Joko Widodo has signed Presidential Regulation Number 32 of 2020 concerning Infrastructure Financing Through Limited Management Rights - Photo by KPPIP

JAKARTA (TheInsiderStories) – Joko Widodo has signed Presidential Regulation Number 32 of 2020 concerning Infrastructure Financing Through Limited Management Rights. Through this policy, private sectors will allowed to manages the government projects.

This financing scheme is also expected to become a new funding source option by utilizing existing assets. The president has signed the regulation on Feb. 18 and this regulation has been enacted since it was promulgated.

Based on regulation, the state and state own enterprises (SOEs) assets could manages by the business entity in the form of transportation infrastructure, including ports, airports, railways, and bus terminals. Then, toll road infrastructure, water resource infrastructure, drinking water infrastructure, waste water management system infrastructure, waste management system infrastructure.

Furthermore, telecommunications and information technology infrastructure, electricity infrastructure, oil, natural gas and renewable energy infrastructure. The projects must meet several requirements, like have been fully operational for at least two years.

It also requires an increase in operating efficiency in accordance with generally accepted international standards, having the useful life of infrastructure assets for at least 10 years, presented in the financial statements of ministries or institutions that have been audited based government accounting standards in the previous period.

Based on Article 33, if the SOEs’ asset management agreement ends, the assets will be handed over from the asset management business entity to the person in Charge of the cooperation project in accordance with the provisions of the legislation in the sector concerned.

The coordinating minister for economic affairs as the chairperson of the committee for acceleration of priority infrastructure delivery carried out the monitoring and the evaluation of the implementation of the asset management and reports to the President at least one time in six months or whenever necessary.

Indonesian government increased infrastructure investment needs worth US$429.7 billion during 2020 – 2024, rise up 20 percent compared to $359.2 billion in 2015 – 2019. The increase in investment was aimed at increasing infrastructure shares to gross domestic product (GDP) from 43 percent in 2017 to 50 percent by 2024.

In order to realize these needs, the government encouraged the role of the private sector in infrastructure development through the government and business entity cooperation scheme as well as the non-government budget investment financing.

Currently, infrastructure funding through the scheme of government and private cooperation has reached 83 projects with a total investment of $40 billion. While for the non-government budget investment financing scheme, 30 projects have been created with a total value of $50 billion.

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