Photo by PT SMI

JAKARTA (TheInsiderStories) – Indonesian PT Sarana Multi Infrastruktur (SMI) has started book-building process for the planned issuance of Rp5 trillion (US$369 million) worth of 1-year, 3-year and 5-year bonds to support the national infrastructure financing needs. The State-owned financing firm’s bonds will list in Indonesian Stock Exchange in November.

The company has announced a plan to issue bonds worth Rp10 trillion (US$750 million) in this year, part of its shelf registration bonds totaling Rp 30 trillion approved by the Financial Services Authority last year. in Nov, 2016, SMI has issued the same amount of Rp 5 trillion with three, five year bonds, 10 and 15 years tenor.

 

 

PEFINDO has affirmed its AAA ratings (stable outlook) for SMI proposed shelf-registration bonds with amount of RP30 trillion. The rating reflect SMI’s status as critical government-related entity, the high potential deman for infrastructure financing,  its verys truing capitalization profile and its strong profitability indicators.

President director of SMI, Emma Sri Martini, said  that the company had set a financing target of Rp 66 trillion in 2017. However the value could rise higher as some additional projects might come later in the second half of the year, such as the Jakarta light rail transit (LRT).

The ambitious project saw financing scheme revision due to massive cuts in the State budget. After raising a white flag from fully funding the Rp 27 trillion project, the government only disbursed Rp 9 trillion of state capital injection to state-owned railway firm PT Kereta Api Indonesia as well as PT Adhi Karya Tbk (IDX: ADHI), allowing them to grab Rp 18 trillion in new loans for the project.

The government through the Finance Ministry has injected Rp 28.5 trillion into the company’s equity in 2016, boosting its total assets to Rp 44.3 trillion with 1.55 times of leverage. The Indonesian government’s plan to transform SMI become a national infrastructure bank to finance infrastructure programs in the country.

The plan to establish the special purpose bank has emerged since 2012 triggered by the absence of long term funding available in banks or market.

Data from Committee for The Acceleration of Provision of Priority Infrastructure showed the government wants to push development of 225 national strategic project that requires investment of Rp3,203 trillion. Currently, the alternative financing infrastructure other than infrastructure bank comes from infrastructure bond.

Meanwhile, Senior Deputy Governor of BI Mirza Adityaswara stated that the urgency of establishing the infrastructure bank, is being questioned. He argues that SMI along with other SOE’s namely PT Indonesia Infrastructure Finance, PT Penjaminan Infrastruktur Indonesia, and SOE’s banks are already able to disburse credit to infrastructure projects.

“So it is actually between necessary and unnecessary because there are existing infrastructure fundings from banks. The important thing is there is funding,” he said.

Secretary of the Coordinating Ministry for Economic Affairs Lukita Dinarsyah Tuwo said that the establishment of an infrastructure bank is is not a primary option. The government decided to encourage financing through non-government financing. 

SMI is an infrastructure financing company which was established on Feb. 26, 2009, with 100% shares owned by the Government of Indonesia through the Minister of Finance. SMI plays active role in facilitating infrastructure financing as well as preparing project and serving advisory for infrastructure projects in Indonesia.

SMI carries the duty of supporting the Government’s infrastructure development agenda for Indonesia through partnerships with private and/or multilateral financial institutions in Public-Private Partnership projects. As such, PT SMI can serve as a catalyst in accelerating infrastructure development in Indonesia.

Sectors that can be financed by PT SMI includes toll Road & Bridge, transportation,oil & gas, telecommunication, waste Management, electricity, irrigation & waterway, water supply, social infrastructure includes: urban infrastructure, education facilities infrastructure, regional infrastructure, tourism infrastructure, health infrastructure and prison infrastructure, the expansion of electricity infrastructure includes energy efficiency, and funding railway rolling stock.

SMI recorded an increase in net profit by 2.8 percent in the first half of 2017. The company’s profit on June 30, 2017 was recorded at Rp707.4 billion. While in the same period in 2016, the company only obtained net profit worth Rp688 billion.

This growth is also followed by the growth of company assets which rose by 5.83 percent compared to last six months, from Rp44.3 trillion at the end of 2016, to Rp46.9 trillion on June 30, 2017. This increase is expected to accelerate in the second semester of 2017.

In the financing facility, until June 2017, the company has committed infrastructure financing (consisting of loans to corporations, local government and equity) worth Rp50.2 trillion to infrastructure projects in Indonesia, with a total project value of Rp264.5 trillion.

While through the Project Consultation and Development Facility, SMI has become an enabler for several national strategic projects so as to achieve financial close, such as the Palapa Ring Project (West, Central and East Package) also Umbulan SPAM Project which finally reached financial close in Dec. 2016, after about 43 years the project is pending.

US$1: Rp13,400

Writing by Linda Silaen, Email: linda.silaen@theinsiderstories.com

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