In performing its tasks as a state owned infrastructure financing company, PT SMI refers to government regulations, listens to people’s concerns and establishes strategic partnerships with relevant stakeholders.
State owned infrastructure financing company, PT Sarana Multi Infrastruktur (Persero) (PT SMI) this year once again joined the Indonesia International Infrastructure Conference and Exhibition (IIICE 2015), which ran from Nov. 4 to 6 at the Jakarta Convention Center, to make itself more accessible to the people. Throughout the course of three days, PT SMI took center stage as it actively embarked on a series of programs related to its core business, financing infrastructure development projects.
“This is probably the biggest infrastructure event in the country and for a state-owned infrastructure financing company, there’s no better place to be. But with that aside, our targets are highly tangible,” company president director Emma Sri Martini said during the lunch break on the second day of the exhibition. With IIICE serving as a melting pot for project developers and international financers, PT SMI’s decision to run a number of selfhosted panel discussions was timely.
Learning from experience
This year’s event was targeted to further open up its doors to regional government infrastructure project financing and the first discussion held on the second day of the exhibition was geared toward accommodating that. Entitled “Alternative Financing to Accelerate District Infrastructure Development”, the panel saw PT SMI Project Development and Advisory Director Darwin Trisna Djajawinata sitting next to the district loan division head from the Home Affairs Ministry, Bejo Mulyono, and South Halmahera district secretary Helmi Surya Botutihe.
In 2014, South Halmahera district government acquired Rp 77.8 billion worth of loans from the state investment unit, the Government Investment Center (PIP), prior to its asset transfer to PT SMI, to finance the construction of three district roads that connect strategic locations. “The project was completed this September and the impact of the newly gained connectivity was immediate, accelerating our district’s economic development,” said Helmi. He shared his experience in preparing all the necessary documents to acquire the loan, including the feasibility study related to the significance of the road construction, especially in relation to the district’s ability to pay back the loan, and most importantly prepared a three-year period district financial report submitted by The Supreme Audit Agency (BPK) with each receiving unqualified opinion (WTP) status.
In relation to PT SMI current status as a non-banking finance company, regional government infrastructure project owners are obliged by law to receive recommendation from regional loan division of the Home Affairs Ministry and this is where Bejo Mulyono came in. “We’re not here to cause difficulties, or to delay, but all is stated within the related government regulations and ministerial regulations”, he noted. Bejo said that the ministry’s role is mostly to act as an reviewer of a district’s financial structure, including inspecting possible irregularities in capital spending, namely those that do not correlate to the district’s economic development, as well as evaluating the priority of the project for the district’s accelerated development. He also stated that the ministry is currently tasked with the revision of Government Regulation No. 30/2011 concerning district loans. The revision, he said, will revolve around adding protection for lenders and borrowers, including clarifying the clause about who can approve a loan. The revision is expected to complete in mid-2016.
PT SMI stated it had financed infrastructure projects for 21 district governments to date, spending between 4 months to 12 months on each prior to the acceptance of the proposal. The panel was attended by invited representatives from various district governments, namely North Sumatra, Lampung, Tulang Bawang and others, including independent project owners and developers. The discussion drew multiple responses, ranging from an appreciation of the lower interest rates, the long-term credit of up to 25 years, tips to successfully pay back loans and suggestions to simplify and clarify the loan approval process.
“We listened to your concerns and we have prepared a number of strategies to smooth out the process in relation to this district infrastructure financing program, namely clustering, which makes classifications of district governments in terms of their financial ability, and assistance,” said Darwin. The assistance program itself is a plan to assist and advise district governments in stages, initially starting with explaining the requirements, helping prioritize projects that have the most tendency to acquire financial aid and confirming the right modality in financing the projects.
PT SMI has stated it will proactively publicize the program to district governments and has received invitations from all corners of the nation that it is more than happy to accept.
Obviously, the renewed transition from PIP to PT SMI is worth looking forward to, especially because they claim that the asset transfer has given the latter significantly more capital to finance infrastructure development, including smaller infrastructure projects. This is what the second panel of the day tried to tap into. Themed “Government Program on Sustainable Financing Renewable Energy Program in Indonesia”, the discussion addressed the challenges and future of renewable energy projects in Indonesia. It featured speakers such as USAID Indonesia Clean Energy Development (ICED) sustainable finance specialist Raymond Bona, UNDP Indonesia environment unit program manager Verania Andria, renewable energy accelerated development task force chairperson from Energy and Mineral Resources Ministry William Sabandar and Indonesia Financial Services Authority (OJK) deputy director Edi Setijawan.
The discussion revealed a high interest in developing such projects, but also that multidimensional challenges continue to suppress penetration. The challenges range from poor technical understanding to conduct proper feasibility studies, a scarcity of experts and consultants resulting from a weak market segment, district regulatory uncertainty and weak government support. “But the government is walking on the right track to support the development of renewable energy,” said William, adding that the government is currently preparing an energy sustainability fund to support renewable energy development, especially if it’s serious about realizing the 25 percent target of renewable energy by 2025. “Not to forget is the small-scale renewable energy projects in district areas, ranging from micro hydro, solar and wind energy and so on, because without them it’s impossible to dream about proper renewable energy penetration in Indonesia,” he said.
PT SMI itself claimed to have allocated around Rp 1 trillion to renewable energy projects (hydro and mini hydro) as of mid 2015, which worth 225 MW in eight locations since 2009. “To be honest, we have only dealt with the financing of hydro and mini hydro project financing so far, but we plan to finance other projects in the future, ranging from biogas, solar panels and probably wind energy,” said Darwin. Sharing the view of both Verania and Raymond though, Darwin admitted that financing renewable energy projects is significantly more expensive than the typical energy projects.
PT SMI also launched a new responsive website design for the IIICE 2015 to make its online presence more accessible for mobile phone browsers. The latest data show that 35 percent of its visitors access the web from their mobile devices. “We have to innovate and provide easier access for the public to find information about us through any channel of communication,” said Emma.
On the third day of the event, PT SMI conducted a coaching session for students. The session introduced PT SMI and its activities and highlighted the opportunities for students to contribute to infrastructure development in the future.