JAKARTA (TheInsiderStories) - Indonesia is planning to open up state-owned run infrastructure, such as toll roads, to private investors in an effort to generate fresh funding for new projects through securitization scheme with underlying revenues and receivables. Securitization is a financing by pledging receivables or revenue to be received by the company in the future.
President Joko Widodo has said at the 2016 Indonesia Infrastructure Week, that he would ask some state-owned enterprises (SOEs) to sell their concessions in major toll roads to private investors to help the financing of infrastructure project in the country.
According to president, the idea based on experience not many investors wanted to invest in greenfield infrastructure projects and instead preferred to put their money in brownfield projects, which refers to projects that are already operating and generating cash flow.
National Development Planning Board (Bappenas) head Bambang Brodjonegoro, said it was possible for SOEs to offer a concession-sharing scheme to private investors. The SOEs, for example, could sell shares of their subsidiaries that are in charge of toll-road management, power plant and other projects.
“They can sell some [portion of shares], like 30 to 40 percent. The SOEs will still own the main concession [for the toll road],” he said.
Commenting on the idea, Minister for SOEs Rini Soemarno stated, currently her ministry reviewing additional funds to PT Perusahaan Listrik Negara (PLN) and PT Jasa Marga Marga Tbk (IDX: JSMR) through securitization scheme.
Rini pointed out several requests from foreign investors to offer existing securitization scheme that came to both of the companies.
She adding , securitization against PLN itself in the next year is targeted to reach around US$5 billion. While securitization for Jasa Marga is amounting to Rp 5 trillion. In total, the additional fresh funds through securitization scheme in 2017 to PLN and Jasa Marga reach Ro 70 trillion.
Vice Chairman of Indonesia Chamber of Commerce (KADIN) Erwin Aksa welcomed the government plan. He agreed with the President idea, the funds from securitized assets can be used again to build a new project and it can generate thousands trillion.
“Investors frankly lazy to greenfield. Should acquired land, take care of permits and so on. If we invite investors from the Middle East an other countries, they’re willing to take a suitcase contents of money, they are looking for where can I buy. If the government is ready to set up an instrument, these goods have become,” He said.
For that, Erwin continues, government should prepare a legal umbrella.