The government, in concert with the World Bank and Asian Development Bank (ADB), plans to inject up to Rp4 trillion ($340 million) into a special body that will provide loans to investors interested in developing long-term infrastructure projects, a senior government official said on Tuesday, The Jakarta Globe reported.
"Looking at the current conditions, we expect the project to move forward and provide funding should developers have difficulty securing financing while banks have only short-term funds," Wahyu Utomo, the coordinating minister for the economy's deputy assistant for infrastructure and underdeveloped areas told reporters at a seminar in Jakarta.
Utomo said the body to be called simply "Infrastructure Funds” would be set up in February and should be operational sometime in the first half of this year
The government expects to make a contribution of Rp1 trillion to the body, with the rest coming from ADB and World Bank. "Indonesian banks' balance sheets mostly consist of short-term deposits," said P.S. Srivinas, lead financial economist at the World Bank in Jakarta. "Therefore, they cannot finance long-term loans like those for an infrastructure project."
Dedy S. Priatna, the state minister for national development planning's deputy for infrastructure, said Indonesia would need Rp1.429 trillion to finance the infrastructure projects the government has planned for 2010-2014. However, he indicated that on its own the government likely could only afford 30% of that total. The rest, it is hoped, could be secured through public-private partnerships.