The role of the capital market as an alternative infrastructure financing source significantly increases to expedite the infrastructure development in Indonesia. As written in the Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI), it is expected that the infrastructure development in Indonesia would need Rp1,786 trillion during the period of 2011-2014. The diversification of financing sources will be required as the Government’s ability in providing financing for infrastructure development is limited. This will be the future role of the capital market to contribute as a source of infrastructure financing in Indonesia.
In line with its vision asa catalyst in the acceleration of national infrastructure development, PT Sarana Multi Infrastruktur (Persero) (“PT SMI”) in cooperation with the Indonesia Stock Exchange (IDX) formed SMinfra18 Index, a stock index comprising from 18 listed infrastructure companies and its supports. The objectives of Sminfra18 index are to be a reference for investors who want to invest in infrastructure projects and to encourage the infrastructure companies to become public companies. By having the capital market, we hope that the financing capacity of the infrastructure companies will increase.
SMinfra18 Index comprises 18 stocks from which their constituents were selected both from the main infrastructure sectors and the supporting sectors in the infrastructure development.
Supporting the hypothesis that ‘infrastructure development’ will play an important role in the development of the Indonesian economy and that the government will focus on infrastructure development, the infrastructure is becoming an attractive sector to the investors. Capital market investors (investment managers, pension funds, insurers, and individual investors) require more specific referencesoninfrastructure stocks as theirinvestment benchmark.
The purpose of SMinfra18 Index
- To be a reference for the investors to invest in infrastructure stocks with high liquidity and large capitalization.
- To be the underlying for the investment product development such as Exchange-Traded Fund (ETF), mutual funds, and other derivative products.
- To increase investors’ confidence which will then indirectly improve the listed infrastructure companies’ performance as well as its capacity to access wider and cheaper funding.
- To encourage infrastructure companies to become public companies.
SMinfra18 IndexSelection Criteria
- The selection of SMinfra18 Index is currently based on the criteria of the infrastructure sector as follows:
- The infrastructure sectorseligible for PT SMI will refer to the Ministry of Finance Regulation No.100 /PMK.010/2009 regarding Infrastructure Financing Company. They are:
- transportation infrastructure, which comprises sea, river, or lake harbour, airports, railway, and railway stations
- road infrastructure, which comprises toll road and toll bridge,
- water infrastructure, which comprises undistilled water canal
- drinking water infrastructure, which comprises undistilled water facility, transmission system, distribution sytem, drinking water treatment facility
- Waste water infrastructure, which comprises waste water treatment facility, collector system and main system, garbage facilities including transporter and land fill
- Telecommunication infrastructure, which comprises telecommunication system
- Electricity infrastructure, which comprises transmission or distribution of electricity
- oil and gas infrastructure, which comprises refinery, storage, transportation, transmission, or distribution of oil and gas and/or
- Other sectors supporting the infrastructure development such as: construction, cement, steel, heavy equipment, and others.
- Fundamental factors as the basic criteria in the selection of Sminfra18 Index constituents and their contribution in the infrastructure development in Indonesia.
- Transaction activities such as regular transaction value, market capitalization, transaction frequency, number of transaction days and stock free float ratio.
- The selection of SMinfra18 index components is based on the companies’ good corporate governance (GCG).
SMinfra18 Index Calculation Method
Sminfra18 Index Calculation Based Day
To test and to obtain the long historical data, Sminfra18 Index was calculated from the based calculation day in December 2004 with index score of 100.
SMinfra18 Index Review Period
IDX and PT SMI will review the SMinfra18 Index components periodically every 6 months, in April and October. The SMinfra18 Index constituents will be updated every 1st of May and 1st of November.
Sminfra18 Index will be periodically reviewed by Independent Committee. The members of the Independent Committee are as follow:
Bacelius Ruru SH, LLM
As a Secretary of the Ministry of State Owned Enterprise (2001-2004) and the Head of the Jakarta Initiative Task Force-JITF (2001-2003). Before, as Ministry of State Owned Enterprise Deputy and Deputy Assistant of Ministry of State Owned Enterprise (1998-2001), Director General Development of State Owned Enterprise, the Department of Finance (1995-1998) and the Head of BAPEPAM (1993-1995).
As the Head of The Indonesian Capital Market Arbitration Board (BAPMI) (2007-current). The Chairman of the Board of the Association of Indonesian Listed Companies (2008 – current). Awarded as Stock Exchange Man of the Year in 2008. Obtained his Master in Law from Havard Law School, USA and Bachelor of Law from the University of Indonesia.
Prof. Firmanzah Ph.D
Currently as the President’s Special Staff in Economy and Development. As a Lecturer and Professor in the Faculty of Economics of University of Indonesia, active lecturer and advisor in the doctoral program in strategic management faculty. Active contributor on the economy, development, and infrastructure sections in the media. As the Dean of Faculty of Economics of the University of Indonesia 2009-2013.
Obtained his Bachelor of Economics from the University of Indonesia and his Doctor from the University of Pau et Pays de l’ Adour, France.
Currently as the Secretary of the Economic National Committee (KEN), the Chairwoman of Indonesia Society of Independent Commissioners (ISICOM), a member of Perbanas Head Office, a member of Board of Expert in the Sharia Economic Society (MES), a committee member of Indonesia Economy Scholar Association (ISEI), Board of Advisor of the Association of Indonesia Listed Companies and a member of the Board of Expert of the Indonesia Provincial Government Association (APPSI). Was the Director of Institute for Development of Economics and Finance (INDEF) (2004-2005).
Obtained her Bachelor of Economics from Atmajaya University, Jakarta (1985), Master in Business Administration from the University of Indonesia, Jakarta (1995) and her Doctor in Business Management from Institut Pertanian Bogor.
Sminfra18 Index Constituents
Sminfra18 Index Performance