'Jabar Fund' signed to raise funds for infrastructure
Zakki P. Hakim, The Jakarta Post, Bandung
The opening of the West Java Infrastructure Summit saw the provincial administration sign a memorandum of understanding with a consortium of securities firms led by PT Dhanawibawa Arthacemerlang to develop infrastructure in the province.
In Thursday's MOU dubbed the "Jabar Fund", the consortium agreed to support fund raising for the development of roads, ports, water treatment and power plants and telecommunications facilities in the province.
"This is not a public offering. It is a collective investment contract with fund managers and Bank BNI as the custodian bank. It will be limited and closed in nature," Dhanawibawa president director Felia Ayudita told The Jakarta Post on the sidelines of the summit, where the provincial government is inviting investors to participate in 57 infrastructure projects worth Rp 35 trillion (US$3.52 billion).
The fund would be limited to 49 investors on first-come-first- serve basis, she said.
A "closed" contract meant investors had to honor their commitments until the investment matured; a time period of between five and 15 years depending on the portfolio, she said.
As they were mostly start-up projects, the fund would be in the form of equity shares, where the return would be in the form of capital gains and dividends, Felia said.
Dhanawibawa and other consortium members -- PT Treasure Fund Investama, PT Asia Financial Networking, Merrill Lynch Indonesia, PT Trimegah Securities and PT Andalan Artha Advisindo -- are expected to support fund raising to help the administration convince investors to directly invest in the infrastructure projects.
The perfect candidates to participate in the fund would be sophisticated investors and international financing institutions such as the Asian Development Bank (ADB), the Islamic Development Bank (IDB) or infrastructure fund institutions from other countries, such as from Malaysia, Felia said.
International practice saw fund managers commonly holding up to 20 percent of equity in one project or company, she said.
Dhanawibawa expected to start offering the fund in November after its fund manager finished forming a portfolio of feasible projects after assessing them all thoroughly, she said.
West Java Governor Danny Setiawan said the development of infrastructure projects needed up to Rp 50 trillion a year from investors, which would help the province boost its economic growth from the current 5 percent to 8 percent over the next five years.
He said there were up to 200 infrastructure projects in the province, but the administration had selected and prioritized only 57.
The event was organized in cooperation with the province's Chamber of Commerce and Industry (Kadinda), consulting firm PA Asia Ltd. and supported by the ADB. Coordinating Minister for the Economy Aburizal Bakrie, Minister of Finance Jusuf Anwar and State Minister for National Development Planning Sri Mulyani Indrawati also attended.
Local industry was represented by Indonesian Chamber of Commerce and Industry (Kadin) chairman Mohamad S. Hidayat, Kadin's China Committee (KIKT) chairman Kiki Barki and business figures such as Arifin Panigoro and Tomy Winata.