Indonesia's SMI Seeks Funding US$ 571M This Year
Indonesian state-owned infrastructure funding company, PT Sarana Multi Infrastruktur (SMI). Photo by The Company

JAKARTA (TheInsiderStories) – Indonesian state-owned infrastructure funding company, PT Sarana Multi Infrastruktur (SMI) plans to raise Rp 8 trillion (US$ 571.42 million) in funding through SUKUK, bilateral and multilateral loans for this year, said an official yesterday.

Director of Project Development and Advisory SMI Darwis Trisna Djajawinata, explained that next week the agency will release SUKUK wirh of Rp1 trillion with a 1-3 year tenor.

“The tenor is deliberately shortened because competition in the bond market is quite challenging, due to policy rate cost of money,” he said .

In addition, the company also plans to explore other funding from bilateral and multilateral loans. For bilateral loans, the company seeks from the development banks of France and Germany.

“The value for loans from each country is approximately Rp100-300 billion,” Djajawinata stated.

While for multilateral loans, it will be explored with the amount of Rp300 billion. “The amount can be more, but we will try to divide it fairly,” he explained.

As for other funding options, the company has a plan to issue securitisation, but it is still in the phase of sorting the assets to be used. The company also intends to issue a green bond again because the company still has a Rp 2.5 trillion pipeline from the total issuance of Rp 3 trillion.

Previously, SMI had issued a green bond Rp500 billion in 2018. The issuance of this green bond was accredited by the Green Climate Fund.

The issuance of the green bond is an important step taken by SMI to support the achievement of the Sustainable Development Goals in the country. Its commitment is in line with the commitment of the Government of Indonesia in realizing the Paris Agreement’s commitment to protect and sustain ecosystems and environmental eminence.

The Center for International Climate Research-Oslo (CICERO), the world’s leading environmental research center has given SMI a Medium Green opinion. SMI will allocate the proceeds of green bond to finance sectors such as renewable energy, clean transportation, as well as sustainable water and waste management.

The World Bank Group as one of the pioneers of the green bond market with a total value of more than $11 billion issuance, has provided technical assistance with CICERO to SMI in preparing a green bond framework that is aligned with the internationally-developed Green Bond Principles and ASEAN Green Bond Standards.

This has established Indonesia as one of the first Southeast Asian countries to adopt both standards. This collaboration took place under a broader capital market and infrastructure finance technical assistance programs supported by the Swiss State Secretariat for Economic Affairs and Global Affairs Canada.

Meanwhile, until December 2018, the company’s financing commitment reached Rp91.3 trillion with assets of Rp 62.5 trillion and equity of Rp35.6 trillion. The company has also carried out various financing innovations such as sustainable financing, sharia financing, bridging financing and equity financing.

The company has also financed a number of projects with a project value of Rp553.6 trillion. The most funded project sectors are transportation and electricity projects.

The transportation sector has many sub-sectors such as toll roads, ports, and airports which are also funded by the SMI. The toll road sector currently being focused by SMI is the Trans Java toll road, Trans Sumatra, SMI also helps a lot from PT Hutama Karya, which has been assigned by the government to finish the development of Trans Sumatra Toll Roads.

As informed, SMI was founded on Feb. 26, 2009 which has a mandate as a catalyst in supporting the acceleration of infrastructure development in Indonesia. SMI plays an active role in supporting the implementation of PPP and encourages the acceleration of infrastructure development in the region through regional financing product.

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