9. Serui Port 19. Bandung City Railway26. TOD JatiJajar study 2. Motor Vehicles 10. Saumlaki Port 20. Kertajati Airport 27. TOD Baranangsiang Weighing Facilities in 11. Labuan Bajo Port Railway 28. TOD Pondok Cabe Sumatera and Java 12. Namlea Port 21. Maminasata Railway 29. New Bali Airport Island 13. Tahuna Port 22. Mengwitani – 30. Singkawang Airport 3. Mengwi Terminal 14. Tobelo Port Singaraja Railway 31. Juwata