Danareksa to raise Rp 3t for infrastructure

Danareksa to raise Rp 3t for infrastructure

Rendi A. Witular, The Jakarta Post/Jakarta

State-owned investment and securities firm PT Danareksa plans to
raise at least Rp 3 trillion (US$297.32 million) next year from
the government and public funds to help infrastructure investors
acquire land for their projects.

Danareksa president director Lin Che Wei told The Jakarta Post
recently the firms would launch later this year an investment
instrument called a "revolving land fund", into which the
government and the public could invest money with the expectation
of competitive proceeds.

"The revolving land fund will be used to acquire land for
infrastructure projects. The government will invest some Rp 600
billion this year into the fund with the remaining Rp 2.4
trillion to be raised from public investors," he said.

He added that the pooled fund would be managed more or less in
the form of a trust fund, rather than a mutual fund.

Land acquisition is among formidable problems discouraging
investors from developing public and business infrastructure amid
the country's dire need for fresh investment in the sector to
help drive higher economic growth.

Many of the country's infrastructure projects have run aground
due to uncertainty in land acquisition as a result of an intense
opposition from landowners and a lack of capital to purchase the
land.

Lin said with the revolving land fund, infrastructure
investors could borrow money to purchase land for their projects,
which they could pay back in monthly or annual installments at a
certain level of interest rate.

The country will need some $140 million over the next five
years to develop sufficient infrastructure for the public and
businesses, however the government can only finance up to 20
percent of funds and the remainder must come from the private
sector.

In January, the government, assisted by several business lobby
groups, held the country's first infrastructure summit aimed at
attracting investors to develop 91 projects worth some $21
billion for this year alone.

However, due to a failure in improving the country's
investment climate and the absence of several incentives as
promised during the summit, the government had only managed to
drum up three winning bidders for the projects as of October.

The government will hold the second infrastructure summit here
in February.