ADB ready to give financial help to Indonesian firms<\/p>\n
JAKARTA (JP): The Asian Development Bank (ADB) is ready to
\nextend financial aid without governmental guarantees to private
\nfirms interested in infrastructure projects in Indonesia under
\nbuild, operate and transfer (BOT) arrangements, an executive said
\nyesterday.<\/p>\n
\"The Asian Development Bank does provide direct assistance
\nwithout government guarantee for build-operate-and-transfer\/
\nbuild-operate-and-own (BOT\/BOO) projects that meet its criteria,\"
\nADB's representative in Indonesia, T.C. Patterson, told a three-
\nday seminar on infrastructure held by the Institute of
\nInternational Research here.<\/p>\n
He said that, under the criteria, the projects must be in line
\nwith ADB's country strategy, which is updated every two to three
\nyears in consultation with the government.<\/p>\n
\"It must complement ADB's role and activities in the given
\nsector; it must meet the norms of feasibility and credit
\nworthiness; and the award of the BOT\/BOO contract should be based
\non a competitive and transparent process,\" he said.<\/p>\n
Mutual fund<\/p>\n
He said that in addition to direct lending and equity
\ninvestment for its own account, ADB can assist in attracting
\nprivate equity and debt capital to individual projects, and that
\nthe first modality for this is the adaption of the mutual fund
\nwindow.<\/p>\n
\"To attract more funds for general investments, ADB has been
\ninstrumental in establishing a mutual fund. Now we have targeted
\ninfrastructure as a specific sector by participating in the
\ncreation of the Asian Infrastructure Fund. Co-investors in this
\nfund include Peregrine Group of Hong Kong, International Finance
\nCorporation (IFC), Soros Capital, Frank Russel and Associate,
\npension funds of major U.S. corporations and major institutional
\ninvestors from the Middle East,\" he said.<\/p>\n
\"The US$1 billion fund, which would invest in infrastructure
\nprojects throughout the region, is expected to be fully
\nsubscribed before the end of this year,\" Patterson said.<\/p>\n
\"ADB may in the near future also explore the possibility of
\nassisting in the establishment of an infrastructure fund focused
\nexclusively on Indonesia,\" he added.<\/p>\n
Patterson said that ADB has been instrumental in the
\nestablishment of Asian Securitization and Infrastructure
\nAssurance Ltd., the first bond insurance institution in the
\nregion.<\/p>\n
He said that the institution will provide bond investors with
\na guarantee on the payment of debt principal and interest. By
\nbeing insured, lower grade bonds will be brought up to an
\ninvestment grade which will offer two substantial benefits to
\nissuers; namely, a reduction in the overall cost of borrowing and
\naccess to a much larger pool of institutional investors, he
\nadded.<\/p>\n
In addition to multilateral institutions, Patterson said that
\nsources of funding for infrastructure projects can be grouped
\ninto five categories: promoters, institutional investors,
\ncommercial banks, financial markets and bilateral credit
\nagencies.<\/p>\n
He said that, potentially, the most significant source of
\nfunding for private infrastructure is domestic savings, both
\npublic and private.<\/p>\n
The promotion and channeling of savings into productive
\ninvestments depend, to a large extent, on the state of banking,
\nequity and debt markets, he said. (icn)<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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