International Development Finance Corporation (IDFC) has committed to invest US$3 billion in Indonesian toll road projects - Photo by Insider Stories.

JAKARTA (TheInsiderStories) – International Development Finance Corporation (IDFC), an independent agency under the American government, has committed to invest US$3 billion in Indonesian toll road projects, the official said today (01/17). The fund will be allocated in Trans Java and Sumatera toll road projects.

“IDFC has firmed to invest in infrastructure projects. They have prepared funds of $3 billion for the construction of the Trans Java and Sumatra toll roads,” Coordinating Minister for Maritime and Investment Affairs Luhut Binsar Pandjaitan told media at his office, adding the corporation also prepared a fund of around $5 billion and considers cooperating with other sovereign wealth funds, whether the United Arab Emirates or Japan, to invest in Indonesia.

IDFC is the development of the Overseas Private Investment Corporation, which was formed through the mandate of the United States (US) Congress. According to IDFC’ CEO, Adam Boehler, the agency is new $60 billion funds focusing on investing in the emerging countries.

Pandjaitan revealed the government needs nearly Rp35,428 trillion ($2,596 billion) of investment in five years to reach a six-percent growth, with the infrastructure projects still the main focus. Of the total figures, the government will contribute 9.4 percent, 8.8 percent from state-owned enterprises, and the private sector will cover 81.8 percent.

The minister opined toll roads in Java that are included in the Trans Java network have become a magnet for foreign investors. A Hong Kong firm Kings Key Limited (KKL) recently invested in two toll roads; Solo-Ngawi and Ngawi-Kertosono-Kediri, he said. KKL is a subsidiary of Road King Expressway International Holdings Limited. The two toll roads are their first investment destination in Indonesia as they are part of the Trans Java toll road network.

“In Indonesia, the most potential places to invest are located in Java. And for toll roads is Trans Java. We see how China has invested a lot in infrastructure, and we hope to be able to support social and economic development through infrastructure well,” Pandjaitan said.

Meanwhile, PT Waskita Toll Road (WTR) plans to divest four toll roads this year, the management said a month ago. Three of four they have been eyed by seven to ten foreign and domestic investors said the unit of state-owned construction firm PT Waskita Karya Tbk (IDX: WSKT).

For 2020, the CEO Herwidiakto said, the company ready to offer three toll roads namely Kanci – Pejagan, Pejagan – Pemalang, and Pemalang – Probolinggo. The other one is being considered to sell are Medan – Kualanamu or Pemalang – Batang toll road. He hopes the transaction will be completed in April 2020. He asserted the Trans Java toll roads are still attractive to the investors, because of the good infrastructure, rapid car traffic, and less marketing to the public.

On the same day, the operator announced has officially released a 40 percent ownership in the Solo – Ngawi Toll Road operated by PT Jasamarga Solo Ngawi (JSN) and Ngawi – Kertosono – Kediri toll road owned by PT Jasamarga Ngawi Kertosono Kediri to Kings Key Limited with worth Rp2.5 trillion. After the divestment, the composition of the two toll roads will be  Kings Key owned 40 percent, PT Jasa Marga Tbk (IDX: JSMR) 40 percent and PT Lintas Marga Jawa 20 percent.

Its holding, Road King Infrastructure Ltd., is not a new player in the toll road business. The company has managed 340 kilometers of toll roads in China since 1993. The toll road portfolio is spread across four provinces, Anhui, Shanxi, Hebei and Hunan. The five sections managed by the Road King are Changsha – Yiyang Expressway (69 kilometers), Ma’anshan – Chaohu Expressway (36 kilometers), Yuci Longbai Village – Chengzhao (72 kilometers), Baoding – Tianjin Expressway (105 kilometers), and Tangshan – Tianjin Expressway (58 kilometers).

While Waskita Karya injected funds of Rp1.19 trillion to WTR. The capital will be used for the operational activities of the unit. WTR will place the cash to its unit PT Citra Waspphutowa (CW) with a total amount of Rp61 billion. CW owned 25 percent stake in Depok – Antasari toll road concession in West Java joined with state-owned investment holding PT PP Tbk (IDX: PTPP) and publicly listed toll road operator PT Citra Marga Nusaphala Persada Tbk (IDX: CMNP). Both companies hold 12.5 percent and 62.5 percent, respectively.

US$1: Rp14,000

Written by Lexy Nantu, Email: lexy@theinsiderstories.com