Investment Opportunities in Indonesia Prof. . Ba Bambang Br - - PowerPoint PPT Presentation
REPUBLIK INDONESIA Investment Opportunities in Indonesia Prof. . Ba Bambang Br Brodjo jonegoro, , Ph.D .D. Min inis ister of of Nati tional De Developmen ent Pla lanning / Head of He of Nati tional l De Development Pla lannin
REPUBLIK INDONESIA
Min inis ister of
tional De Developmen ent Pla lanning / He Head of
tional l De Development Pla lannin ing Agency Tok
, 2017
Prof. . Ba Bambang Br Brodjo jonegoro, , Ph.D .D.
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Indonesia Macroeconomic and Policy Outlook
How is the economy doing?
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In Indonesia is is a huge e pot
ial market in in Asia ia
Largest economy in the world
15th 5th Largest emerging market with the
best middle class potential
4th
Most Populous country in the world
±5%
Private consumption grows steadily ly
Indonesia is projected to be the largest economy in the world by 2050
High & stable economic growth
Indonesian Economic Growth (%)
3,374 3,605
2015 2016
GDP per capita (US$)
Source: BPS *Outlook
Progressive infrastructure development
Source: World in 2050, PWC
Source: BPS, Team Analysis
5.0 4.9 5.0 5.2 2014 2015 2016 2017* 5.0 4.9 5.0 5.2
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Top
Destination for attracting investors in Asia (The Economist)
Top
Japanese investment destination (JBIC Ratings)
Rank
Jumped from rank 106 in 2016 to rank 91 in 2017 for Ease of Doing Business (EoDB, World Bank - 2018)
BBB- /Positive Baa3 /Positive BBB- /Stable BBB- /Positive BBB- /Positive
Abundant natural resources
Indonesia are FDI capital
most populous country on earth 261 million population
Promising investment destination
Promising investment destination
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Source: The Investment Coordinating Board of The Republic of Indonesia (BKPM)
Total FDI Realization
in 2012 – Q3 2017 (USD million)
6,119.1 3,999.6 2737,4 1,536.7 1,336.5
Singapore Japan China United States South Korea
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Outward investment in the world 2012 –Q3 2017
Investment Realization
Based on Capital Expenditure*
Source: The Investment Coordinating Board Republic of Indonesia (BKPM)
(excl. upstream oil & gas, and financial sectors )
investmentrealizationbysectors in Indonesia2012–Q3 2017
(excl. oil & gas, and financial sectors – USD million)
0.00 500.00 1,000.00 1,500.00 2,000.00 2,500.00 3,000.00 3,500.00
2012 2013 2014 2015 2016 Q3 2017 Transportation Industry Metal, Machinery & Electronic Industry Electricity, Gas & Water Real Estate Chemical & Pharmaceutical
Source : FDI Market/Financial Times, 2017
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Investment will be the main driver of Indonesia’s economic growth
ECONOMIC GROWTH:
[5.4 %]
HH Consumption : 5.1 % NPISH Consumption : 5.8 %
Investment (GFCF) : 6.3 % Export : 5.1 % Import : 4.5 % Expenditure Side Manufacture* : 4.9 % Construction* : 6.9 % Trade* : 5.7 % ICT* : 11.0 % Financial Service* : 9.4 % Agriculture* : 3.7 % Production Side Transportation : 8.3 % Mining : 1.0 % Electricity & Gas : 5.7 %
Poverty Rate: 9.5 – 10.0% Unemployment Rate: 5.0 – 5.3% Gini Ratio: 0.38 HDI: 71.5
Inflation: 3.5 % USD/IDR: 13,400
3 priority sectors that will be enhanced
by its role in growth and employment rate are: Tourism Agriculture Manufacture
*the greatest contribution to growth
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Indonesia Infrastructure Development and Financing Framework
Growing private sector involvement in infrastructure development
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Closing the infrastructure gap and providing a stronger foundation for economic growth in the future
Source: The World Bank (2015) & McKinsey (2013)
Indonesia infrastructure stock is below average global standard and tends to decline Strong commitment in policy and implementation level by President Jokowi administration
Some breakthroughs
planned during Dutch colonial era
planned 30 years ago
Multiplier effect from infrastructure development
sectors
Lowering competitiveness and economic growth
Why now?
The nature of infrastructure development
from planning, construction and operation
increased capex when the project is delayed
the impact are in the medium and long-term (IMF)
Real results
Global Competitiveness from 41st to 36th Infrastructure Global Competitiveness from 60th to 52nd
Source: Global Competitiveness Report 2017-2018, WEF
38 % 70 % 32 % 49 %
Infrastructure stock gap/GDP
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Closing the infrastructure gap to achieve economic growth Integrated Approach
Financial innovation (hybrid financing) Strong coordination at policy and implementation level Private sector engagement (domestic &
Mobilizing long- term funds (pension funds & insurance companies)
Improving project readiness & pipeline
economic growth
investment ecosystem to attract more domestic investors & foreign investors
the ecosystem, deepen the capital markets, support transactions, and manage investment risks
Stakeholder facilitation & advocacy towards financial close
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Fulfillment of Basic Needs
100% drinking water access 100% sanitation access
Basic needs infrastructure for improving citizen’s health and well-being
Livable housing access Irrigation for agriculture security
Infrastructure to Support Leading Sectors
Industrial area connectivity Tourism area development
Infrastructure for connecting leading sector areas
Urban Infrastructure
Modern transport development Develop sustainable urban transport Development towards smart cities
Urban infrastructure development towards modern and smart cities
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SOEs : USD 79.8 bn Government Budget: USD 148.2 bn
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 Development Planning
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Total value of investment required for infrastructure in 2015 – 2019
Private Participation: USD 131.1 bn
Investment value sources:
Increasing the significant role of SOEs & the private sector through PINA & PPP schemes
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Investment which is economically and financially viable but seen as less attractive
needed. Investment which is economically viable but less financially viable hence needs additional Government support.
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PUBLIC INVESTMENT: PROVISION OF PUBLIC FACILITIES
Social security; Education security; Health security. Investment that does not cause direct investment return to the object. Sou Source of
fund : : Government funding (APBN & APBD)
Social Investment
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Internal Rate of Return (IRR) low high
Special Commercial Investment
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Public Private Partnership
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General Commercial Investment
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Drinking water facility; Mass public transportation. Sou Source of
fund : Government funding & commercial funding Toll roads; Ports. Sou Source of
fund : Commercial funding promoted by the Government Investment which is more attractive hence the Government’s role in regulating and promoting is minimized. Electricity; Airports; Gas pipe. Sou Source of
fund : Commercial funding
Increasing the significant role of SOEs & the private sector through PINA & PPP schemes
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Project Stage
PRIVATE PARTICIPATION
TRANSACTION - OPERATIONAL PLANNING - PREPARATION
Project Advisor
(Preliminary Studies, Feasibility Studies)
Strategic Consultant Operatorship Securities Guarantor Legal Status
GREENFIELD
Development/ Transaction Consultant Investor
(Debt & Equity)
Contractor Securities Guarantor Supplier Surveyor Project Initiator
(Unsolicited PPP Project Scheme)
Debt Financier
…PRIVATE INVESTMENT OPPORTUNITIES within a wide range of project phases…
BROWNFIELD
Development/ Transaction Consultant Securities Guarantor Investor
(Debt & Equity)
Supplier
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Pembiayaan Investasi Non Anggaran Pemerintah (PINA)
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INVESTOR
Investment appetite Investment focus areas Equity participation Loan Project pipeline Project readiness Project structure Investment instrument options Investee Investor
Facilitation Function Pipelining Function Ecosystem Function
PINA plays a significant role in accelerating project’s financial close
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Direct Equity Financing
Direct equity participation in an infrastructure company (investment platform)
Equity investment
Investor purchases equity instruments issued by infrastructure company (investment platform) such as discretionary funds, perpetuity notes, and callable preferred stocks or other near-equity related instruments
deepening capital markets
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Source: BAPPENAS-PINA Center for Private Investment Analysis 18
Project category (parameter) Greenfield Brownfield Operational
Feasib ibil ilit ity Stu tudie ies Con Concession Agr greemen ent Permit its & & Lice Licenses La Land Acq cquis isit ition Co Constructi tion Prog
Oper erati ting g Proje ject
< < Under 75 75% Ra Range 75 75% - 100% 100% 100% 100% < < Under 25 25% Ra Range 25 25% - 100% 100% 100% 100% < Under 50 50% Ra Range 50 50% - 100% 100% 100% 100%
Ra Range 0 – 10 Yea ears Mor
than 10 Yea ears
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Source: BAPPENAS-PINA Center for Private Investment Analysis 19
NEW PROJECT
GREENFIELD BROWNFIELD OPERATIONAL
PINA PROJECT
INVESTOR
EQUITY BANKS AND FINANCIAL INSTITUTIONS LOAN PINA PROJECT
INVESTOR
EQUITY BANKS AND FINANCIAL INSTITUTIONS LOAN PINA PROJECT
INVESTOR
EQUITY BANKS AND FINANCIAL INSTITUTIONS LOAN NEW PROJECT
NEW INVESTOR
(Domestic and Foreign Investor)
NEW INVESTOR
(Domestic and Foreign Investor)
Recycle
EQUITY
Securitization/Divestment Limited Concession Scheme PROJECT CONDITION INVESTMENT FINANCING SCHEME
BOND
Potential investment recycle at each stage
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Success stories
Central Package of PALAPA Ring Fiber Optic Project
IDR174 billion(USD 13.0mn) (shareholderloan)
Waskita T
IDR3.5 trillion(USD265.0 mn) (equityparticipation) IDR932.0billion(USD 69.7mn) (discretionary fund -equity)
PT Bandara Internasional Jawa Barat (BIJB)
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Financially closed Targeted to becompletedby end2017
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IDR1.81trillion(USD 134mn) (equityparticipation)
PT NusantaraInfrastructure Tbk Investmentpartnershipwithstrategic internationalpartner
PT Waskita Toll Road (phase 2) The development of Trans-Java and Non Trans Java toll road Project value: USD 10,000 mn Target Collected Funds : Equity participation max 20 % in WTR based on agreed valuation Project value: USD 227 mn Target Collected Funds : USD 75.0 mn (equity)
PT PP Energi The development of Coal-Fired Power Plant in Meulaboh, Aceh
1 2
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1 3 2 4
Power Plan lants– PT PJB (6 Projects) ) (I (IDR DR 49 49.3 .3 tn tn/ USD SD 3,60 3,600 0 mn mn) BIJB (De Development St Stag age 2 2 & Ae Aerocity – 2 2 Projects) (I (IDR DR 30 30 tn/ n/ USD SD 2,20 2,200 mn) n) Nort
Sumatera Tol
utama Mar arga Was askita (I (IDR DR 13 13.4 .4 tn tn/ USD SD 1,01 1,010 0 mn mn) Gas as-fi fired Die Diesel Power Plan lants – PT Ind ndonesi sia Power (I (IDR DR 2 2 tn tn/ USD SD 15 152.6 2.6 mn mn)
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4 5 3 7 2 2 2 1 6
13 projects with total value of USD 10.1 bn
Integrated Tourism Ar Area De Development, Flo Flores Isla sland – Flo Flores Prosperindo, Ltd. (I (IDR DR 13 13.5 .5 tn/USD 1,00 1,000 0 mn) n) R-80 80 Airp Airplane – PT RAI RAI (I (IDR DR 21 21.6 .6 tn tn/ USD SD 1,60 1,600 0 mn mn ) Kulon Progo DIY DIY Airp Airport – PT Ang Angkas asa a Pura a 1 & PT PP PP (I (IDR DR 6.7 6.7 tn tn/ USD SD 49 495 5 mn mn)
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China
The private sector is interested to invest in power generation, seaports, toll roads, industrial parks and integrated tourism areas.
Domestic investors that have proven to invest are : Singapore
The private sector is interested to invest in toll roads and seaports .
Australia
The pension funds and private sector have strong interest to invest in airports, toll roads, power generation and integrated tourismcareas.
Japan
The Financial & Strategic investors have strong interest to invest in power generation, seaports, toll roads and airports.
Republic of Korea
Private sector & pension funds are interested to invest in power generation, toll roads and airports.
Canada
The pension funds and private sector are interested to invest in power plants and toll roads. ± USD100 billion
Total potential funds 22
PINA conducts roadshows and socialization forum with various domestic and foreign investors
SOE in infrastructure finance Civil servants pension fund Armed forces pension fund
Long-term funds from Australia, Canada, South Korea & China show strong interest to invest in Indonesia infrastructure projects
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Regulation Advocacy
Coordinate with OJK, Indonesian Financial Services Authority, to relax the regulations & issue new investment instrument(s); Coordinate with IAI, Indonesian Accounting Association for aligning of financial recording rules.
Socialization & Coordination
Continues to hold PINA socialization forum with various stakeholders (PINA Day); Coordinate with various related associations that have potential
investors.
Improvement of Governance & Regulation
Develop strategic plan and good governance guidelines of PINA; Conducting related research and studies to strengthen the functions and roles of PINA in investment funding schemes.
PINA advocates several new rules and regulations that improves investment appetite
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PINA Center for Private Investment Ministry of National Development Planning / BAPPENAS Jalan Taman Suropati 2, Menteng Jakarta Pusat, Indonesia 10310 Tel: +62-21-3903916 Email : info@pina.bappenas.go.id
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(Kerjasama Pemerintah dengan Badan Usaha/KPBU)
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CONNECTIVITY
Road
URBAN FACILITY SOCIAL FACILITIES
Transportation
Electricity
Energy conservation
Telecommunication & Informatics
Water supply Waste management system Water resources & irrigation Localized waste water management Centralized waste water management Public housing Urban facility
Tourism Education facilities Sports, art & culture facilities Health Zone Penintentiary
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There are 6 implemented schemes used as benchmarks for future PPP projects PPP projects based on structure development PPP projects based on project preparation
Government Guarantee
Coal-Fired Power Plant Central Java 2x1000 MW (USD 4,200.0 million)
Tariff & Viability Gap Fund (VGF)
Umbulan Drinking-Water Facility (USD 152.0 million)
Bangun Cipta Kontraktor
Availability Payment (AP) for Investment Return
Palapa Ring Optic-Fiber Network (USD 561.5 million)
Government In-Kind (Construction Support)
Total: USD 2,318.8 million
Success Fee Scheme
Coal-Fired Power Plant Central Java 2x1000 MW (USD 4,200.0 million)
Unsolicited PPP Project
Jakarta – Cikampek II Elevated Toll Road (USD 120.2 million) PT Ranggi Sugiron Perkasa
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Solicited and Unsolicited Schemes
Project Identification Preliminary Study Outline Business Case (OBC) Final Business Case (FBC) Pre Qualification Request for Proposal Bid Award PPP Agreement Signing Financial Close
PLANNING PREPARATION TRANSACTION
Project proponent submits a proposal and pre-FS document to GCA
get pre-FS approval
proponent to prepare FS Business Entity submits FS FS evaluation Tender Preparation PPP Agreement Signing
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Issuing approval letter Financial Close
Government as the project innitiator (SOLICITED) Private as the project innitiator (UNSOLICITED)
inclu lude 2 uns unsol
icit ited toll l road
proje
rian – Le Legu gundi – Bun Bunder – Man Manyar (US (USD 0.9 bi billio ion)
Jakarta – Ci Cikampek El Elevated II (US (USD 0.1 bi billio ion) USD SD 8.8 billi lion
Construction Jatiluhur Water Supply (USD 123.7 million)
GCA: Government Contracting Agency
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PPP TARGET 2016 - 2017
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PPP PIPELINE
10 Quick Win Projects 2018 (total project value: USD 3.6 billion)
1. Serang Panimbang Toll Road 2. Jakarta – Cikampek South Toll Road 3. Probowangi Toll Road 4. Nambo Regional Waste Management 5. Bandar Lampung Water Supply 6. Jatiluhur Water Supply
Transaction until PPP Agreement Signing
Financial Close
USD SD 0.6 bil billion USD SD 3.5 3.5 bil billion
Transaction until PPP Agreement Signing
Preparation
USD SD 3.5 3.5 bil billion USD SD 0.1 0.1 bil billion USD SD 6.8 6.8 bil billion + 5 5 Und nder Cal alculation Proj
USD SD 6.7 .7 bil billion + 12 Und nder Calc alculation Proj
Construction
USD SD 8.8 8.8 bil billion USD SD 0.6 .6 bil billion
2018 Construction
12 1
Financial Close
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Preparation
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PUBLIC PRIVATE PARTNERSHIPS (PPP/KPBU)
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Contact us:
Capital Place, 8th floor Jalan Jenderal Gatot Subroto 18 Jakarta Selatan 12710 , Indonesia Phone: +62 21 27081111 www.pppoffice-indonesia.or.id
KANTOR BERSAMA KPBU REPUBLIK INDONESIA
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