SMI to revive development of stalled projects

Benget Besalicto Tnb., The Jakarta Post, Jakarta  , |  Sat, 02/28/2009 2:22 PM  

The government has formally established a financial firm to manage the infrastructure fund, PT Sarana Multi Infrastruktur (SMI), which will include a focus on financing several stalled infrastructure projects.    

The deputy to the coordinating minister of economic affairs in charge of infrastructure, Bambang Susanto, said Friday the firm will work on several stalled projects include the Rp 80 trillion (US$9 billion) Trans-Java Toll Road, and the Rp 4.6 trillion Jakarta-SoekarnoHatta railway project. 

The new institution starts operating in April with an initial capital of Rp 1 trillion allocated from the 2009 state budget, and will get more financial support from the Asian Development Bank (ADB) and World Bank (WB), up to Rp 2 trillion. 

"For additional funds we plan to issue bonds. I'm optimistic that it will manage to get a total fund of up to Rp 20 trillion in the next two to three years. With the support of reliable institutions such as ADB and WB, and the prospects for our infrastructure projects, it won't be difficult to realize the target," he told The Jakarta Post. 

Several big infrastructure projects are stalled mainly due to financing and land clearing problems. These include electric power plants, the proposed double-track railway linking Jakarta and Surabaya, and the monorail project in Jakarta. 

Bambang said that the government has also named members of the SMI board of directors and board of commissioners, but refused to elaborate further; saying Minister of Finance Sri Mulyani Indrawati will announce (the details) soon. 

He added that SMI will also be a shareholder in some infrastructure projects. 

"The SMI will act as a holding company as it will later have several subsidiaries. The Indonesia Infrastructure Fund Facility (IIFF) will be one of its subsidiaries," he said 

However, he noted that the SMI would not fully finance the infrastructure projects. It will establish a consortium for every project. In some cases the loans will stand as bridging loans, mainly aimed at securing long term finance.