Jakarta:The Asian Development Bank (ADB) has approved a $100 million financial intermediary loan to the Government of Indonesia to help catalyze private sector investments in infrastructure projects.
“The loan will help mobilize private sector investments to develop and finance much-needed infrastructure projects,” said ADB Country Director for Indonesia Mr. Winfried F. Wicklein. “ADB’s assistance will help close the infrastructure financing gap in Indonesia and raise the quality and standards of infrastructure projects.”
Quality infrastructure is critical to more inclusive growth in Indonesia, requiring infrastructure services to support a modern, competitive middle-income economy and provide basic services to its people. Indonesia’s infrastructure financing gap remains significant, with annual investment needs estimated to be more than $70 billion. Accelerating infrastructure development is a development priority of the Indonesian government.
Under the Leveraging Private Infrastructure Investment Project, the government will onlend the ADB loan proceeds to PT Indonesia Infrastructure Finance (IIF) through PT Sarana Multi Infrastruktur (SMI), a state-owned enterprise. SMI and IIF are important institutions in Indonesia’s infrastructure financing landscape that provide project finance, advisory services, guarantees, and project development support to infrastructure projects.
With ADB’s assistance, IIF will lend at commercial terms to infrastructure projects adhering to IIF’s and ADB’s standards and guidelines. The loan will support projects in health, renewable energy, telecommunication and transportation sectors. “ADB’s assistance is anticipated to leverage a multiple of the loan amount in the form of additional private sector investments in important infrastructure projects and in doing so help deliver value for money to the government,” said ADB Country Economist Mr. Yurendra Basnett.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members—49 from the region.