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.