Indonesia and United States (US) ministry of finance have agreed to cooperates on the infrastructure financing and financial market development - Photo by MoF Office

JAKARTA (TheInsiderStories) – Indonesia and United States (US) ministry of finance have agreed to cooperates on the infrastructure financing and financial market development, said the minister on Sunday. The agreement was signed by Sri Mulyani Indrawati and Steven Mnuchin as a joint effort to encourage private participation in the both sectors.

She said, the experience of the US treasury department in the process of making alternative private financing schemes, reviewing infrastructure projects, and utilizing the capital market as a source of infrastructure financing will be a good source to be used as a reference.

Early of this year, International Development Finance Corporation (IDFC), an independent agency under American government, prepares an investment US$5 billion for Indonesia. The organization is the development of the Overseas Private Investment Corp., which was formed through the mandate of the US Congress.

According to IDFC’ CEO, Adam Boehler, the agency is new $60 billion funds focusing in investing in the emerging countries. While, coordinating minister for economic affairs, Airlangga Hartarto, stated, the government need investment from private parties to fund many infrastructure projects in the country. He assured, that Indonesia continues to make a policy breakthrough to support and create a friendly investment climate through the omnibus law.

Currently, IDFC and the government has discussed various infrastructure projects in the archipelago, such as Trans Java, Trans Sumatera, tourism, hydro power in North Kalimantan and state-owned companies.  To support the planned, the country aimed to build a sovereign wealth fund, as it looks to double down on investment and boost economic growth. 

That fund would collect money from overseas investment funds including US, Uni Arab Emirates, Japan and other countries, with the aim of attracting around $10 billion to be spent on infrastructure such as the development of new capital. The investment aimed to speeding up the development of Indonesia’ digital infrastructure, include build a next-generation transportation network around electric vehicles in local cities and improving the way important services, such as health care, are delivered in the country.

Indonesia needs Rp35,428 trillion ($2,426.37 billion) of investment in five years period to reach the six percent growth. Of the total figures, the government will contributes 9.4 percent, 8.8 percent from state-owned enterprises, and private sectors will cover 81.8 percent. Based on national medium-term development plan for the 2020 – 2024 period, the authority will boost manufacturing and tourism sectors to reach the target. 

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