Govt provides incentives for infrastructure investments<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
To invite more private participation into public infrastructure
\ndevelopment, the government has issued a new regulation providing
\nmore incentives and governmental support for the risk management
\nof projects.<\/p>\n
The new rules, Presidential Regulation No. 67\/2005 on public-
\nprivate partnerships for infrastructure provision, also provide
\nother incentives such as tax exemptions and public service
\nobligation (PSO) subsidies for tariff-bearing projects.<\/p>\n
\"This regulation was issued as part of the government's
\ncommitment to speed up infrastructure development and create an
\ninvestment climate that encourages the private sector to
\nparticipate in this development,\" State Minister for National
\nDevelopment Planning Sri Mulyani Indrawati said on Thursday. The
\nregulation, which was issued on Nov. 9, will replace Presidential
\nDecree No. 7\/1998.<\/p>\n
The new rules, Mulyani said, were designed to protect the best
\ninterests of consumers, the public and private investors. All
\ninfrastructure projects would now be implemented through
\npartnership agreements or operating licenses after passing a
\nproper due diligence process, she said.<\/p>\n
\"The procurement process of the projects must also adhere to
\nthe principles of transparency, competitiveness, efficiency and
\nmaintaining a level-playing field,\" she said.<\/p>\n
To protect the interests of private investors and encourage
\ntheir participation, Mulyani said the government would provide
\nsupport in covering the risks of the projects, with the finance
\nministry having already established a Risk Management Committee
\nfor Infrastructure Provision for that purpose.<\/p>\n
\"This committee will facilitate managing the risks of the
\nprojects through parties considered the most capable of doing so.
\nBut any of the incentives would still be considered with regard
\nto the state budget,\" she said.<\/p>\n
Infrastructure projects covered by the new regulation include
\nthose proposed by ministries and regional administrations in the
\ntransportation sector, such as the construction and operation of
\nseaports, airports, railways and toll roads.<\/p>\n
The private sector can also participate in the development of
\nirrigation facilities, as well as public drinking water and
\nsewage treatment facilities.<\/p>\n
Power generation projects and their transmission grids are
\nalso open, as well as refineries, storage and the distribution of
\noil and gas products.<\/p>\n
Private investors can propose their own projects, which if
\napproved would still be offered through an open tender, with
\ncompensation for the project initiator in the form of a value-
\nadded purchase price and the purchasing of intellectual property
\nrights of the projects by the government.<\/p>\n
Minister of Public Works Djoko Kirmanto said the governmental
\nrisk guarantee in the new regulation would hopefully help
\ninvestors overcome their difficulties in raising the needed
\ncapital from banks, many of which consider multi-year
\ninfrastructure projects here too risky.<\/p>\n
Meanwhile, Minister of Energy and Mineral Resources Purnomo
\nYusgiantoro hoped the regulation could help solve the power
\ncrunch in several remote areas in the country because private
\ninvestors could now propose their own projects.<\/p>\n
On PSO subsidies, Minister of Transportation Hatta Radjasa
\nsaid the government would provide a framework on initial tariffs
\nand their adjustments to ensure a competitive return on
\ninvestments for the private sector, he said.<\/p>",
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"sponsor": "Okusi Associates",
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