State-owned companies will sign deals this week to push ahead $13.6 billion in planned infrastructure projects as the country seeks to diversify funding sources, authorities and a brokerage house executive said on Tuesday. (Antara Photo/M Agung Rajasa)
Indonesian State-Owned Firms to Sign Deals on $13.6b of Infrastructure Projects
BY : GAYATRI SUROYO AND FRANSISKA NANGOY
OCTOBER 09, 2018
Nusa Dua. Indonesian state-owned companies will sign deals this week to push ahead $13.6 billion in planned infrastructure projects as the country seeks to diversify funding sources, authorities and a brokerage house executive said on Tuesday.
There will be over 20 deals signed by more than 12 state companies, including one by energy firm Pertamina and Taiwan's CPC Corporation for a joint petrochemical business worth $6.5 billion, State-Owned Enterprises Minister Rini Soemarno told reporters in Bali.
Indonesia is hosting an infrastructure forum to coincide with the annual meetings of the International Monetary Fund and the World Bank in Nusa Dua, Bali, this week.
Mandiri Sekuritas chief executive Silvano Rumantir said most of the agreements due to be signed on Thursday are for strategic partnerships.
The securities firm and its parent company, Bank Mandiri, have helped arrange some of the agreements.
Rini said partnerships, like some of those to be signed, can "reduce our leverage position so we can deleverage and get more equity-based financing."
State companies have taken the lion's share in President Joko "Jokowi" Widodo's ambitious infrastructure push. International rating agencies have warned that this has pushed those firms to borrow extensively, causing their balance sheets to deteriorate.
Inability to expand borrow is making state firms come up with new financing instruments, helping to deepen Indonesia's shallow capital market.
Toll road operator Jasa Marga pioneered asset securitization last year by offering a share in its future revenue. Construction firm Pembangunan Perumahan raised funds through the sale of the country's first perpetual bonds this year.
Last year, Jasa Marga also sold rupiah-denominated offshore bonds, dubbed "Komodo bonds."
On Thursday, Mandiri will launch an infrastructure investment fund, a mutual fund instrument combining debt and equity assets that are offered to the public and aimed at helping finance infrastructure projects, Silvano said.
He said the proceeds of the fund, the rupiah equivalent of around $100 million, will be used by Jasa Marga.
"We are hoping capital market investors like Black Rock, Allianz and AIA would consider taking part," Silvano said.
Other agreements expected to be signed on Thursday involve mining, airport expansion, tourism and transportation.