Kedutaan Besar Republik Indonesia
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Embassy of the Republic of Indonesia
Ambassade de la RÉpublique d'Indonésie

Indonesia Infrastructure Finance meets 50% of 2017 financing target

Infrastructure financing company Indonesia Infrastructure Finance (IIF) has disbursed Rp 6 trillion (US$450.92 million) financing as of May, 50 percent of its Rp 12 trillion financing target for 2017.

The financing mostly went to power plant, telecommunication and transportation projects, IIF president director Ari Soerono said on Wednesday, adding that the latest financing was for the trans-Java toll road project.

“For the next deals, there are some geothermal power plant projects in East Java,” Ari said during the third annual Indonesian Infrastructure Finance Conference.

Ari said IIF could only contribute up to 35 percent of a project, while the remaining financing should come from other investors.

Ari said that for 2017, the company was preparing a new structure called “staple financing” and “take-out financing” schemes.

“In a staple financing scheme, the public-private partnership project will be bundled with IIF’s financial package, then the contractors do not have to find the financing. But if they do not agree, they can look for external financiers,” he said.

For take-out financing schemes, there is an agreement that IIF will take over the financing in the future, said Ari. He gave an example that if the project tenor was 15 years, the bank would finance it for the first five years, after that they could sell it to IIF.

“Take-out financing is useful for a bank that has a medium financing horizon, if they stay in a project too long, it will affect their asset quality,” Ari said. (bbn)