JAKARTA (TheInsiderStories) – Indonesian ministers offers projects with worth of billion dollars to foreign investors followed upgrading rating from Standard & Poor’s and other agencies revise the country other performances.
During visited the offices of three state-owned enterprises of China engaged in oil and gas in Beijing on June 7, Energy and Mineral Resources Minister Ignatius Jonan invited them to increase their investment in upstream oil and gas Indonesia.
The three state-owned enterprises are China National Petroleum Corporation (CNPC), China Petrochemical Corporation (Sinopec), and China National Offshore Oil Corporation (CNOOC). In addition, Jonan also visited the CITIC office whose main business is in the capital market, but has investment in upstream oil and gas in Indonesia.
CNPC is ranked 3rd in the Fortune 500 list in 2016, Sinopec 4th position, CNOOC rated 109, and CITIC at number 156. While, PT Pertamina which is an Indonesian state-owned company ranked 230th.
All of China’s SOEs have investment value in Indonesia is still very small compared to the size of their business. Therefore, according to Minister of EMR, it is very potential for them to increase their investment in Indonesia.
In the meeting, Jonan offered Oil and Gas Working Areas that are being tendered by the Directorate General of Oil and Gas, mature fields that can be collaborated with Pertamina or other operators, as well as the need for enhanced oil recovery technology required by Indonesia. In addition it explored their interest to invest in potential petrochemical industries for the Bintuni Bay area of Papua and Masela Block in West Southeast Maluku.
Head of Special Unit for Upstream Oil and Gas Business Activities (SKK Migas) Amien Sunaryadi said CNPC, Sinopec, CNOOC and CITIC officials expressed interest in boosting investment. They requested full support from the Minister of EMR to realize the process.
“Sinopec even thinks for an initial study related to the petrochemical industry opportunities in Bintuni Bay and Masela,” said Amien.
Bappenas offers 35 projects $30.5 billion
In Singapore, Minister of PPN/ Head of Bappenas Bambang Brodjonegoro offers 35 infrastructure projects worth US$30.5 billion with two schemes Public Private Partnership (PPP) and Non Government Budget Investment (PINA).
“Infrastructure development is an important focus of the current Jokowi-JK Presidential government to improve connectivity, reduce regional disparities, support rural and urban development, and most importantly, adequate infrastructure can reduce high economic costs,” said the Minister.
Bambang invited 200 investors who attended Nomura event in Singapore including Credit Suisse Asset Management, Daiwa Asset Management, DBS Bank, Deutsche Asset Management, East Springs, Fidelity Investments, Government of Singapore Investment Corporation, JP Morgan, Morgan Stanley, Temasek, China Asset Management, Abu Dhabi Investment Authority, Kuwait Investment Authority, Oman Investment Fund, Qatar Investment Authority, and Aberdeen Asset Management.
On the occasion, the government offered 31 projects under the PPP scheme and 4 projects through the PINA scheme which includes port projects, toll roads, railways and telecommunications/satellites offered to investors.
Minister Bambang also stressed the importance of using the financing scheme through PINA. According to him, PINA becomes an instrument that can be profitable for the government and investors. The PINA scheme has an investment potential of 20-30 percent financing from total equity financing, 70-80 percent of project loans and infrastructure bonds.
In the PINA scheme, the government does not need to use the State Budget (APBN) or Regional Revenue Budget (APBD) to build infrastructure projects. The existence of PINA aims to encourage private involvement as an investor in infrastructure development. The amount of investment required in infrastructure encourages the government to invite private sector involvement as an equity investor.
“In the future, the PINA scheme will continue to be pushed because of its enormous potential to accelerate the development of infrastructure that is evenly distributed throughout Indonesia,” He explained.
In view of the current Development Vision of Indonesia 2045, the ministry projects the Indonesian economy to grow an average of 6.4 percent over the period 2016-2045. Indonesia will become a high-income country by 2035 and become the world’s fourth largest gross domestic product by 2045.
In the first quarter of 2017, national economic growth grew 5.01 percent, better than the previous quarter’s 4.94 percent. The government set an economic growth target of 5.1 percent in the 2017 APBN and 5.3 percent in the Revised State Budget (RAPBN-P).
To encourage quality economic growth, Indonesia continues to improve the investment climate and the ease of doing business in Indonesia. One of the benchmarks for the success of government efforts is seen from the rise of Ease of Doing Business (EODB) ranking or the ease of doing business in Indonesia.
By 2017, World Bank data shows EODB Indonesia’s rating rose from 106 to 91. Looking ahead, the government focused on fixing two EODB indicators that have an effect on Indonesia’s rank rate, like business start and enforcing contract procedures. Indonesia is expected to get an investment flow of $200 billion in the future, following the upgrade of investment grade credit rating by S & P Global Ratings.
“After this investment grade rating, I believe there are more than $100 billion or $200 billion of potential investment, not only in government bonds, but also shares and corporate bonds,” Bambang said.