Delivering Infrastructure
Hotel Grand Hya-, Nusa Dua - Bali 10-11 December 2015
Presented by:
Steven Tabor
Infrastructure for what?
•
To support new sources of growth
•
To foster more equitable development
•
To enable more sustainable development
•
To prepare for growing urbanizaUon
•
To tackle criUcal bo-lenecks and high costs
•
To address 15 years of under-investment and the
O&M neglect habit
Why Infrastructure Investment is
Important…
•
Key for higher and sustained economic growth necessary for poverty
reducUon and welfare improvement.
•
Infrastructure development is necessary to:
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Maintain high, inclusive, and sustainable growth
•
Meet the challenges of massive
•
Achieve higher level of regional economic cooperaUon
•
Infrastructure connecUvity reduces economic distance and increases
density and scale of economic acUvity.
•
It improves producUvity and efficiency by:
•
CreaUng greater opportuniUes for market access by reducing costs of
trade and physical movement
•
SUmulaUng consumpUon through be-er delivery of goods and services
Key CharacterisBcs of Infrastructure
• ExternaliUes
• Non-excludability/free riders
• Poverty and other posiUve impacts
Public Good
• Need for long term financing • PoliUcal risk/risk sharing
Long Horizon
• Large investments by powerful agents • Possible market dominance/regulatory
capture
Bulky Investment
• Dynamic of comparaUve advantage • SubsUtute/complement for factors of
producUon
• Generate spaUal effects
Infra-Industry Nexus
Insufficient Infrastructure Spending in
Many ASEAN Countries
Infrastructure Needs vs Spending—ASEAN Economies
Country EsBmated
Infra Needs (2010-2020) USD Billion
Needs as % of EsBmated GDP (Annual,
2010-2020)
Infra Spend as % of GDP (1980-2009)
Infra Spend as % of GDP
Indonesia: Addressing Infra Gap
•
2015-2019 RPJM
•
Major infra
investments in
transport and
electricity
•
Public sector: 70%
of total infra
investments
•
Public infra
investments to
rise from 4.2% of
2015-2019 National Medium Term Development Plan, Infrastructure Investments by Funding Source
Delivery Targets Are Enormous
RPJM --- $480 billion with 30% expected to be financed by the private sector through PPPs, 50% through the naUonal and sub-naUonal government budget and 20% directly by state owned enterprises
• Power generaUon: 36,000 MW
• Gas distribuUon: 1 million household gas units developed
• IrrigaUon: 1 million Ha of new irrigated lands
• IrrigaUon rehab: 3 million Ha of irrigated lands rehabilitated
• New roads: 2,650 km
• Toll roads: 1,000 km
• Improved road maintenance: 46,700 km
• Airports: 15 new airports
• Ports: 24 new ports
• Ships: 550 new ships
• Railways: 3,258 km of new rails
• Urban mass transit: 1,099 of urban railways
• Bus-rapid transit: 29 ciUes to adopt
• Broadband ICT: 100% of all ciUes and regencies covered
Infrastructure investment needs 2015-2019
(~7% average GDP growth esBmated by BAPPENAS)
Sector APBN APBD SOE PRIVATE TOTAL
Road 268.0 200.0 65.0 200.0 733.0
Railways 93.0 – 11.0 122.0 226.0
Seaport 260.0 – 238.2 93.0 591.2
Airport 64.0 5.0 50.0 25.0 144.0
Ferries and inland waterways 37.0 – 10.0 – 47.0
Urban transport 61.0 15.0 5.0 5.0 86.0
Electricity 120.0 – 445.0 435.0 1,000.0
Oil and gas 4.3 – 151.5 351.5 507.3
InformaUon and
communicaUons technology 15.0 15.3 27.0 223.0 280.3
Water resources 196.0 68.0 7.0 179.9 450.9
Water supply and sanitaUon 131.0 198.0 44.0 30.0 403.0
Public housing 184.0 44.0 12.5 87.0 327.5
Total budget requirement for
infrastructure 1,433.3 545.3 1,066.2 1,751.4 4,796.2
Infrastructure Financing Sources, 2015–2019
(Based on BAPPENAS esBmate)
• 143.3 bn US$
NaUonal gov’t
budget ~30%2)
Regional gov’t budget ~11%
2) PorUon of naUonal budgets based on agreed budget ceiling by MoF as proposed by the NaUonal Development Planning Ministry
PPPs in Indonesia
•
Large unleashed PPP potenUal
•
38 PPPs in 2005-2014 for $35 billion
•
A lot more to be tapped, given large unmet needs
•
Recent reforms signal conUnued commitment to
PPPs:
•
InsUtuUonal architecture (KPPIP/Commi-ee for
Accelerated Infrastructure delivery, PPP Unit in MOF)
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Infrastructure SOEs’ capital infusion
•
Enhancement the funcUons of PT SMI (Sarana MulU
Infrastruktur), PT IIF (Indonesian Infrastructure
Finance) and PT IIGF
Indonesia: Addressing Infra Gap
•
Key 2015 reforms to accelerate public sector infra spending:
•
Mainstreaming of advance procurement:
•
President set up Budget RealizaBon EvaluaBon
and Monitoring Team (chaired by MOF) to
debofleneck spending at central and local levels
•
Capital injecBons to and revaluaBon of assets of
infra SOEs
•
PT SMI’s capital increased by $1.6 bn to $2.1 bn
•
AdopBon of direct lending scheme to ease SOE
access to IFI finance
•
Expansion IIGF scope to guarantee SOE
Indonesia: Addressing Infra Gap
•
Key reforms to leverage private investment in infra:
• New Perpres on PPPs: now also social sectors covered and
availability-based contracts possible
• OperaBonalizaBon of PPP Unit at MOF as one-stop-shop for PPP coordinaBon and facilitaBon, including on gov’t support to PPPs
• Extension of BVGL scheme to 2019 and to also cover 35GW program
• $20 bn private investment in energy generaBon to be leveraged
• Further improvement of land acquisiBon framework
• IntroducBon of proxy mandate: private sector may conduct–on behalf of the government
contracBng agency–preparaBon, consultaBons, valuaBon, negoBaBon and compensaBon for the procured land.
• OperaBonalizaBon of viability gap funding to raise afracBveness of
projects to investors
• 2 water supply projects will receive VGF in 2016 for total of IDR 1.15 tr
• Streamline investment licensing and facilitate foreign parBcipaBon in
PPPs
• TransformaBon of PT SMI to Infrastructure Development Fund or Bank
• ConsultaBon and analysis iniBated
