Indonesia set up forum coordination to support infrastructure financing

JAKARTA (TheInsiderStories) - Indonesia Finance Ministry joined with Financial Services Agency (OJK) and Bank Indonesia (BI) set up Coordination Forum for Development Financing through Financial Markets Deepening (FK-PPK) to support financing for infrastructure project.

According to BI’s governor Agus Martowardojo, the Signing of this MoU is driven by the need for sufficient development financing, financial markets deepening, and good coordination among related institutions.

Development financing is urgently needed by Indonesia in order to achieve high, sustainable and inclusive economic growth. Furthermore, it is realized that active, liquid, inclusive, and efficient financial markets is one of the important factors needed to increase the availability of funds for development.

This can be achieved through financial markets, improving the effectiveness of fiscal and monetary policies implementation as well as providing risk management and liquidity tools for business practitioners.

Therefore, a common understanding and close coordination among the authorities and institutions is needed to accelerate the development and deepening of financial markets.

This MoU covers the establishment of the FK-PPPK which consists of Ministry of Finance, Bank Indonesia, and Financial Services Authority, cooperation in the planning and policy implementation acceleration related to all financial markets elements, and the exchange of data and information.

With the signing of this MoU, It is expected that FK-PPPK could improve the synergy in formulating comprehensive national strategies for financial markets development and deepening to support national development financing.

Currently, He said, the transaction volume in money market around $5 billion a day-mostly in spot transaction-while in Thailand has reached $11 billion and Malaysia $15 billion. He continued, 72 percent financing for infrastructure projects comes from banking sectors.

Finance Minister Bambang Brodjonegoro, adding PT Sarana Multi Infrastruktur (SMI), an infrastructure financing company own by government, will facilitate the funding from pension funds, insurances and social security organizing body for employment. Government targeting to finance infrastructure projects on 2016’s State Budget Rp313 trillion (US$23.72 billion).

According to him, the agency could raise funds around Rp40 trillion from the local financial institution firms.

Beside collecting funds from local financial institution, Chairman of OJK Muliaman Hadad adding, to attract more liquidity to the market, the agency pushed the asset management company to publish the Limited investment mutual funds with underlying infrastructure projects.

“We encourage investment managers to use infrastructure projects as underlying asset for limited mutual funds as an instrument for raising funds on the infrastructure projects,” He stated.

Previously, Chief Executive OJK for the Capital Market Supervisory Nurhaida, said one infrasctrutcture projects could use as underlying fro the limited mutual funds are the 35,000 megawatts electricity generation projects.

According Nurhaida, new energy power projects, renewable and energy conservation need huge funding. Based on estimates of the Ministry of Energy and Resources minerals, amounting up to Rp1.700 trillion.

Indonesia needs investment with worth Rp 5,519 trillion until 2019 to develop infrastructure projects by government and private company.