State-owned infrastructure financing company PT Sarana Multi Infrastruktur (SMI) has signed a memorandum of understanding (MoU) for joint financing worth up to US$1 billion with the Islamic Development Bank (IDB).
The MoU is part of IDB’s Member Country Partnership Strategy (MCPS).
The agreement covers six areas of cooperation, including co-financing using debt structure and co-investing using equity structure, as well as technical assistance and capacity building activities, particularly for SMI’s sharia business unit, according to Finance Minister Sri Mulyani Indrawati.
“We will use the IDB financing to cover central government infrastructure projects,” Sri Mulyani said in the sidelines of the third IDB Member Countries Sovereign Investment Forum in Nusa Dua on Tuesday.
Earlier, on March 13, SMI secured a total of $200 million from a global lender, the World Bank, and a regional lender, the Asian Infrastructure Investment Bank (AIIB), each of which funneled $100 million to support regional infrastructure development.
Sri Mulyani said that the latest financing from the IDB and the previous one from the World Bank were to help enhance infrastructure development projects run by the central government and regional administrations.
IDB group president Bandar bin Mohammed bin Hamza Asaad Al Hajjar said that the IDB commitment for Indonesia under the MCPS would reach $5.2 billion from 2016 to 2020.
“Out of the $5.2 billion, $1.5 billion was already approved last year,” he said, adding that 32 percent of the funds were used in the education sector, while another 30 percent were funneled to infrastructure development.
As part of the 2016 to 2020 MCPS, the 57-member lender already disbursed $1.05 billion last year for National Slum Upgrading Project, power grid enhancement and education development.
The 2016 to 2020 commitment follows the first MCPS that Indonesia obtained from 2011 to 2015 totaling $5.5 billion.