Why Invest in Infrastructure?

Adapted from National Planning Agency (Bappenas) and IIGF (2018)

2

To reduce infrastructure gapto boost competitiveness

Indonesia’s Need for Infrastructure Financing

Calculation based on infrastructure investment (required) to be a middle income country by 2025.Sources: BAPPENAS- JICA, 2014: Background Study for RPJMN 2015-2019, Analyst team of Ministry of National Development Planning (BAPPENAS) RPJMN: National Medium-Term DevelopmentPlanning

3Adapted from National Planning Agency (Bappenas) and PINA 2018

Focus to develop Indonesia’s InfrastructureAim for basic need, leading sector, and urban infrastructure development

nortation Ins al integratio

100% drinking water access

100% sanitation access

96.6%electrification ratio

Livable housing access

Border & underdeveloped regions accessibility

Fulfillment of Basic Needs

Infrastructureto Support Leading Sectors

Connectivity

Maritime

Highway +Intermodal

Broadband Development:• Palapa Ring• Broadband plan: e-Government, e-Health, e-

Education, e-Procurement, e-Logistic, e-Commerce.

Energy Development: 35 GW• Target 1,200 kWh/population in 2019 (vs

1,300 in Vietnam and 4,400 in Malaysia)

Leading Sector

Service and Tourism

Agriculture

Manufacturing

Urban Infrastructure

Transportation

safety &security

Development of road, mass transport system & intermodal

Improve the capacity and quality of the urban road network

Develop sustainable urban transport

Shift Improve

Network to support journey

efficiency

Increased share of public

transport

Increasedutilizationtechnology

Urban Transport DevelopmentConcept

Avoid

RegionalDevelopment/ Growth Center

Marine Highway

RegionalDevelopment/ Growth Center

Intermodal Intermodal

Port AreaDeveloped Area

dUnder-

Develope Area

Flood Control

Energy for urban transport

Urban infrastructure developmentby ICT utilization toward smartcities

4Source: National Planning Agency (Bappenas) 2017 and IIGF (2018)

Some Infrastructure Projects: progress and financing

5

1. MRT Jakarta2. Trans Sumatra Toll Road3. Umbulan Drinking Water Project4. Mandalika Special Economic Zone (Tourism)

MRT Jakarta

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MRT Jakarta

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MRT Jakarta Phase I was launched on 24 March 2019 Investments: IDR16 trillion (JPY 123.36 billion or USD1.1 billion) Loan from Japan Bank for International Cooperation (JBIC) Interest rate 0.1% p.a. Tenor 40 years; grace period 10 years Central Government 51%, Local Government 49%

Trans Sumatra Toll Road

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Expected total length: 2,765 km divided into 24 sections.

Expected completion: 2024 Expected investments: IDR476Trillion

(USD34 billion) PT Hutama Karya has the mandate

from the central government

Source: BeritaSatu.com

Trans Sumatra Toll Road

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Sections Length (Km) Investments (IDR billion)

Source: BeritaSatu.com

Trans Sumatra Toll Road

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Bakauheni-Terbanggi Besar section Inauguration ceremony on 8 March 2019 140.9 km long Investments: IDR16.8 trillion (USD1.2

billion) SOEs: PT Hutama Karya, PT PP, PT Waskita

Karya, and PT Adhi Karya

SOEs Participations in Infrastructure Projects

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PT Hutama Karya

PT Waskita Karya (WSKT)PT Adhi Karya (ADHI)

Total Equity of WSKT and ADHI

12

2,383 2,849

9,704

16,773

22,755

28,887

1,548 1,752

5,154 5,443 5,870 6,103

0

5000

10000

15000

20000

25000

30000

35000

2013 2014 2015 2016 2017 2018

Billion IDR

WSKT ADHI

Total Equity of WSKT and ADHI

13

240.64%

194.25%

0%

50%

100%

150%

200%

250%

300%

0

5000

10000

15000

20000

25000

30000

35000

2013 2014 2015 2016 2017 2018

WSKT ADHI WSKT ADHI

Total Liabilities of WSKT and ADHI

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6,4059,693

20,605

44,660

75,141

95,504

8,173 8,70711,599

14,653

22,463 22,237

0

20000

40000

60000

80000

100000

120000

2013 2014 2015 2016 2017 2018

Billion IDR

WSKT ADHI

Total Liabilities of WSKT and ADHI

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51.34%

112.57%

6.54%

33.21%

-20%

0%

20%

40%

60%

80%

100%

120%

140%

0

20000

40000

60000

80000

100000

120000

2013 2014 2015 2016 2017 2018

WSKT ADHI WSKT ADHI

Total Receivables of WSKT and ADHI

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2,342 2,608 2,508

10,902

13,12213,870

2,7053,214

6,423

9,802

15,06715,758

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

2013 2014 2015 2016 2017 2018

Billion IDR

WSKT ADHI

Total Receivables of WSKT and ADHI

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2,342 2,608 2,508

10,902

13,12213,870

2,7053,214

6,423

9,802

15,06715,758334.78%

99.83%

-50%

0%

50%

100%

150%

200%

250%

300%

350%

400%

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

2013 2014 2015 2016 2017 2018

WSKT ADHI WSKT ADHI

Stocks Performance of SOEs in Constructions

18

Bond Issues: crowding out?

19

Face Value (Billion IDR)

Coupon Rate (%)

Tenor(Years)

Maturity Date Rating

Hutama KaryaContinuous Bond I Phase II

1,968 8.07 10 06-June-2027 idAAA

Hutama KaryaContinuous Bond I Phase III (Series B)

2,367 8.40 10 26-Sep-2027 idAAA

Bank BRI (BBRI)Continuous Bond Phase III (Series C)

2,517 8.25 7 24 Aug 2024 idAAA

Lautan Luas (LTLS)Continuous Bond II

200 10.5 5 21 Jun 2022 idA-

Adhi Karya (ADHI) Continuous Bond IIPhase I

2,997 9.22 5 22 Jun 2022 idA-

Indonesia Infrastructure Guarantee Fund (IIGF)

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On December 30, 2009 the Government of Indonesia has established Indonesia Infrastructure Guarantee Fund or IIGF

A State-Owned Enterprises (SOEs) under the Ministry of Finance Responsible for providing government guarantees for infrastructure projects

developed under the Public Private Partnership (PPP) scheme. Aims to provide IDR210 trillion guarantee project value by 2018

Government Support for InfrastructureFacilities and entity available to support PPP Projects in Indonesia

Project Planning & Preparation

Bidding/Selection Project Construction

FacilitiesViability Gap Funding or

Availability Payment

ManagingEntity

Ministry of Finance

Project Development

Fund

Ministry of Finance

FinancingLand

Acquisition

PT SMIMinistry of

Agrarian and Spatial Planning

; LMAN

GuaranteeFund

Pre-Feasibility Studies

Ministry ofPlanning

21Source: IIGF (2018)

Umbulan Drinking Water Project

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Location: Umbulan, Pasuruan Regency, East Java Province Source: Umbulan spring founded in 1916 During Dutch Colonialization: Inlando Water Bedrij (1917) The initial plan for Umbulan Drinking Water Project was since 1972 The first ever drinking water project in Indonesia

Umbulan Drinking Water Project: PPP

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Public Private Partnership (PPP) Consortium: PT Medco Energi Internasional Tbk. And PT Bangun Cipta Total investments: IDR2.05 trillion (USD146 million) Consortium provides IDR1,232 trillion investment IIGF provides IDR818 billion Viability Gap Funding (VGF) Built Operate Transfer (BOT) for 25 years Groundbreaking: July 2017 Expected to start operation in Mid 2019

Mandalika Special Economic Zone (Tourism)

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Mandalika Special Economic Zone (Tourism)

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Location: Mandalika, Lombok Tengah Regency, Nusa Tenggara Barat Province Area: 1,175 hectare Infrastructure investments: Asian Infrastructure Investment Bank (AIIB)

USD248 million 30 years 10 years principal grace period 5 years interest payment grace period

Mandalika Special Economic Zone (Tourism)

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Mandalika Special Economic Zone (Tourism)

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• MotoGP circuit• Investments: USD1 billion• Construction will start in September 2019• Expected completion: end of 2020• VINCI Construction Grands Projects, France

• Street circuit• Convention center• Hotel • Special Hospital

Mandalika Special Economic Zone (Tourism)

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Relevant Websites

http://www.iigf.co.id/en/http://kek.go.id/kawasan/Mandalikahttps://www.itdc.co.id/the-mandalika/investment/hotel-and-leisure/