Sector-specific PPP landscape

  • Roads

    Road, Indonesia
    • Road Network Length
      476,337 km
    • Road Infrastructure Quality
      4.2
    • Number of PPPs Reaching FC
      26
    • Value of PPPs Reaching FC
      $ 7,404 M
    • Number of PPPs with Foreign Sponsors
      3
    • Number of PPPs with Govt. Support
      2

    FC = financial closure, Govt. = government, km = kilometers, M = million.

    Note: Quality of road infrastructure: 1 (lowest) – 7 (highest).

    Source: Trading Economics. Indonesia – Roads, Total Network (km). https://tradingeconomics.com/indonesia/roads-total-network-kmwb-data.html; TheGlobalEconomy.com. Compare Countries with Annual Data from Official Sources. https://www.theglobaleconomy.com/texts_new.php?page=aboutus.

    • Roads

      Contracting Agencies

      The Indonesia Toll Road Authority (BPJT) is the authorized government agency responsible for the operation of toll roads, which entails regulating, operating, and supervising toll road business entities. The BPJT is under the Ministry of Public Works and Housing (MPWH).

      There are two other institutions associated with toll roads in Indonesia: Bina Marga and the Toll Road Business Enterprise (BUJT). Bina Marga is directly supervised by the MPWH, and is involved in initiating, preparing, selecting, and evaluating all toll road development plans. The BUJT is responsible for planning, building, operating, and maintaining toll road projects. The operation of the toll roads can be carried out by either a state-owned enterprise (SOE) or a private entity.

    • Roads

      Sector Laws and Regulations

      The existence of the BPJT is mandated by Law No. 38 of 2004 on Roads, regulated under Government Regulation No. 15 of 2005 on Toll Roads and stipulated by Minister of Public Works Regulation No. 295/PRT/M/2005 on the Indonesia Toll Road Authority.

      The key sector-specific regulations are:

      • Law No. 38 of 2004 on Roads.
      • Government Regulation No. 15 of 2005 on Toll Roads, as amended by Government Regulation No. 30 of 2017.
      • Ministry of Public Works Regulation No. 01/PRT/M/2017 on Guidelines for Procurement of Toll Road Concession.
      • Ministry of Public Works Regulation No.16/PRT/M/2014 on Minimum Service Standard Requirements for Toll Roads.
      • Presidential Regulation No. 38 of 2015 on Cooperation Between Government and Business Entities in Procurement of Infrastructure, which introduced the possibility of a performance-based payment mechanism for the toll road PPP sector.1

       Foreign Investment Restrictions

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      Parameter201720182019
      Maximum allowed foreign ownership of equity in greenfield projects100%100%100%

      Source: Government of Indonesia, Presidential Regulation No. 44 of 2016 on Lists of Business Fields That Are Closed to and Business Fields That Are Open with Conditions to Investment.

      Standard Contracts

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      Type of ContractAvailability
      PPP/concession agreement
      Performance-based operation and maintenance contract
      Engineering, procurement, and construction contract
      • Yes
      • No
    • Roads

      Sector Master Plan

      There are no details on the sector master plans for roads available in English. In November 2019, Leonard V.H. Tampubolon, deputy minister for development planning, in a presentation on Indonesia’s long-term development plan for 2020–2024 (National Medium-Term Development Plan, RPJMN) mentioned the following projects in the PPP project pipeline. The plan seeks to lay 2,500 kilometers (km) of new toll roads and 3,000 km of new national roads. Some of the road projects are:

      • Balikpapan–Samarinda Toll Road,
      • Balikpapan–Penajam Paser Utara Toll Road,
      • Samarinda–Bontang Toll Road,
      • Trans-Sumatera Toll Road Development, and
      • Trans-Papua Toll Road Development1

      Based on the PPP Book 2019, the PPP projects in the pipeline for the roads sector are:

      Pipeline of PPP Road Projects, 2019

      Project Name Status Investment Feasibility Study Appointment of Concessionaire Construction Start
      ($ million) (Rp trillion)
      Yogyakarta–Bawen Toll Road Under preparation 1,019 14.2 2019 2020 2020
      Riau Non-Toll Road Preservation Under preparation 68 0.9 2019 2020 2021
      UPPKB in Java and Sumatra Under preparation 24 0.3 2018 2020 2021
      Probolinggo–Banyuwangi Toll Road Already tendered 1,719 23.9 UA 2017 2020
      Semarang–Demak Toll Road Already tendered 1,090 15.1 2018 2020 2020
      South Sumatera Non-Toll Road Preservation Already tendered 194 2.7 2018 2019 2020

      Rp = Indonesian rupiah (national currency), UA = unavailable, UPPKB = Motor Vehicle Weighing Implementation Unit.

      Note: Rp1 = $0.000072.

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta, Indonesia. https://library.pppknowledgelab.org/documents/5826/download.

      The PPP Book also provides information on prospective PPP infrastructure projects in the Indonesian roads sector.

      Prospective PPP Road Infrastructure Projects, 2019

      Project Name Government Contracting Agency
      Road and Bridge in Central and Western Sumatra Road Corridor Ministry of Public Works and Housing
      Bridges in Trans-Java Main Corridor Ministry of Public Works and Housing
      Trans Papua (Jayapura–Wamena) Ministry of Public Works and Housing
      Tanjung Jabung Bridge Regent of Tanjung Jabung
      Semanan–Balaraja Toll Road (Unsolicited) Ministry of Public Works and Housing
      Kamal–Teluk Naga–Rajeg Toll Road (Unsolicited) Ministry of Public Works and Housing
      Akses Patimban Toll Road (Unsolicited) Ministry of Public Works and Housing
      Gedebage–Tasikmalaya–Cilacap Toll Road (Unsolicited) Ministry of Public Works and Housing
      Solo–Yogyakart–NYIA Kulon Toll Road Ministry of Public Works and Housing
      Balikpapan–Penajam Passer Utara Bridge (unsolicited) Ministry of Public Works and Housing
      TOD Jatijajar Ministry of Transportation
      TOD Baranangsiang Ministry of Transportation
      TOD Pondok Cabe Ministry of Transportation
      Air Haji Motor Vehicle Weighing Implementation Ministry of Transportation
      UPPKB in Pesisir Selatan, West Sumatra Ministry of Transportation
      Sumatra Ministry of Transportation

      NYIA = New Yogyakarta International Airport, TOD = transit-oriented development, UPPKB = Motor Vehicle Weighing Implementation Unit.

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta, Indonesia. https://library.pppknowledgelab.org/documents/5826/download.

      Projects under Preparation or Procurement

      Roads Public–Private Partnerships under Preparation and Procurement

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      Note: There are no available data for projects under procurement in 2017 and 2018.

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). Public–Private Partnership: Infrastructure Projects Plan in Indonesia. Jakarta, Indonesia (3 years: 2017–2019).

      https://www.bappenas.go.id/files/9314/8767/3599/PPP_BOOK_2017.pdf; https://www.bappenas.go.id/files/PPP%20Book/PPP%20Book%202018%20FINAL.pdf; https://library.pppknowledgelab.org/documents/5826/download.

    • Roads

      Features of Past PPP Projects

      Procurement of PPP Projects

      Roads Public-Private Partnerships procured through various modes

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      Note: Only active projects are considered in the above graph.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      PPP Projects Reaching Financial Close

      Roads Public-Private Partnerships reaching Financial Close

      The South Sumatra Non-Toll Road Preservation is the first non-toll (availability-based payment) PPP project in the roads sector. The project had not achieved financial closure in 2019.

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      Note: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      PPP Projects with Foreign Sponsor Participation

      Roads Public-Private Partnerships with Foreign Sponsor Participation

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      Note: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia.https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Government Support to PPP Projects

      Government Support for Roads Public-Private Partnerships

      The Cisumdawu Toll Road received capital subsidy from the government. The Cikampek–Palimanan Toll Road received a revenue guarantee from the government.1

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      Note: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Payment Mechanism for PPP Projects

      Payment Mechanisms for Roads Public-Private Partnerships

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      Notes: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia.https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Typical Risk Allocation for PPP Projects

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      Risk TypePrivatePublicSharedComment
      Traffic
      Collection risk
      Competition risk
      Government payment riskThe South Sumatera Non-Toll Road Preservation is the first non-toll (availability-based payment) PPP project in the road sector. It was awarded in 2019.
      Environmental and social risk
      Land acquisition risk
      Permits
      Geotechnical risk
      Brownfield risk: inventories studies, property boundaries, project scope
      Political risk
      Force majeure
      Foreign exchange risk
      Construction risk
      • Yes

      Financing Details

      Parameter 1990–2017 1990–2018 1990–2019
      PPP projects with foreign lending participation 1 2 2
      PPP projects that received export credit agency/international financing institution support 1 2 2
      Typical debt:equity ratio 70:30 70:30 70:30
      Time for financial closure 6 months 6 months 6 months
      Typical concession period 15–45 years 15–45 years 15–45 years
      Typical Financial Internal Rate of Return 10%–16%   10%–16%   10%–16%  

      Only active projects are considered in the above graph.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia.https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

    • Roads

      Tariffs

      Toll road tariffs are controlled by the Minister of Public Works and Public Housing, with the BPJT having the authority to recommend the initial fare and subsequent tariff adjustments to the minister. Regulations stipulate that the tariffs will be reviewed every 2 years. The tariffs, which vary according to the type of vehicle, are published on the BPJT website.1  Examples of tariffs for the various vehicle types are shown for three toll roads.

      Toll Road Tariffs for Various Types of Vehicles (Rp)

      Road Group I Group II Group III Group IV Group V Group VI
      Jakarta Outer Ring Road 15,000 15,000 22,500 30,000 30,000 UA
      Jakarta–Bogor–Ciawi 7,000 11,500 11,500 16,000 16,000 UA
      Jakarta–Tangerang 5,500 6,500 9,000 11,000 13,000 UA

      Rp = Indonesian rupiah (national currency), UA = Unavailable.

      Note: Group I consists of small cars, pickup trucks, and passenger buses; Group II includes trucks with two axles; Group III includes trucks with three axles; Group IV includes trucks with four axles; Group V includes trucks with five axles and truck trailers; and Group 6 includes motorcycles.

      Source: Indonesian Toll Road Authority (BPJT). http://bpjt.pu.go.id/

    • Roads

      Challenges

      • Land acquisition delays due to the decentralization of the process and to the objections of local residents have led to the time and cost overruns of several projects.
      • Another issue is the delay in reimbursements of land acquisition fees due to the lack of clarity during the processing of documents by the commitment-making officer, leading to higher interest expenses for the private sector.
      • The absence of a standard risk-sharing matrix and of concession agreements has led to several projects facing overruns and revenue shortfalls.
      • Lower demand, due to the delayed development of other supporting infrastructure (road connectivity), has lessened the private sector appetite for infrastructure investment.
      • Government supervision during the operation and maintenance (O&M) stage of projects was lower in intensity.
  • Railways

    Jakarta commuter train
    • Railway Network Length
      4,684 km
    • Number of Passengers
      25,654 M pkm
    • Freight Volume
      7,166 M ton-km
    • Railway Infrastructure Quality
      4.7
    • Number of PPPs Reaching FC
      1
    • Value of PPPs Reaching FC
      $ 6,000 M
    • Number of PPPs with Foreign Sponsors
      1
    • Number of PPPs with Govt. Support
      ----

    FC = financial closure, Govt = government, km = kilometers, M = million, pkm = passenger-kilometer, ton-km = ton-kilometer.

    Notes: Passenger-kilometer refers to the transport of one person over 1 km, with the data expressed in millions of pkm. Ton-kilometer refers to the transport of a ton of cargo over 1 km, with the data expressed in millions of ton-km. Quality of railway infrastructure: 1 (lowest) – 7 (highest).

    Sources: Economist Intelligence Unit. Measuring the Enabling Environment for Public–Private Partnerships in Infrastructure. https://infrascope.eiu.com/; TheGlobalEconomy.com. Railway Passengers – Country Rankings. https://www.theglobaleconomy.com/rankings/Railway_passengers/; TheGlobalEconomy.com.Railway Transport of Goods – Country Rankings. https://www.theglobaleconomy.com/rankings/Railway_transport_of_goods/; TheGlobalEconomy.com. Railroad Infrastructure Quality – Country Rankings. https:// www.theglobaleconomy.com/rankings/railroad_quality/.

    • Railways

      Contracting Agencies

      The Ministry of Transportation (MOT), or the head of a government agency, regional government, state-owned enterprise (SOE), or regional government-owned enterprise, can act as a concession authority.

    • Railways

      Sector Laws and Regulations

      The key sector-specific regulations are:

      • Law No. 23 of 2007 on Railways, which provides the overall legal framework for railways.
      • Government Regulation No. 56 of 2009 on Implementation of Railway Affairs, as amended by Government Regulation No. 6 of 2017 on Railway Service, both of which support the establishment of a railway business entity without a bidding process after the railway business entity receives proposal approvals from the minister, governor, or regent,1 or mayor in accordance with their respective authority.
      • Government Regulation No. 72 of 2009 on Rail Traffic and Transportation, as amended by Government Regulation No. 61 of 2016, both of which cover the tariffs that can be charged for freight and passengers.
      • MOT Regulation No. 11 of 2012 on the Procedure for Railway Alignment Determination.
      • MOT Regulation No. 24 of 2015 on the Standard of Railway Safety, which specifically regulates the safety standards to be implemented by the railway infrastructure management.
      • MOT Regulation No. 66 of 2013 on Railways Operation Infrastructure Permits, as amended by MOT Regulation No. 21 of 2019.
      • 1A regent is the elected official who heads a regency, which is a level of administration beneath a province but above a municipality.

      Foreign Investment Restrictions

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      Parameter201720182019
      Maximum allowed foreign ownership of equity in greenfield projects49%49%49%

      Standard Contracts

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      Type of ContractAvailability
      PPP/concession agreement
      Performance-based operation and maintenance contract
      Engineering, procurement, and construction contract
      • Yes
      • No
    • Railways

      Sector Master Plan

      There are no specific details on the sector master plan for railways available in English, but the National Medium-Term Development Plan, RPJMN 20202024 has listed the following PPP projects:

      • Construction of high-speed trains: Jakarta–Surabaya, at the cost of Rp107 trillion, and Jakarta–Bandung, at the cost of Rp82 trillion.
      • Construction of freight trains (Trans-Sulawesi Railway, Makassar–Parepare) at a cost of Rp18 trillion through PPP and financing from State Shari‘a Securities.1
      • The Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) has listed Soekarno Airport Express Train–Hatta (estimated project cost of Rp25 trillion) as a priority project.

      Based on the PPP Book 2019, the PPP projects in the pipeline for the railway sector are:

      • 1Surat Berharga Syariah Negara (SBSN), State Shari‘a Securities, are state securities issued in Indonesian rupiahs and foreign currencies. Based on Islamic principles, they require assets as underlying guarantees. SBSN project-based sukuk have prioritized the development of infrastructure and of public service facilities.

      Pipeline of PPP Railway Projects, 2019

      Project Name Status Investment Feasibility Study Appointment of Concessionaire Construction Start
      ($ million) (Rp trillion)
      Medan Municipal Transport Under preparation 891 12.4 2019 2020 2021
      Semarang LRT Under preparation 1,041 14.5 2019 2020 2020
      Makassar–Parepare Railway Already tendered 147 2.0 2018 2019 2019

      LRT = Light Rail Transit, Rp = Indonesian rupiah (national currency).

      Note: Rp1 = $0.000072.

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta, Indonesia. https://library.pppknowledgelab.org/documents/5826/download.

      The PPP Book also provides information on prospective PPP infrastructure projects in the Indonesian railway sector.

      Prospective PPP Railway Infrastructure Projects, 2019

      Project Name Government Contracting Agency
      Siantar–Parapat Railway Regional Government
      Tanjung–Banjarmasin Railway Regional Government
      Perkotaan–Bandung Railway Regional Government
      Bandara–Kertajati Railway Regional Government
      Maminasata Railway Regional Government
      Lahat–Tarahan Railway Ministry of Transportation
      Shortcut Cibungar–Tanjung Rasa Railway Ministry of Transportation
      Mengwitani–Singaraja Railway Regional Government
      Medan–Binjai–Deli Serdang Railway Regional Government
      Penkanbaru–Jambi Railway Ministry of Transportation
      Manado–Bitung Railway Ministry of Transportation
      Balikpapan–Samarinda Railway Ministry of Transportation
      Pontianak–Sangau Railway Ministry of Transportation
      Parigi–Poso Railway Ministry of Transportation
      Patimban Port Railroad Access Ministry of Transportation
      Cibubur–Bogor LRT Ministry of Transportation
      Jakarta MRT Service Extension Ministry of Transportation
      Jakarta Elevated Loop Line Ministry of Transportation

      LRT = Light Rail Transit, MRT = Mass Rapid Transit.

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta, Indonesia. https://library.pppknowledgelab.org/documents/5826/download.

      Projects under Preparation and Procurement

      Railways Public-Private Partnerships under Preparation and Procurement

      The railway projects listed as “under preparation” in the PPP Book 2019 are :

      • Medan Municipal Transport, a light rail transport (LRT) system, is in the Full Business Case (FBC) stage of preparation. The estimated project cost is $824 million (approximately Rp12.4 trillion).
      • Semarang LRT is also in the FBC stage of preparation. The estimated project cost is $1.04 billion (approximately Rp14.5 trillion).

      Another project, the Makassar–Parepare Railway, was awarded after competitive bidding.

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      Notes: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable.

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). Public–Private Partnership: Infrastructure Projects Plan in Indonesia. Jakarta, Indonesia (3 years: 2017–2019).https://www.bappenas.go.id/files/9314/8767/3599/PPP_BOOK_2017.pdf, https://www.bappenas.go.id/files/PPP%20Book/PPP%20Book%202018%20FINAL.pdf,and https://library.pppknowledgelab.org/documents/5826/download.

    • Railways

      Features of Past PPP Projects

      Procurement of PPP Projects

      Railways Public-Private Partnerships procured through various modes

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      Notes: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. (accessed 24 August 2020).

      PPP Projects Reaching Financial Close

      Railways Public-Private Partnerships reaching Financial Close

      One project, the Jakarta–Bandung High-Speed Railway, achieved financial closure in 2017. This is the only project in the sector to have done so. The Jakarta–Bandung high-speed rail line was awarded in 2016 to China Railway 18th Bureau Group Co., Limited.

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      Note: Only active projects are considered in the above graph.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia.https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      PPP Projects with Foreign Sponsor Participation

      Railways Public-Private Partnerships with Foreign Sponsor Participation

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      Notes: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Government Support to PPP Projects

      Government Support for Railways Public-Private Partnerships

      The Makassar–Parepare Railway project will derive its earnings from availability payments . The IIGF is working on a guarantee structure to cover the availability payments and termination cost.

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      Notes: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/ en/snapshots/country/indonesia (accessed 24 August 2020).

      Payment Mechanism for PPP Projects

      Payment Mechanisms for Railways Public-Private Partnerships

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      Notes: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Typical Risk Allocation for PPP Projects

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      Risk TypePrivatePublicSharedComments
      Demand riskThe demand risk, the tariff risk, and the revenue collection risk are with the public sector.
      Revenue collection riskThe demand risk, the tariff risk, and the revenue collection risk are with the public sector.
      Tariff risk The demand risk, the tariff risk, and the revenue collection risk are with the public sector.
      Government payment risk
      Environmental and social risk
      Land acquisition riskLand acquisition is a slow and complex process in Indonesia; the private sector has no appetite to take the land acquisition risk.
      Interface
      Handover
      Political risk
      Foreign exchange risk
      Early termination risk
      • Yes

      Financing Details

      As no PPP railway projects had achieved financial close by the end of 2019, there is no information available on the financing details of projects in this sector.

      Parameter 19902017 19902018 1990–2019
      PPP projects with foreign lending participation UA UA UA
      PPP projects that received export credit agency/international financing institution support UA UA UA
      Typical debt:equity ratio UA UA UA
      Time for financial closure UA UA UA
      Typical concession period UA UA UA
      Typical financial internal rate of return UA UA UA

      UA = Unavailable.

      Sources: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/ en/snapshots/country/indonesia (accessed 24 August 2020).

    • Railways

      Tariffs

      No data are available regarding tariffs in this sector.

    • Railways

      Challenges

      • The PPP ecosystem in Indonesia for the railways sector is in its nascent stage. There is no past experience of executing projects in this sector, so it is difficult to avoid taking first-of-a-kind risks.
      • There is a need for improvements in the feeder network for commuters from their various points of origin to the railway stations, and from the railway stations to their final destinations. The result would be a significant increase in ridership.
      • Land acquisition remains a major challenge for project development.
      • Private bus travel offers very competitive fares, while the cost-recovery-plus orientation of the railway system means substantially higher tariffs. Therefore, a strong value proposition (emphasizing superior safety, reliability, and availability, among other features) or a heavy cross-subsidy would be required to encourage passengers to shift to the railways.1
  • Ports

    Port, Indonesia
    • Number of Ports
      154
    • Container Traffic
      12,853 TEU
    • Port Infrastructure Quality
      4
    • Number of PPPs Reaching FC
      7
    • Value of PPPs Reaching FC
      $ 1,519 M
    • Number of PPPs with Foreign Sponsors
      4
    • Number of PPPs with Govt Support
      ----

    FC = financial closure, Govt. = government, TEU = twenty-foot equivalent unit.

    Note: Quality of port infrastructure: 1 (lowest) – 7 (highest).

    Sources: World Port Source. World Ports by Country. http://www.worldportsource.com/countries.php; TheGlobalEconomy.com. Port Traffic – Country Rankings. https://www.theglobaleconomy.com/rankings/Port_traffic/; Economist Intelligence Unit. Measuring the Enabling Environment for Public–Private Partnerships in Infrastructure. https://infrascope.eiu.com/.

    • Ports

      Contracting Agencies

      For PPP projects in the Indonesian port sector, the government contracting agency (GCA) is generally the relevant port authority, represented by the Ministry of Transportation (MOT). State-owned enterprises (SOEs) such as PT Pelabuhan Indonesia (Pelindo) I, II, III, and IV could also act as contracting authorities. These SOEs have entered into joint ventures with the private sector in the past. 

    • Ports

      Sector Laws and Regulations

      The port sector in Indonesia is largely regulated under Law No. 17 of 2008 on Shipping (the Shipping Law or Navigation Act). Prior to the Shipping Law, all the major commercial ports in Indonesia were controlled by the four state-owned Indonesian port corporations (PT Pelabuhan Indonesia I, II, III, and IV), which acted as both the sole port operator and port authority, and had regulatory authority over private sector ports. The law has removed the state-sector monopoly on Indonesia’s ports; and to encourage participation by the private sector, it maintains a clear separation between the port regulator and the operator, thus reducing the role of the Indonesian port corporations to that of a port operator. Other relevant regulations in the port sector are as follows:

      • Government Regulation No. 20 of 2010 on Inland Waterways Transport.
      • Government Regulation No. 61 of 2009 on Port Affairs, as amended by Government Regulation No. 64 of 2015.
      • MOT Regulation No. 62 of 2010 on the Organization and Work Procedure of the Port Operator Unit, as amended by MOT Regulation No. 130 of 2015.
      • MOT Regulation No. 95 of 2015 on Guidelines for Determining Port Service Charges by Port Enterprises.
      • Government Regulation No. 20 of 2010 on Water Transportation, as amended by Government Regulation No. 22 of 2011.
      • Government Regulation No. 21 of 2010 on Maritime Environmental Protection.
      • MOT Regulation No. 51 of 2015 on the Implementation of Seaports, as amended by MOT Regulation No. 146 of 2016 (partly revoked by MOT Regulation No. 24 of 2017).
      • MOT Regulation No. 15 of 2015 on Concession and Other Forms of Cooperation between the Government and Port Business Entities in the Port Area, as amended by MOT Regulation No. 166 of 2015.
      • Ministry of Transport Decree Number KP 901 of 2016 on National Port Master Plan.
      • Government Regulation No. 15 of 2016 on Types and Tariffs of Non-Tax State Revenue Applicable to the MOT.1

      Key Institutions That Regulate the Port Sector in Indonesia

      Agency Function
      Port authority
      • Providing onshore and offshore land for the port
      • Providing and maintaining anchor, port pool, cruise line, and road arrangement
      • Providing and maintaining aids to navigation
      • Ensuring safety and order in the port
      • Ensuring and maintaining the sustainability of the port environment
      • Preparing the port masterplan comprising the port working area and port interest area
      • Suggesting a rate to be determined by the Ministry of Transportation, for the use of water or land, and port facilities provided by the government as well as port services convened by the port authorities in accordance with the prevailing laws and regulations
      • Ensuring smooth distribution of goods
      Port administration unit
      • Responsible for ports that are not yet commercially operated
      Harbor master
      • Responsible for the safety and security of the port, including implementation, supervision, and law enforcement
      • Responsible for the search and rescue  in the vicinity of the port

      Foreign Investment Restrictions

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      Parameter201720182019
      Maximum allowed foreign ownership of equity in greenfield projects49%49%49%

      Source: Government of Indonesia, Presidential Regulation No. 44 of 2016 on Lists of Business Fields That Are Closed to and Business Fields That Are Open with Conditions to Investment.

      Standard Contracts

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      Type of ContractAvailability
      PPP/concession agreement
      Performance-based operation and maintenance contract
      Engineering, procurement, and construction contract
      • Yes
      • No
    • Ports

      Sector Master Plan

      There are no specific details on the sector master plans for ports available in English. The National Medium-Term Development Plan (RPJMN), 2020–2024 has listed Development of an Integrated Seven-Port Network as a major project. However, this project, whose cost is estimated at $1 billion (Rp14 trillion), is expected to be executed by Indonesian SOEs.

      Based on the PPP Book 2019, the PPP projects in the pipeline for the port sector are:

      Pipeline of PPP Port Projects, 2019

      Project Name Status Investment Feasibility Study Appointment of Concessionaire Construction Start
      ($ million) (Rp trillion)
      Development of Baubau Port Under preparation 34 0.5 2018 2020 2020

      Rp = Indonesian rupiah (national currency).

      Note: Rp1 = $0.000072.

      Source: Government of Indonesia, Planning/National Development Planning Agency (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta, Indonesia. https://library.pppknowledgelab.org/documents/5826/download.

      The PPP Book also provides information on prospective PPP infrastructure projects in the Indonesian port sector.

      Prospective PPP Port Sector Infrastructure Projects, 2019

      Project Name Government Contracting Agency
      West Papua Ferry Port Ministry of Transportation
      Anggrek Port Ministry of Transportation
      Banggai Port Ministry of Transportation
      Belang–Belang Port Ministry of Transportation
      Kaimana Port Ministry of Transportation
      Serui Port Ministry of Transportation
      Saumlaki Port Ministry of Transportation
      Labuan Bajo Port Ministry of Transportation
      Namlea Port Ministry of Transportation
      Tahuna Port Ministry of Transportation
      Tobelo Port Ministry of Transportation
      Dobo Port Ministry of Transportation
      Pomako Port Ministry of Transportation
      Cikarang Bekasi Laut Inland Waterway Ministry of Transportation

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta, Indonesia. https://library.pppknowledgelab.org/documents/5826/download.

      Projects under Preparation and Procurement

      Ports Public-Private Partnerships under Preparation and Procurement

      The project under preparation in 2019 was the development of Baubau Port, for which the estimated cost is $33.6 million (Rp0.5 trillion).

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      Note: “-” includes: no projects, data not available, or not applicable.

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). Public–Private Partnership: Infrastructure Projects Plan in Indonesia. Jakarta.(2017–2019. https://www.bappenas.go.id/files/9314/8767/3599/PPP_BOOK_2017.pdf, https://www.bappenas.go.id/files/PPP%20Book/PPP%20Book%202018%20FINAL.pdf, https://library.pppknowledgelab.org/documents/5826/download.

    • Ports

      Features of Past PPP Projects

      Procurement of PPP Projects

      Ports Public-Private Partnerships procured through various modes

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      Notes: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      PPP Projects Reaching Financial Close

      Ports Public-Private Partnerships reaching Financial Close

      The concession period varied from 10 to 50 years. The type of concessions included

      • build–rehabilitate–operate–transfer (BROT),
      • rehabilitate–operate–transfer (ROT), and
      • build–operate–transfer (BOT).
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      Notes: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      PPP Projects with Foreign Sponsor Participation

      Ports Public-Private Partnerships with Foreign Sponsor Participation

      Foreign sponsors such as DP World (Dubai), International Container Terminal Services (Philippines), and Hutchison Whampoa Limited (Hong Kong, China) have invested in Indonesia’s ports.

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      Note: Only active projects are considered in the above graph.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Government Support to PPP Projects

      Government Support for Ports Public-Private Partnerships

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      Notes: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia.https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Payment Mechanism for PPP Projects

      Payment Mechanisms for Ports Public-Private Partnerships

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      Notes: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Typical Risk Allocation for PPP Projects

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      Risk TypePrivatePublicSharedComment
      Demand riskMarket practice in the ports sector is that the private party bears this risk.
      Competition risk (exclusivity)
      Tariff riskIn case of extreme fluctuation of inflation and interest rate, the risk can be shared with the public sector.
      Environmental and social risk
      Environmental permits required in preparing project to be public responsibility.
      Private party takes responsibility for obtaining environmental and social permits and obligations on signing the PPP agreement.
      Permits
      Permits required in preparing project are public responsibility.
      Construction and operations permits are private responsibility.
      Geotechnical riskThe private sector is typically responsible for designs to assess and address site-specific condition risks, including geotechnical surveys.
      • Yes

      Source: ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitor-second-edition.pdf.

      Financing Details

      Parameter 19902017 19902018 19902019
      PPP projects with foreign lending participation 1 1 1
      PPP projects that received export credit agency/international financing institution support 1 1 1
      Typical debt:equity ratio 70:30 70:30 70:30
      Time for financial closure 6 months 6 months 6 months
      Typical concession period 25–30 years 25–30 years 25–30 years
      Typical financial internal rate of return 12%–16% 12%–16% 12%–16%

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).; Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta, Indonesia. https://library.pppknowledgelab.org/documents/5826/download.

    • Ports

      Tariffs

      Indonesia is currently implementing a common model of port administration known as the “Landlord Port.” The government owns, provides, and regulates access to port land, port waters, and basic port infrastructure, while port operators provide services over a long duration under a concession agreement. The newly established port authorities and private terminal operators can establish commercial rates for port services that are market-related. The government will oversee the rates to ensure that port operators behave competitively.

      Guidelines for stipulating port tariffs are specified under MOT Regulation No. 95 of 2015. Tariffs for services performed by the port authorities are determined by the port authorities themselves after consulting with the MOT. The relevant port authority collects the tariffs. Terminal handling charges (THCs) are charged by terminal operators for cargo movement and stevedoring services performed at a terminal. For container terminals, THCs cover the movement of a container between a ship’s hold to the exit–entry gate via the container terminal yard. Actual THCs vary from port to port, as the charges are part of a complete package negotiated with the government; also, the cost of handling depends on the contractual agreement between terminal operators and the relevant shipping line.

      Source: ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.

    • Ports

      Challenges

      • The historical dominance of state-owned enterprises (SOEs)—PT Pelabuhan Indonesia I, II, III, and IV, also referred to as Pelindo I, II, III, and IV—in port development and operations has resulted in the Pelindos acquiring significant influence and power, which has caused uncertainty among potential investors. Although Shipping Law 2008 calls for an independent port authority, its enforcement still needs to be strengthened. There is a lack of clarity regarding the Pelindos’ roles as regulators or operators in cases where any of these companies are in a joint venture with foreign operators.1
      • It is unclear whether partnerships with Pelindos could be considered PPPs.
      • According to MOT Regulation No. 15 of 2015, the government can participate in PPPs in the port sector, but there is no specific regulation about the modality of the PPPs in this sector.
      • There is a need to develop sufficient infrastructure on land to support the ports.
  • Airports

    Airport, Indonesia
    • Number of Airports
      29
    • Passenger Capacity
      115.15 M
    • Airport Infrastructure Quality
      4.9
    • Number of PPPs Reaching FC
      ----
    • Value of PPPs Reaching FC
      ----
    • Number of PPPs with Foreign Sponsors
      ----
    • Number of PPPs with Govt. Support
      ----

    FC = financial closure, Govt. = government, M = million.

    Note: Quality of airport infrastructure: 1(lowest) – 7(highest).

    Sources: World by Map. Airports. https://www.citypopulation.de/en/world/bymap/Airports.html; World Bank. Data. Air Transport, Passengers Carried – Bangladesh, Cambodia, Georgia, Kazakhstan, Myanmar, Pakistan, Papua New Guinea, Sri Lanka, Uzbekistan, Vietnam, China, India, Indonesia, Philippines, Thailand. https://data.worldbank.org/indicator/IS.AIR.PSGR?locations=BD-KH-GEKZ-MM-PK-PG-LK-UZ-VN-CN-IN-ID-PH-TH; TheGlobalEconomy.com. Compare Countries with Annual Data from Official Sources. https://www.theglobaleconomy.com/compare-countries/; and ADB Data Library. Cumulative Lending, Grant, and Technical Assistance Commitments. https://data.adb.org/dataset/cumulative-lending-grant-and-technical-assistance-commitments.

    • Airports

      Contracting Agencies

      Two state-owned companies manage and operate all the major airports in the country: PT Angkasa Pura I and PT Angkasa Pura II. These companies are wholly owned by the government and are regulated by the Directorate General of Civil Aviation (DGCA), which is part of the Ministry of Transportation (MOT). PT Angkasa Pura I manages 13 airports, and PT Angkasa Pura II manages 16 airports.1

    • Airports

      Sector Laws and Regulations

      The key sector-specific regulations include:

      • Civil Aviation Act of 2009, Act No.1 of 2009.
      • Government Regulation No. 40 of 2012 on Airport Construction and Environmental Preservation.1

      The International Civil Aviation Organization publishes a number of regulations that airport operators are required to adopt in order to ensure safe and secure air transport operations.

      Key Government Agencies in Indonesia’s Airport Sector

      Agency Function
      Ministry of Transportation – DGCA The DGCA is the main regulator of airports and aviation in Indonesia. It is responsible for developing and implementing policies, as well as norms, standards, procedures, and criteria regarding the use of air space, aircraft, and airports; the organization of air transport and air navigation; and safety, security, and environmental quality. The DGCA also acts as the airport authority in terms of supervising aviation activities at airports, including the regulation of airport services and operations. In addition, the DGCA is responsible for the certification and licensing of air transportation, airports, flight security, air navigation, aircraft airworthiness, and operations.
      AirNav Indonesia AirNav Indonesia is the national air traffic control provider, and its main business includes the provision of air traffic services, aeronautical telecommunications, dissemination of aeronautical information, as well as search-and-rescue information and aviation meteorology information.
      AVSEC Airport Security Formed by PT Angkasa Pura (as the only airport operator), AVSEC Airport Security provides security services and meets international and national rules with regard to the provision of security services at airports.

      AVSEC = Aviation Security, DGCA = Directorate General of Civil Aviation.

      Source: ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitor-second-edition.pdf.

      Foreign Investment Restrictions

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      Parameter201720182019
      Maximum allowed foreign ownership of equity in greenfield projects49%49%49%

      Source: Government of Indonesia, Presidential Regulation No. 44 of 2016 on Lists of Business Fields That Are Closed to and Business Fields That Are Open with Conditions to Investment.

      Standard Contracts

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      Type of ContractAvailability
      PPP/concession agreement
      Performance-based operation and maintenance contract
      Engineering, procurement, and construction contract
      • Yes
      • No
    • Airports

      Sector Master Plan

      There are no details on the sector master plan for airports . The PPP Book 2019, published by the Ministry of National Development Planning (BAPPENAS), highlights that one project is in the pipeline: Expansion of Hang Nadim International Airport Passenger Terminal.

      Based on the PPP Book 2019, the PPP projects in the pipeline for the airport sector are:

      Pipeline of PPP Airport Projects

      Project Name Status Investment Feasibility Study Appointment of Concessionaire Construction Start
      ($ million) (Rp trillion)
      Expansion of Hang Nadim International Airport Passenger Terminal Ready to offer 275 3.8 2019 2019 2020
      Expansion of Komodo International Airport Already tendered 210 2.9 2018 2019 2020

      Rp = Indonesian rupiah (national currency).

      Note: Rp1 = $0.000072.

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta, Indonesia. https://library.pppknowledgelab.org/documents/5826/download

      The PPP Book also provides information on prospective PPP infrastructure projects in the Indonesian airport sector.

      Prospective PPP Airport Infrastructure Projects

      Project Name Government Contracting Agency
      Singkawang Airport Ministry of Transportation
      Tarakan Airport Ministry of Transportation
      North Bali Airport Ministry of Transportation
      Waisai Airport Ministry of Transportation
      Water Aerodrome (water-based airport) Ministry of Transportation
      Airplane Repair Maintenance Overhaul Center Ministry of Transportation
      Mengwi Terminal Type A Ministry of Transportation
      Central Java Terminal Type A (10 locations) Ministry of Transportation
      Kembang Putih Terminal Type A, Tuban, East Java Ministry of Transportation
      Bimuku Terminal Type A, Kupang, East Nusa Tenggara Ministry of Transportation
      Singkawang Terminal Type A, Singkawang, West Kalimantan Ministry of Transportation

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta, Indonesia.

      Projects under Preparation and Procurement

      Airports Public-Private Partnerships under Preparation and Procurement

      The one project under preparation, according the PPP Book 2019, was the Expansion of Hang Nadim International Airport Passenger Terminal.

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      Note: “-” includes: no projects, data not available, or not applicable.

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). Public–Private Partnership: Infrastructure Projects Plan in Indonesia. Jakarta, Indonesia (3 years: 2017–2019). https://www.bappenas.go.id/files/9314/8767/3599/PPP_BOOK_2017.pdf, https://www.bappenas.go.id/files/PPP%20Book/PPP%20Book%202018%20FINAL.pdf, https://library.pppknowledgelab.org/documents/5826/download.

    • Airports

      Features of Past PPP Projects

      Procurement of PPP Projects

      Airports Public-Private Partnerships procured through various modes

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      Note: “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Private Participation in Infrastructure (PPI) database. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      PPP Projects Reaching Financial Close

      Airports Public-Private Partnerships reaching Financial Close

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      Note: “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      PPPs with Foreign Sponsor Participation

      Airports Public-Private Partnerships with Foreign Sponsor Participation

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      PPP = public–private partnership.

      Note: “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Government Support to PPP Projects

      Government Support for Airports Public-Private Partnerships

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      Note: “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Payment Mechanism for PPP Projects

      Payment Mechanisms for Airports Public-Private Partnerships

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      Note: “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Typical Risk Allocation for PPP Projects

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      Risk TypePrivatePublicSharedComments
      DemandThe demand risk, the tariff risk, and the revenue collection risk are with the private sector.
      Revenue collectionThe demand risk, the tariff risk, and the revenue collection risk are with the private sector.
      TariffThe demand risk, the tariff risk, and the revenue collection risk are with the private sector.
      Government paymentNot applicable
      Environment and social
      Land acquisitionLand acquisition is a slow and complex process in Indonesia; the private sector has no appetite to take the land acquisition risk.
      Interface
      Handover
      Political
      Foreign exchange (FOREX)
      • Yes

      Financing Details

      Parameter 19902017 19902018 19902019
      PPP projects with foreign lending participation UA UA UA
      PPP projects that received export credit agency/international financing institution support UA UA UA
      Typical debt:equity ratio UA UA UA
      Time for financial closure 912 months 912 months 912 months
      Typical concession period 25 years 25 years 25 years
      Typical financial internal rate of return 11%18% 11%18% 11%18%

      UA = unavailable.

      Sources: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta, Indonesia. https://library.pppknowledgelab.org/documents/5826/download; World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

    • Airports

      Tariffs

      The operator of the Komodo International Airport will collect user charges for aeronautical and non-aeronautical services over a 25-year concession period.

    • Airports

      Challenges

      The key challenges for the sector include the following:

      • The state-owned enterprises (SOEs) PT Angkasa Pura I and II are undertaking the expansion of existing airports, while proposals for new airports are either being implemented or are being planned. The lack of sufficient funding for upgrading existing airports or building new ones has been an obstacle.
      • The dominance of the PT Angkasa Pura SOEs in airport development and operation creates a lack of certainty with regard to potential investors.
      • Foreign ownership of airports is not possible in Indonesia under Law No. 1 of 2009 on Aviation, which states that foreign investors cannot own a majority stake in an Indonesian airport. While there are ways of securing some level of foreign participation in infrastructure assets where this restriction applies—for example, by forming a joint venture with an Indonesian SOE, as has been done in the port sector—there are no such examples in the airport sector. As airports require significant capital expenditure over a longterm period, the current lack of transparency and certainty with regard to operating in Indonesia as a foreign company, as well as the fact that Angkasa Pura I and II together have full control over the country’s major airports, further limits the ability of Indonesia to establish such partnerships.
      • The process of acquiring new land for airport expansion is very slow; as a result, a number of airport projects have been significantly delayed.1
  • Energy

    Scaling Up Renewable Energy Access in Eastern Indonesia
    • Power Consumption
      811.9 kWh per capita
    • Share of Clean Energy
      36.88 %
    • Electricity Access
      98.51 %
    • Energy Imports
      -103.09 %
    • Number of PPPs Reaching FC
      68
    • Value of PPPs Reaching FC
      $ 39,412 M
    • Number of PPPs with Foreign Sponsors
      46
    • Number of PPPs with Govt. Support
      82

    FC = financial closure, Govt. = government, kWh = kilowatt-hour, M = million.

    Note: Share of clean energy and energy imports as percentage of total energy use. Energy access as percentage of total population.

    Source: The Economist Intelligence Unit. Measuring the Enabling Environment for Public–Private Partnerships in Infrastructure. https://infrascope.eiu.com/; TheGlobalEconomy.com. Share of Clean Energy–Country Rankings. https://www.theglobaleconomy.com/rankings/Share_of_clean_energy/; World Bank. Data. Access to Electricity (% of Population)–Myanmar, Cambodia, Uzbekistan, China, Bangladesh, Georgia, India, Indonesia, Kazakhstan, Pakistan, Philippines, Sri Lanka, Thailand, Vietnam. https://data.worldbank.org/indicator/EG.ELC.ACCS.ZS?end=2018&locations=MM-KH-UZ-CN-BD-GE-IN-ID-KZ-PK-PH-LK-THVN&start=2018&view=bar; World Bank. Ease of Doing Business Scores. https://www.doingbusiness.org/en/data/doing-businessscore?topic=getting-electricity; TheGlobalEconomy.com. Energy Imports–Country Rankings. https://www.theglobaleconomy.com/rankings/Energy_imports/; ADB Data Library. Cumulative Lending, Grant, and Technical Assistance Commitments. https://data.adb.org/dataset/cumulative-lending-grant-and-technical-assistance-commitments.

    • Energy

      Contracting Agencies

      • The state-owned electricity company PT Perusahaan Listrik Negara (PLN) is responsible for the management and development of power generation, transmission, and distribution in Indonesia. PLN is supervised from a technical perspective by the Ministry of Energy and Mineral Resources (MEMR), and from a management perspective by the Ministry of State-Owned Enterprises and the Ministry of Finance.
      • PLN controls more than half of the power-generating assets and is the sole owner of the electricity distribution and transmission assets in the country. PLN also has the right of first refusal on all new generation capacity, is the provider of electricity of last resort, and holds an electricity supply business permit.
    • Energy

      Sector Laws and Regulations

      The power sector is regulated by the MEMR and its subagencies: the Directorate General of Electricity and the Directorate General of New and Renewable Energy and Energy Conservation. The key sector regulation is Law No. 30 of 2009 on Electricity (the Electricity Law) and its implementing regulation: Government Regulation No. 14 of 2012 on Electricity Supply Business (as amended by Government Regulation No. 23 of 2014), which provides a greater role for the regional governments in the sector. Government Regulation No. 42 of 2012 on Cross-Border Power Purchase and Government Regulation No. 62 of 2012 on Electricity Support Business are also supporting elements for the Electricity Law. Furthermore, the guidelines on the use of domestic products in the construction of electricity infrastructure are dictated by the Ministry of Industry Regulation No. 54/M-IND/PER/3/2012 (as amended by the Ministry of Industry Regulation No. 05/M-IND/PER/2/2017), which stipulates the minimum percentage of local content.1

      The geothermal energy sector is mainly regulated by Law No. 21 of 2014 on Geothermal and Government Regulation No. 7 of 2017 on Indirect Use of Geothermal. The tariffs for renewable energy and thermal energy are under the regulation of the MEMR.

      Energy-Related Regulatory Authorities in Indonesia

      Agency Function
      Ministry of Energy and Mineral Resources This is the principal actor in the governance of the energy and mining sector. It oversees policy making, policy implementation, and the development of technical policies; manages energy and mining assets; and evaluates the performance of the sector. The ministry develops the National Electricity Plan and prepares laws and regulations on electricity-related national tariff and subsidy policies.
      National Energy Council Established in 2009 as the principal energy coordination body, the National Energy Council brings together the seven ministries that are directly or indirectly involved in the energy sector.
      Ministry of Finance The Ministry of Finance manages the state’s fiscal and financial assets and properties, and formulates the state budget, as well as taxation, customs, and excise policies. With regard to energy, the ministry is engaged in the management of energy subsidies; the setting of renewable energy tariffs; and the taxation of energy products, energy infrastructure, and operations.
      Ministry of Environment and Forestry This ministry establishes and enforces environmental standards and regulations, and sets the environmental standards for resource extraction in the coal mining, oil, and gas sectors. It also grants forestry borrow-to-use permits to provide power to plant developers if their plants are to be located in a forest.
      Commission VII of the Indonesian House of Representatives This ministry establishes and enforces environmental standards and regulations, and sets the environmental standards for resource extraction in the coal mining, oil, and gas sectors. It also grants forestry borrow-to-use permits to provide power to plant developers if their plants are to be located in a forest.

      Source: ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitor-second-edition.pdf.

      Foreign Investment Restrictions

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      Business ActivityMaximum % of FDI Allowed
      Power generation100%
      Power transmission100%
      Power distribution100%
      Oil and gas75%

      FDI = foreign direct investment.

      Source: Government of Indonesia. Presidential Regulation No. 44 of 2016 on Lists of Fields That Are closed to and Business Fields That Are Open with Conditions to Investment.

      Standard Contracts

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      Type of ContractAvailability
      Power purchase agreement
      Capacity take-or-pay contract
      Fuel supply agreement
      Transmission and use of system agreement
      Performance-based operation and maintenance contract
      Engineering, procurement, and construction contract
      • Yes
      • No
      • Unavailable
    • Energy

      Sector Master Plan

      • The National Energy Council prepared the Electricity Supply Business Plan (RUPTL) 2019–2028. The plan calls for an additional 56.60 gigawatts (GW) of power capacity, provided by projects to be completed by 2028. Independent power producers (IPPs) have been allocated power projects that will deliver a total capacity of 33.67 GW, while the state-owned PLN is slated to build power plants delivering approximately 16.24 GW. By 2025, the energy mix is expected to include about 54% from coal, 23% from new and renewable sources, and 22% from gas and biofuel. By 2028, the proportion of renewable energy sources is expected to increase marginally, to 23.2%. Among the renewable energy sources, hydro and mini-hydro power plants are projected to account for the largest portion (9.7 GW), followed by geothermal power plants (4.6 GW). The electricity obtained from rooftop solar photovoltaic panels is projected to be 3,200 megawatts (MW). Indonesia is the world’s largest producer of crude palm oil, and the use of the B20 biodiesel blend is mandatory for all sectors outlined in the RUPTL. This policy was introduced in September 2018.
      • In fulfilling the government’s 100% electrification program by 2020, primarily to provide electricity in Indonesia’s far-flung areas that are still off the national grid, the RUPTL has outlined the use of communal solar electricity stations, photovoltaic towers, and solar home systems. Utilizing mobile power plants (barge- as well as truck- mounted and in containers) remains a short-term solution for meeting electricity demand in parts of eastern Indonesia.

      The Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) includes the following initiatives in its list of priority projects:

      • Central Java Power Plant (Batang Steam Power Plant), with an estimated project cost of Rp40 trillion (approximately $2.9 billion).
      • Gas Power-Based Power Plant, with an estimated project cost of Rp302 trillion (approximately $21.7 billion), to be developed by IPPs and the Ministry of State-Owned Enterprises.
      • Mulut Tambang Steam Power Plant, with an estimated project cost of Rp210.8 trillion (approximately $15.2 billion), to be developed by IPPs and the Ministry of State-Owned Enterprises.
      • Waste-to-energy projects in cities such as Jakarta, Tangerang, Bandung, Surakarta, Semarang, Surabaya, Makassar, and Denpasar, as priority projects to be developed in the PPP mode and though state-owned enterprises (SOEs). The estimated project cost is Rp19.74 trillion (approximately $1.4 billion).1

      Based on the PPP Book 2019, the PPP projects in the pipeline for the energy sector are:

      • 1Government of Indonesia, Committee for Acceleration of Priority Infrastructure Delivery (KPPIP). 2019. KPPIP Semester 2 2019 Report. Jakarta.

      Pipeline of PPP Energy Sector Projects

      Project Name Status Investment ($ million) Investment (Rp billion) Feasibility Study Appointment of Concessionaire Construction Start
      Surakarta Street Lightinga Under preparation 0.9 million (10 years)  2.4 (20 years)    12.5 2019 2020 2020
      • aStreet lighting is classified under the energy conservation subsector

      Rp = Indonesian rupiah (national currency).

      Source: Government of Indonesia, Committee for Acceleration of Priority Infrastructure Delivery (KPPIP). 2019. KPPIP Semester 2 2019 Report. Jakarta.

      The PPP Book also provides information on prospective PPP infrastructure projects in the Indonesian energy sector.

      Prospective PPP Energy Sector Projects

      Project Name Government Contracting Agency
      Household Gas Pipeline System Ministry of Energy and Mineral Resources
      Off-Grid Mini/Micro Hydropower Plant Ministry of Energy and Mineral Resources

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta, Indonesia.

      Projects under Preparation and Procurement

      Energy Public-Private Partnerships under Preparation and Procurement

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      a There are no available data for projects under preparation or procurement in 2017 and 2018.

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). Public–Private Partnership: Infrastructure Projects Plan in Indonesia. Jakarta, Indonesia (3 years: 2017–2019). https://www.bappenas.go.id/files/9314/8767/3599/PPP_BOOK_2017.pdf, https://www.bappenas.go.id/files/PPP%20Book/PPP%20Book%202018%20FINAL.pdf. https://library.pppknowledgelab.org/documents/5826/download.

    • Energy

      Features of Past PPP Projects

      Procurement of PPP Projects

      Energy Public-Private Partnerships procured through various modes

      Under the competitive tender methods, the key bidding parameter is the price at which providers are willing to sell the electricity generated. The request for proposals (RFPs) issued by PLN generally contains a draft form of a power purchase agreement (PPA) and other relevant project agreements, such as a draft guarantee agreement (if the project is being tendered under a PPP program). Bidders are often able to submit a completed PPA form (and other forms provided by PLN) before the submission of their bids.1

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      Notes:

      1. Only active projects are considered in the above graph.

      2. “Competitive bids” includes projects awarded on a licensed basis.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      PPP Projects Reaching Financial Close

      Energy Public-Private Partnerships reaching Financial Close

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      Note: Only active projects are considered in the above graph.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/ en/snapshots/country/indonesia (accessed 24 August 2020).

      PPP Projects with Foreign Sponsor Participation

      Energy Public-Private Partnerships with Foreign Sponsor Participation

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      Note: Only active projects are considered in the above graph.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020)

      Government Support to PPP Projects

      Government Support for Energy Public-Private Partnerships

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      Notes: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Payment Mechanism for PPP Projects

      Payment Mechanisms for Energy Public-Private Partnerships

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      Notes: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Typical Risk Allocation for PPP Projects

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      Risk TypePrivatePublicSharedComment
      Demand risk
      Revenue collection risk
      Tariff risk
      Government payment risk
      Environmental and social riskAs projects require international finance, international environmental and social standards are to be followed. Social risks remain critical in geothermal projects.
      Land acquisition risk
      Permits
      Handover risk
      Political riskThe perception of political risk on independent power producer power projects remains relatively high, due to legal and regulatory risk and breach of contract risk; thus, most players desire and seek viable government support/political risk insurance cover through export credit agency
      Regulatory riskThere are major concerns from the private sector on frequent changes of regulations relevant to several sectors, notably the geothermal sector.
      Interconnection risk
      Brownfield risk: asset conditionNot applicable
      Grid performance risk
      Hydrology risk
      Exploration and drilling riskThis is a major expenditure for geothermal power and therefore a significant risk.
      • Yes

      Financing Details

      Parameter 1990–2017 1990–2018 1990–2019
      PPP projects with foreign lending participation 31 35 36
      PPP projects that received export credit agency/international financing institution support 22 24 25
      Typical debt:equity ratio Ranges from 70:30 to 80:20
      Time for financial closure UA
      Typical concession period 10–25 years
      Typical financial internal rate of return 10%–11%

      UA = Unavailable.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

    • Energy

      Tariffs

      Among others, Ministry of Energy and Mineral Resources (MEMR) Regulation No. 50 of 2017 (on the Utilization of Renewable Energy for Power Supply) and MEMR Regulation No. 19 of 2017 (on the Utilization of Coal for Power Generation and Purchase of Excess Power) regulate the benchmark purchase prices for various types of energy sources.1

      The feed-in tariff, a fixed price paid to renewable energy producers for each unit of energy they inject into the electricity grid, varies according to the unit capacity and the heat rate.

      Feed-In Tariffs, by Type of Energy Producer

      Type of Independent Power Producer Determinants of Tariffs
      Solar
      • If local BPP> national BPP = 85% of local BPP
      • If local BPP ≤ national BPP = By agreement of the parties
      Wind
      Hydropower
      • If local BPP> national BPP = 100% of local BPP
      • If Sumatra, Java and Bali BPP ≤ national BPP = By agreement of the parties
      Biomass and biogas
      • If local BPP> national BPP = 85% of local BPP
      • If local BPP ≤ national BPP = By agreement of the parties
      Urban waste
      • If local BPP> national BPP = 100% of local BPP
      • If Sumatra, Java and Bali BPP ≤ national BPP = By agreement of the parties
      Geothermal
      Seawater
      • If local BPP> national BPP = 100% of local BPP
      • If Sumatra, Java and Bali; BPP ≤ national BPP = By agreement of the parties

      BPP = best practice price.

      Source: PT Sarana Multi Infrastruktur (Persero). 2019. SMI Insight – Renewable Energy Commercial Review. Jakarta, Indonesia. https://ptsmi.co.id/wp-content/uploads/2019/11/SMI-Insight-2019-Renewable-Energy-Commercial-Review.pdf

      Electricity Tariff Ceilings Set by the Ministry of Energy and Mineral Resources, by Province or Region

      No Region Cost per Kilowatt-Hour (Rp) Cost per Kilowatt-Hour ($)
      I. Sumatra 1,194 8.98
        A. Northern Sumatra    
        1. Aceh 1,673 11.74
            a. Weh Island 2 ,303 16.16
            b. Simeuleu Island 2,650 18.60
        2. North Sumatra 1,451 10.18
            Nias 3,041 21.34
        B. Central And Southern Sumatra    
        1. West Sumatra 1,058 7.43
        Mentawai Archipelago 3,041 21.34
        2. Riau and Riau Archipelago 1,655 11.61
            a. Bintan 1,786 12.53
            b. Tanjung Balai Karimun 2,110 14.81
            c. Natuna 2,239 15.71
            d. Anambas 2,267 15.91
        3. South Sumatra, Jambi, Bengkulu 1,061 7.45
            Enggano Island 3,041 21.34
        4. Lampung 1,039 7.29
        C. Bangka 2,681 18.82
        D. Belitung 1,799 12.63
        E. Other small archipelago subsystems 3,041 21.34
      II. Java-Bali 868 6.52
        A. DKI Jakarta 985 6.91
        Thousand Islands (Kepulauan Seribu) 1164 8.17
        B. Banten 985 6.91
        Panjang Island 3,041 21.34
        C. West Java 984 6.91
        D. Central Java 984 6.91
        Karimun Jawa 3,041 21.34
        E. East Java 989 6.94
        1. Madura Island 3,041 21.34
        2. Bawean 3,041 21.34
        3. Gili Ketapang 3,041 21.34
        F. Bali 985 6.91
        Three Nusa System (Sistem Tiga Nusa)
      (Nusa Penida, Nusa Lembongan, Nusa Ceningan)
      2,762 19
        G. Other small subsystems 3,041 21.34
      III. Kalimantan 1,373 10.31
        A. West Kalimantan 1,525 10.7
        B. South and Central Kalimantan 1,682 11.8
        C. East and North Kalimantan 1,507 10.58
        D. Other small subsystems 3,041 21.34
        C. West Java 984 6.91

      DKI = Special Capital Region, Rp = Indonesian rupiah (national currency).

      Source: MEMR. 2019. Decree No. 55 K/20/MEM/2019 on the Amount of Cost of Generation Provision

    • Energy

      Challenges

      The key challenges for the energy sector include the following:

      • A significant challenge for the energy distribution system is the lack of transmission lines and supporting infrastructure. The transmission and distribution network remains a PLN monopoly.
      • The lack of experience in private financing of (long-term) renewable energy projects remains a significant challenge for renewable project development.
      • The challenges for geothermal projects specifically include the lack of community acceptance of geothermal projects and the lack of government guarantees for geothermal field development and resource confirmation.
      • There have been delays in land acquisition delays due to local community objections.
      • A recent trend is the PLN’s practice of making power purchase agreements (PPAs) for shorter durations. PLN now offers take-or-pay commitments only for the tenure of the senior loan, whereas the commitments were previously offered for the entire term of the PPA. The shorter-duration commitments increase the revenue risk for the developer.1
  • Water and Wastewater

    solar pump
    • Access to Water
      87 %
    • Access to Sanitation
      61 %
    • Number of PPPs Reaching FC
      15
    • Value of PPPs Reaching FC
      $ 1,589 M
    • Number of PPPs with Foreign Sponsors
      9
    • Number of PPPs with Govt. Support
      4

    FC = financial closure, Govt. = government, M = million.

    Note: Access to water and sanitation as percentage of total population with access to improved water resources and sanitation facilities.

    Source: ADB. 2016. Country Partnership Strategy: Indonesia 2016–2019—Towards a Higher, More Inclusive and Sustainable Growth Path. Manila. https://www.adb.org/sites/default/files/institutional-document/202126/cps-ino-2016-2019.pdf.; The Economist Intelligence Unit. Measuring the Enabling Environment for Public–Private Partnerships in Infrastructure. https://infrascope.eiu.com/; ADB Data Library. Cumulative Lending, Grant, and Technical Assistance Commitments. https://data.adb.org/dataset/cumulativelending-grant-and-technical-assistance-commitments.

    • Water and Wastewater

      Contracting Agencies

      Since the implementation of decentralization in Indonesia, water and wastewater infrastructure development and service delivery have involved district and provincial governments as the government contracting agencies (GCAs). The roles and institutions involved could differ from one project to another, depending on the coverage of the project. There could be at least four agencies responsible for water and wastewater project development: (i) the regional government as the GCA; (ii) the municipal or district public water company (PDAM) or provincial public water company (PDAB), (iii) the provincial house of representatives; and (iv) the private sector developer as a business partner.1

    • Water and Wastewater

      Sector Laws and Regulations

      Originally, water resources and drinking water supplies were regulated under Law No. 11 of 1974 on Water Resources Development. However, after decentralization, Law No. 7 of 2004 on Water Resources was enacted, which provided for the decentralization of administrative and financial responsibilities in the sector, delineating the responsibilities and areas of authority of the central, provincial, and local governments. In February 2015, Law No. 7 of 2004 was revoked by the Constitutional Court, following challenges related to private sector control over water resources.

      Following this, Government Regulation No. 121 of 2015 on Water Resources Business and Government Regulation No. 122 of 2015 on Drinking Water Supply System were issued (under Law No. 11 of 1974) as bridging regulations while efforts were being made to enact a new water law. Both included provisions for private sector participation in water resource management and water supply system development, operations, and management.

      New Law on Water Resources—Law No. 17 of 2019

      In 2019, the government enacted a new law on water resources.

      • The new legislation, Law No. 17 on 2019 on Water Resources, replaced Law No. 11 of 1974 on Water Resources Development. Law No. 17 of 2019 explicitly states that water resources must be controlled by the state and used first and foremost for the prosperity of the community.
      • Under Law No. 17 of 2019, the central and regional governments can delegate some of their duties and authority, including collecting water tariffs from license holders within a specific working area, to a state-owned enterprise (SOE) or regional (government)-owned enterprise (ROE) specifically established to carry out some of the government’s responsibilities for water resources. At the regional level, the existing ROEs may only deal with drinking water supply systems.
      • Law No. 17 of 2019 also requires a license from the government for the use of water for business activities or for private noncommercial activities other than those guaranteed by the government.

      The various laws and regulations governing wastewater management include:

      • Law No. 23 of 2014 on Local Governments.
      • Law No. 11 of 1974 on Water Resources Development.
      • Law No. 32 of 2009 on Environmental Protection.
      • Government Regulation No. 82 of 2001 on Water Quality Management and Water Pollution Control.
      • Ministry of Environment and Forestry Regulation No. 68 of 2016 on Standards for Domestic Wastewater (including various industrial wastewater effluents).
      • Various provincial governor regulations and mayor/regent regulations on wastewater effluent standards at the local level, which should be compliant with, or even stricter than, national effluent standards for both industry and domestic use.

      Aspects of Regulations on Private Sector Participation in Water and Wastewater Projects

      Parameter201720182019
      Can the private sector be given water abstraction rights?
      Are there regulations in place on raw water extraction?
      Are there regulations in place on the release of treated effluents?
      • = Yes

      Source: World Bank. 2018. Indonesia Infrastructure Sector Assessment Program (InfraSAP). Washington, DC.

      Water and Wastewater Regulatory Bodies in Indonesia

      Agency Function
      Ministry of Public Works and Housinga

      In charge of dealing with tenders, contracts, and procurement processes, which are delegated to the directorate general that deals with the relevant sector.

      Defines national-level water and wastewater sector policies, technical standards for both water and wastewater treatment, and technical assistance

      Directorate General of Water Resources The main government agency dealing with the management and development of the water sector, responsible for formulating and implementing water sector policies and the technical standards for drinking water.
      Directorate General of Human Settlements Involved in the water and wastewater sector through two directorates: the Directorate of Drinking Water Development and the Environmental and Settlement Sanitation Directorate (see below)
      Agency for the Improvement of the Implementation of the Drinking Water Supply System (BPPSPAM) The body under the Ministry of Public Works and Housing responsible for formulating and implementing policies related to drinking water, and for managing, monitoring, and facilitating the development of drinking water supply systems and infrastructure in Indonesia
      The Environmental and Settlement Sanitation Directorate Responsible for formulating and implementing policies and technical standards in the wastewater and drainage sector.
      Research and Development Board Responsible for conducting water resource-related research and development activities through its Water Resources Research and Development Centre.
      Ministry of Home Affairs Manages water and wastewater utilities, drinking-water tariff guidelines, financial performance assessments, and monitoring
      Ministry of Health Sets drinking-water quality standards and monitors water and wastewater quality
      Ministry of Finance In charge of funding allocations, loan agreements, and the (multilateral) management of assets
      Ministry of Environment and Forestry Responsible for water pollution control and other related environmental policies
      Ministry of Energy and Mineral Resources Oversees exploration, development, and management of groundwater sources
      Local governments Manage local government-owned public water utilities.
      Indonesian Association of Water Utilities Association of Indonesian drinking water and wastewater services. Provides the means for consumers to voice their grievances toward the municipal water and wastewater service providers.
      • a Note that there is no overarching economic regulator of water providers; so, for instance, tariff decisions remain within the purview of the local governments

      BPPSPAM = Badan Peningkatan Penyelenggaraan Sistem Penyediaan Air Minum.

      Source: ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitor-second-edition.pdf.

      Foreign Investment Restrictions

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      Parameter201720182019
      Maximum allowed foreign ownership of equity in greenfield projects
      • Bulk water supply and treatment

      • Water distribution

      • Wastewater treatment

      100%100%100%
      • Wastewater collection

      100%100%100%
      • Unavailable

      Standard Contracts

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      Type of ContractAvailability
      PPP/concession agreement
      Bulk water supply agreement
      Performance-based operation and maintenance contract
      Engineering, procurement, and construction contract
      • Yes
      • No
    • Water and Wastewater

      Sector Master Plan

      Sector strategy and investment priorities are detailed in the National Long-Term Development Plan (RPJPN), 2005–2025 and the National Medium-Term Development Plan (RPJMN), 2015–2019.

      Based on the PPP Book 2019, the list of PPP projects in the pipeline for the water and wastewater sector are:

      Pipeline of PPP Water and Wastewater Projects

      Project Name Status Investment Feasibility Study Appointment of Concessionaire Effective Date
      ($ million) (Rp trillion)
      Pekanbaru Water Supply PPP Preparation 51.88  0.7 2019 2020 2020
      Jatiluhur Regional Water Supply I (Unsolicited Project) Tendered (Prequalification) 133.10  1.8 2018 2020 2020
      West Semarang Water Supply System PPP Concept 73.67  1.0 UA UA UA
      Jakarta Sewerage System PPP Concept 4.33  0.1 UA UA UA
      Bandar Lampung Water Supply System PPP Concept 43.29  0.6 UA UA UA
      Jatiluhur Drinking Water Supply System PPP II Concept 103.30  1.4 UA UA UA

      Rp = Indonesian rupiah (national currency), UA = Unavailable.

      Note: Rp1 = $0.000072.

      The PPP Book also provides information on prospective PPP infrastructure projects in Indonesia.

      Prospective PPP Water and Wastewater Projects

      Project Name Government Contracting Agency
      Merangin Reservoir Ministry of Public Work and Housing
      Kamijoro Water Supply Government of DI Yogyakarta
      Jatigede Water Supply Government of Jawa Barat
      Matenggeng Water Supply Regional Government
      Potential water supply systems from newly built dams: Sei Gong, Sindangheula, Marangkayu, and Passeloreng Regional Government
      Potential water supply systems from newly built dams: Karalloe, Tapin, and Way Sekampung Regional Government
      Karian Water Supply Ministry of Public Works and Housing
      Patimban Subang Regional Water Supply Regional Government

      DI = Special Region.

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta, Indonesia.

      Projects under Preparation and Procurement

      Water and Wastewater Public-Private Partnerships under Preparation and Procurement

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      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). Public–Private Partnership: Infrastructure Projects Plan in Indonesia. Jakarta, Indonesia (3 years: 2017–2019). https://www.bappenas.go.id/files/9314/8767/3599/PPP_BOOK_2017.pdf, https://www.bappenas.go.id/files/PPP%20Book/PPP%20Book%202018%20FINAL.pdf. https://library.pppknowledgelab.org/documents/5826/download.

    • Water and Wastewater

      Features of Past PPP Projects

      Procurement of PPP Projects

      Water and Wastewater Public-Private Partnerships procured through various modes

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      Note: Only active projects are considered in the above graph.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      PPP Projects Reaching Financial Close

      Water and Wastewater Public-Private Partnerships reaching Financial Close

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      Note: Only active projects are considered in the above graph.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      PPP Projects with Foreign Sponsor Participation

      Water and Wastewater Public-Private Partnerships with Foreign Sponsor Participation

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      Note: Only active projects are considered in the above graph.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Government Support to PPP Projects

      Government Support for Water and Wastewater Public-Private Partnerships

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      Note: Only active projects are considered in the above graph.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Payment Mechanism for PPP Projects

      Payment Mechanisms for Water and Wastewater Public-Private Partnerships

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      Note: Only active projects are considered in the above graph.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Typical Risk Allocation for PPP Projects

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      Risk TypePrivatePublicSharedComments
      DemandBoth Jakarta's water concessions and the Tangerang concession place demand risk and revenue collection risk on the private sector. This has incentivized concession companies to invest where volume and value customers can be connected.
      Revenue CollectionBoth Jakarta's water concessions and the Tangerang concession place demand risk and revenue collection risk on the private sector. This has incentivized concession companies to invest where volume and value customers can be connected.
      TariffWhile concession agreements generally have provision for index-linked tariff, this has been a major area of contention as public resistance and lack of political will has resulted in prolonged delays to tariff rebasing negotiations.
      Government PaymentGenerally, sits with the private sector; however, Indonesia Infrastructure Guarantee Fund usually provides public sector guarantee against default of payments by PDAMs.
      Environment and Social
      Land Acquisition
      Land acquisition is a slow and complex process in Indonesia; the private sector has no appetite to take the land acquisition risk.
      Interface
      Handover
      Political
      Foreign Exchange (FOREX)
      • Yes

      IIGF = Indonesia Infrastructure Guarantee Fund, PDAM = district or municipal public water company.

      Source: ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitor-second-edition.pdf.

      Financing Details

      Parameter 19902017 19902018 19902018
      PPP projects with foreign lending participation 13 13 13
      PPP projects that received export credit agency/international financing institution support 13 13 13
      Typical debt:equity ratio Range from 55:45a  to 75:25b
      Time for financial closure 6–12 months
      Typical concession period 25–30 years
      Typical financial internal rate of return 12%–16%
      • aThis applies to the Tangerang Water Supply PPP project.
      • bThis applies to the Bandar Lampung Drinking Water PPP project.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

    • Water and Wastewater

      Tariffs

      In general, the local governments set the tariff for public water services through PDAM operations; therefore, there may be different tariffs in different areas. PDAMs are generally responsible for billing and revenue collection. In theory, the Ministry of Home Affairs regulations state that PDAMs have to charge tariffs high enough to cover their operational costs. However, in practice, more than 50% of the PDAMs have tariff structures that are too low to recover their costs. Many local governments prefer to charge low tariff rates and avoid increasing them, particularly when close to an election. But the laws are now changing, and PDAMs that enter the government’s debt restructuring program are required to charge tariffs that recover the operational costs.1

      Water Tariffs in Jakarta and Bandung

      Jakarta Bandung
      Volume (m3) Tariff (Rp per m3) Volume (m3) Tariff (Rp per m3)
      0 – 10 3,550 0 – 10 1,000
      10 – 20 4,700 10 – 20 1,600
      Above 20 5,500 20 – 30 2,300
          Above 30 5,500
      Fixed charge (Rp per month) 18,110 Fixed charge (Rp per month) 17,000

      m3 = cubic meter, Rp = Indonesian rupiah (national currency).

      Note: An empty cell indicates that the column head does not apply.

      Source: IBNet Tariffs DB. PDAM Lyonnaise Jaya (Palyja) (Indonesia). https://tariffs.ib-net.org/sites/IBNET/ViewTariff?tariffId=1648&countryId=0.

      For the Umbulan BOT Bulk Water PPP Project, the target price of bulk water sold by the provincial public water company (PDAB) to the various PDAMs was set at Rp2,440 per m3, while the target price of bulk water sold by the project’s special purpose vehicle (SPV) to the PDAB was set at Rp2,370 per m3. The estimated full-cost price of water sold to the PDAB was estimated at Rp6,600 per m3, almost three times as much.

      For the wastewater tariffs, there are two options:

      • If the water and wastewater are billed together, the wastewater is charged as a surcharge in the range of 25%–30% of the water tariff. This arrangement already prevails for the Bandung PDAM.
      • If the wastewater charge is separate, customers are billed based on the customer type (e.g., household or industry) and the total floor area of the connected building (footnote 1).
    • Water and Wastewater

      Challenges

      The key challenges for the sector include the following:

      • Poor governance and capacity issues are likely to cause delays in PPP agreements.
      • The lack of a centralized body to coordinate all issues related to water resource management means that public sector project proponents and investors have to manage multiple stakeholders.
      • The PDAMs are incapable of planning investments, as they are not commercial enterprises but typical bureaucratic units.
      • Natural challenges include the lack of raw water resources. Moreover, rainfall patterns and population densities leave some areas with very limited water resources.
      • There is a reluctance among some private sector partners to take responsibility for the construction of the “last mile” of customer connections, and for persuading potential customers to shift away from groundwater or other existing water sources to new water supplies.
      • Many PDAMs in Indonesia are struggling to obtain their full cost recovery because of the low tariffs; and it is very difficult to increase tariffs, as it requires the approval of the provincial Parliament. Only 30% of PDAMs in Indonesia are able to implement a full cost-recovery tariff.1

       

  • ICT

    Polytechnics Education Development Project
    • Telephone Subscribers
      3.1
    • Cellular Phone Subscribers
      119.34
    • Cellular Network Coverage
      100 %
    • Internet Subscribers
      3.32
    • Internet Bandwidth per User
      6.23 kbps
    • Number of PPPs Reaching FC
      5
    • Value of PPPs Reaching FC
      $ 725 M
    • Number of PPPs with Foreign Sponsors
      1
    • Number of PPPs with Govt. Support
      6

    FC = financial closure, ICT = information and communication technology, kbps = kilobits per second.

    Note: Telephone, cellular phone, and internet subscribers per 100 inhabitants. Cellular network coverage as percentage of population covered.

    Sources: World Bank. Data. Fixed Telephone Subscriptions (per 100 people) – Myanmar, Cambodia, Uzbekistan, China, Bangladesh, Georgia, India, Indonesia, Kazakhstan, Pakistan, Philippines, Sri Lanka, Thailand, Vietnam. https://data.worldbank.org/indicator/IT.MLT.MAIN.P2?end=2018&locations=MM-KH-UZ-CN-BD-GE-IN-ID-KZ-PK-PH-LK-TH-VN&start=2018&view=bar; TheGlobalEconomy.com. Mobile Phone Subscribers, Per 100 People – Country Rankings. https://www.theglobaleconomy.com/rankings/Mobile_phone_subscribers_per_100_people/; TheGlobalEconomy.com. Mobile Network Coverage – Country Rankings. https://www.theglobaleconomy.com/rankings/Mobile_network_coverage/; TheGlobalEconomy.com. Internet Bandwidth – Country Rankings. https://www.theglobaleconomy.com/rankings/Internet_bandwidth/.

    The information and communication technology (ICT) sector of Indonesia consists of three main segments: telecommunications, digital services, and cybersecurity. There is a large digital divide in Indonesia that is mostly attributable to the uneven distribution of ICT infrastructure. To overcome this digital divide, the Ministry of Communication and Informatics (MCI) is implementing various measures, including streamlining the allocation of ICT resources, allocating spectrum and telephone numbers, enhancing service coverage, and regulating service price rates.1

    • ICT

      Contracting Agencies

      • The Ministry of Communications and Informatics (MCI) is responsible for developing the ICT infrastructure in order to provide equal access to information in all regions in Indonesia. The MCI has typically been the government contracting agency for PPP projects in the ICT sector.
      • The MCI is responsible for policies regarding the digital government and telecommunications infrastructure. In addition, it is also responsible for overseeing critical infrastructure projects, including the Palapa Ring Project, which is a flagship project under the Five-Year National Broadband Plan, as well as projects such as the Multifunction Satellite Project.
      • The MCI originally served as a regulator for the ICT sector, and as a facilitator for the implementation of various ICT programs. It established the Indonesian Telecommunication Regulatory Body (BRTI), to which it has delegated the authority to regulate, supervise, and control telecommunications networks and services. The BRTI also organizes telecommunications spectrum auctions, which are sanctioned by the MCI.1
    • ICT

      Sector Laws and Regulations

      Sector Regulations

      Telecommunications Services

      The telecommunications service delivery in Indonesia fall under the Government Regulation No. 52 of 2000 on Telecommunications Operations, and the Regulation of the Minister of Communications and Informatics No. 10 of 2018 on Implementation of Telecommunications and Informatics Universal Service Obligation.

      Digital Services

      Government Regulation No. 82 of 2012 on the Implementation of Electronic Systems and Transactions governs the digital services segment of the ICT sector in Indonesia.

      Cybersecurity Services

      There is no stand-alone cybersecurity law in Indonesia. The various Indonesian laws applicable to the development of cybersecurity are as follows:

      • Law No. 11 of 2008 on Electronic Information and Transactions: This is the first cyber law in Indonesia, and it remains the main instrument for regulating online content and electronic transactions. Among the law’s provisions are those on (i) electronic information, records, and signatures; (ii) electronic certification, systems, and transactions; (iii) domain names, intellectual property rights, and the protection of privacy rights; (iv) prohibited acts; and (v) investigations.
      • Law No. 14 of 2008 on Public Information Disclosure: This law regulates information that is produced, stored, managed, sent, and/or received by a public agency. It states that every public agency is obligated to allow access to public information, except classified information. The law also identifies what information may be classified.
      • Law No. 17 of 2011 on National Intelligence: It sets out the criteria for the classification of government secrets.
      • Law No. 25 of 2009 on Public Service: This law identifies critical or strategic sectors that may require public services, such as education, health, energy, banking, transportation, natural resources, ICT, and tourism.
      • Law No. 23 of 2006 on Citizen Administration: This law protects citizens’ personal data, such as date of birth, citizen number, and family certificate number.
      • Government Regulation No. 82 of 2012 on the Implementation of Electronic Systems and Transactions: This law regulates seven of the nine matters in this area that need to be regulated by the government. These are Provision of Electronic Systems, Electronic Agent Operator, Provision of Electronic Transactions, Electronic Signature, Provision of Electronic Certification, Trust Mark Certification Body, and Domain Name Administration.1

      In addition to these foundational laws, Law No. 11 of 2008 on Electronic Information and Transactions, which adheres to the United Nations Commission’s standards for international trade law, also governs issues of cybersecurity.

      Sector Regulators

      The regulators of the telecommunications segment of the ICT sector in Indonesia are the

      • MCI,
      • BRTI, and
      • National ICT Society.

      The policy makers and regulators covering the digital services segment of the ICT sector in Indonesia include the

      • Commission for the Supervision of Business Competition (KPPU),
      • Ministry of Trade,
      • MCI,
      • Bank Indonesia (the central bank), and
      • Financial Services Authority (OJK).

      The government has set up an organization to provide cybersecurity for government institutions, select private companies, and the public. It is known as the National Cyber and Encryption Agency (BSSN). The BSSN is responsible for drafting the policies, legislation, and regulations regarding domestic cybersecurity and network security issues that fall within its purview (footnote 1).

      Foreign Investment Restrictions

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      Parameter201720182019
      Maximum allowed foreign ownership of equity in greenfield projects67%67%67%

      Source: Government of Indonesia, Presidential Regulation No. 44 of 2016 on Lists of Business Fields That Are Closed to and Business Fields That Are Open with Conditions to Investment.

      Standard Contracts

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      Type of ContractAvailability
      PPP/concession agreement1
      Performance-based operation and maintenance contract
      Engineering, procurement, and construction contract
      • 1License Agreement
      • Yes
      • No
    • ICT

      Sector Master Plan

      • Indonesia’s National Long-Term Development Plan (RPJPN) 2005–2025 provides the roadmap for the ICT sector in the country. Indonesia’s National Medium-Term Development Plan (RPJMN) 2015–2019 was the third phase of implementation of RPJPN 2005–2025. As a part of its “infrastructure and security” pillar, the main targets achieved under RPJMN 2015–2019 included:
        • increased coverage of fixed broadband from 15% at the end of 2013 to 71% of urban households and 49% of rural households by the end of 2019; and
        • increased fixed-broadband speeds from 1 megabit per second (Mbps) at the end of 2013 to 20 Mbps in urban areas and 10 Mbps in rural areas by the end of 2019.1
      • To achieve these targets, the government launched the Indonesia Broadband Plan 2014–2019 to address the need for affordable broadband across the country’s 18,000-plus islands. The most critical ICT infrastructure project proposed to help achieve the objectives of the Broadband Plan is the Palapa Ring project, which would involve the construction of a fiber-optic cable network comprising an undersea network of 13,000 kilometers (km) and an onshore network of 22,000 km. The project cost is estimated at $1.55 billion (Rp21.5 trillion), and would be implemented on a PPP basis. The private operator would be responsible for construction of the fiber-optic cable network, and would recover the costs based on the availability of infrastructure services by means of availability payments from the Telecommunications and Information Accessibility Body (BAKTI), under the MCI. These availability payments are guaranteed by the Indonesia Infrastructure Guarantee Fund (IIGF).
      • Three packages of the Palapa Ring project, including the Palapa Ring East Package, Palapa Ring West Package, and the Palapa Ring Central Package, have been successfully completed by MCI. The remaining packages of the Palapa Ring project are expected to be implemented under the RPJMN 2020–2024.

      Details on the Palapa Ring Project

      Project Name PPP Type Investment ($ million) Investment (Rp trillion) Status
      Palapa Ring Broadband PPP Project BOT 360 5 Under Preparation

      BOT = build–operate–transfer, Rp = Indonesian rupiah (national currency).

      Source: Government of Indonesia. National Medium-Term Development Plan 2020–2024.

      The PPP Book provides information on prospective PPP infrastructure projects in Indonesia.

      Prospective PPP Infrastructure Projects in the ICT Sector

      Project Name Government Contracting Agency
      Land Registration Information System PPP Minister of Agrarian Affairs and Spatial Planning/ National Land Agency
      Marine Observation and Modelling PPP Meteorological, Climatological, and Geophysical Agency

      ICT = information and communication technology.

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta, Indonesia.

      Projects under Preparation and Procurement

      ICT Public-Private Partnerships under Preparation and Procurement

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      ICT = information and communication technology.

      Note: “-” includes: no projects, data not available, or not applicable.

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). Public–Private Partnership: Infrastructure Projects Plan in Indonesia. Jakarta, Indonesia (3 years: 2017–2019). https://www.bappenas.go.id/files/9314/8767/3599/PPP_BOOK_2017.pdf, https://www.bappenas.go.id/files/PPP%20Book/PPP%20Book%202018%20FINAL.pdf, https://library.pppknowledgelab.org/documents/5826/download.

    • ICT

      Features of Past PPP Projects

      Procurement of PPP Projects

      ICT Public-Private Partnerships procured through various modes

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      ICT = information and communication technology.

      Note: “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      PPP Projects Reaching Financial Close

      ICT Public-Private Partnerships reaching Financial Close

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      ICT = information and communication technology.

      Note: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      PPP Projects with Foreign Sponsor Participation

      ICT Public-Private Partnerships with Foreign Sponsor Participation

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      ICT = information and communication technology.

      Notes: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Government Support to PPP Projects

      Government Support for ICT Public-Private Partnerships

      Three contracts were signed in 2016 for the Palapa Ring Broadband PPP project: those for Western, Central, and Eastern Indonesia. Palapa Ring is the first project in the telecommunications sector to use the availability payment scheme, introduced under the 2015 PPP regulations. It also received guarantees from the Indonesia Infrastructure Guarantee Fund to secure the availability payments.

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      ICT = information and communication technology.

      Notes: Only active projects are considered in the above graph. “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Payment Mechanism for PPP Projects

      Payment Mechanisms for ICT Public-Private Partnerships

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      Note: Only active projects are considered in the above graph.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Typical Risk Allocation for PPP Projects

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      Risk TypePrivatePublicSharedComment
      DemandThe demand risk, the tariff risk, and the revenue collection risk are with the public sector, as the users of ICT services delivered by the PPP projects make payments in the form of Access Charge and other relevant user fees to MCI acting through Kominfo - BAKTI.
      Revenue collectionThe demand risk, the tariff risk, and the revenue collection risk are with the public sector, as the users of ICT services delivered by the PPP projects make payments in the form of Access Charge and other relevant user fees to MCI acting through Kominfo - BAKTI.
      TariffThe demand risk, the tariff risk, and the revenue collection risk are with the public sector, as the users of ICT services delivered by the PPP projects make payments in the form of Access Charge and other relevant user fees to MCI acting through Kominfo - BAKTI.
      Government paymentThe private developer is responsible for the design and construction of the project assets, and for the delivery of the broadband and satellite services. The private developer gets paid in the form of availability payments linked to the availability of the project assets and service delivery performance from Kominfo - BAKTI. However, these availability payments from Kominfo - BAKTI are guaranteed by IIGF.
      Environment and social
      Land acquisitionLand acquisition is a slow and complex process in Indonesia; the private sector has no appetite to take the land acquisition risk.
      Interface
      Handover
      Political
      Foreign exchange (FOREX)
      • Yes

      BAKTI = Telecommunications and Information Accessibility Body, ICT = information and communication technology, IIGF = Indonesia Infrastructure Guarantee Fund, MCI = Ministry of Communication and Informatics.

      Source: Government of Indonesia, BAPPENAS. 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta. https://library.pppknowledgelab.org/documents/5826/download.

      Financing Details

      Parameter 19902017 19902018 19902019
      PPP projects with foreign lending participation 1 1 1
      PPP projects that received export credit agency/international financing institution support UA UA UA
      Typical debt:equity ratio Ranges from 65:35 to 80:20
      Time for financial closure 6 months
      Typical concession period 15 years
      Typical financial internal rate of return 12%–15%

      UA = unavailable.

      Sources: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta.https://library.pppknowledgelab.org/documents/5826/download; World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

    • ICT

      Tariffs

      All the PPP projects in the ICT sector are based on availability payments backed by guarantees from the IIGF. Hence, no data on the tariffs chargeable for ICT services are available.

  • Social Infrastructure

    Neighborhood Upgrading and Shelter Sector
    • Govt. Expenditure on Education (% of GDP)
      3.6 %
    • Education Spending (% of total spending)
      20.5 %
    • Total Health Expenditure (% of GDP)
      2.8 %
    • Health Spending per Capita
      $ 114.97
    • Hospital Beds (per 10,000 population)
      ----
    • Govt. Expenditure on Health (% of total expenditure)
      ----
    • Number of PPPs Reaching FC
      ----
    • Value of PPPs Reaching FC
      ----
    • Number of PPPs with Foreign Sponsors
      ----
    • Number of PPPs with Govt. Support
      ----

    FC = financial closure, GDP = gross domestic product, Govt. = government.

    Sources: The Economist Intelligence Unit. Measuring the Enabling Environment for Public–Private Partnerships in Infrastructure. https://infrascope.eiu.com/; TheGlobalEconomy.com. Education Spending, Percent of Government Spending – Country Rankings. https://www.theglobaleconomy.com/rankings/Education_spending_percent_of_government_spending/; ADB. 2016. Country Partnership Strategy: Indonesia, 2016–2019—Towards a Higher, More Inclusive and Sustainable Growth Path. Manila. https://www.adb.org/sites/default/files/institutional-document/202126/cps-ino-2016-2019.pdf; ADB Data Library. Cumulative Lending, Grant, and Technical Assistance Commitments. https://data.adb.org/dataset/cumulative-lending-grant-and-technical-assistancecommitments; TheGlobalEconomy.com. Health Spending per Capita – Country Rankings. https://www.theglobaleconomy.com/rankings/Health_spending_per_capita/

    • Social Infrastructure

      Contracting Agencies

      Health-Care Services

      There are three types of hospitals in Indonesia: public hospitals, private hospitals, and community or nonprofit organization hospitals. Public hospitals are managed by the Ministry of Health, other government ministries, the provincial government, the municipal or district government, the military, or the police. Private hospitals are managed by state-owned enterprises (SOEs) or the private sector (individuals, companies, and other private sector entities). And community or nonprofit organization hospitals are managed by the private nonprofit sector, for instance, by religious and social organizations.

      Accordingly, in the case of implementation of a health-care PPP at the national government level, the Ministry of Health would act as the contracting agency. The Ministry of Health may delegate its responsibility for the implementation of a national-level health-care PPP to a secretariat general. For the implementation of a health-care PPP at the regional government level, the governor, a regent, or a mayor would act as the contracting agency. The governor, regent, or mayor may delegate their responsibility for the implementation of a regional-level health-care PPP to a local secretary and or to a local public service agency (BLUD). Moreover, in the case of health-care facilities or hospitals devoted to specific needs, the contracting agency may be (i) the Ministry of Research Technology/National Research and Innovation Agency (for hospitals and medical schools); (ii) the Ministry of Defense and Indonesian Armed Forces for Hospitals (for military hospitals); (iii) the Indonesian National Police (for police hospitals); or (iv) the Ministry of Health for Hospitals (for hospitals for religious activities).

      Education Services

      Primary and secondary education in Indonesia come under the purview of the Ministry of Education and Culture and the Ministry of Religious Affairs (for Islamic schools). Higher education in Indonesia comes under the purview of the Ministry of Research Technology/National Research and Innovation Agency.

      Accordingly, for projects focused on primary and secondary education, the contracting agency could be a PPP, the Ministry of Education and Culture, or the Ministry of Religious Affairs (for Islamic schools). For PPPs involved in development, operations, and service delivery for universities, institutes, academies, and polytechnics, the contracting agency would be the Ministry of Research Technology/National Research and Innovation Agency.

      Public Housing

      In Indonesia, the responsibility for providing public housing is divided among the central government, provincial (or regional) governments, and city or district governments; but housing for low-income communities is under the central government.

      At all the levels, the housing sector comes under the purview of the Ministry of Public Works and Housing (MPWH). For an affordable housing or public housing PPP project, the MPWH would act as a the contracting agency.

      Government Buildings

      Depending on the nature and the type of government building being developed, the contracting agency could be a governor, regent, or mayor; the MPWH; or an SOE or regional (government)-owned enterprise (ROE).

      For correctional facility PPPs, the Ministry of Law and Human Right would be the contracting agency. For industrial zone PPPs, the Ministry of Industry would fulfill that role.

    • Social Infrastructure

      Sector Laws and Regulations

      Health-Care Sector Regulations

      The relevant regulations governing the implementation and delivery of health-care infrastructure include:

      • Law No. 44 of 2009 on Hospitals.
      • Law No. 36 of 2009 on Health.
      • Government Regulation No. 47 of 2016 on Health-Care Facilities.
      • Presidential Regulation No. 72 of 2012 on the National Health System.
      • Ministry of Health (MOH) Regulation No. 56 of 2014 on Hospital Classification and Licensing.
      • MOH Regulation No. 85 of 2015 on the State Treasury and Hospitals.
      • MOH Regulation No. 24 of 2016 on Technical Requirements of Hospital Infrastructure and Facilities.
      • MOH Regulation No. 40 of 2018 on Guidelines for Implementing Cooperation between Government of Indonesia with Business Entities in the Provision of Healthcare Infrastructure.
      • MOH Regulation No. 4 of 2019 on Technical Standards of Quality Service Compliance for Minimum Service of Healthcare.
      • MOH Regulation No. 7 of 2019 on the Provision of Environmental Health in Hospitals.
      • General Regulation No. 93 of 2015 on Teaching Hospitals.
      • Minister of Defense Regulation 11 of 2014 on the Standardization of Health Equipment in Class III Hospitals at the Ministry of Defense and Indonesian Armed Forces.
      • Head of Police of Indonesia Regulation No. 2 of 2010 on Guidelines of the Implementation of Bhayangkara Police Hospital.
      • Minister of Health Regulation No. 2407 of 2011 on the Hajj Health Service.

      Education Sector Regulations

      While there are various laws and regulations governing infrastructure development and service delivery in the education sector, the principal one is Law No. 20 of 2003 on the National Education System. This law lays down the provisions governing the delivery of primary, secondary, higher, informal, nonformal, religious, and other types of education. It also provides the educational standards to be met, as well as and the standards for education infrastructure, facilities, and equipment.

      Public Housing Regulations

      The various laws, government regulations, and ministry regulations governing the delivery of public housing services include:

      • Law No. 20 of 2011 on Vertical Housing.
      • Law No. 4 of 2016 on the Public Housing Fund.
      • Government Regulation No. 64 of 2016 on the Development of Low-Income Community Housing.
      • MPWH Regulation No. 21 of 2018 on the Implementation of Procedures for Cooperation between Government and Business Entities in the Provision of Infrastructure within the Ministry of Public Works and Housing.
      • MPWH Regulation No. 21 of 2016 on the Facilitation and/or Aid for Housing Procurement for Low-Income Communities.
      • MOHA Regulation No. 55 of 2017 on the Implementation of Licensing and Non-Licensing of the Construction of Low-Income Community Housing.
      • MPWH Regulation No. 1 of 2018 on Vertical Housing Construction and Management Aid.

      Regulations on Other Social Infrastructure—Government Buildings, Prisons, Correctional Centers, and Other Facilities

      The construction of other social infrastructure—such as government buildings, prisons, correctional centers, markets, industrial estates—are governed by the following laws and regulations:

      • Law No. 2 of 2017 on Construction Projects Financed by the State Budget.
      • Ministry of Trade Regulation No. 70 of 2013 (as amended by Ministry of Trade Regulation No. 56 of 2014) on Guidelines for Structuring and Fostering Traditional Markets, Shopping Centers, and Modern Shops.
      • Ministry of Trade Regulation No. 37 of 2017 (as amended by Ministry of Trade Regulation No. 37 of 2017) on Trade Facility Construction and Management.
      • Presidential Residential No. 112 of 2007 on Structuring and Guidance of the Traditional Market, Shopping Center, and Modern Shop.
      • Law No. 7/2014 on Trade.
      • Law No. 3/2014 on Industry.
      • Governmental Regulation No.142 of 2015 on Industrial Estate.
      • Ministry of Industry Regulation No. 40 of 2016 on Technical Guidelines for Industrial Estate Development.

      Foreign Investment Restrictions

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      Parameter201720182019
      Maximum allowed foreign ownership of equity in greenfield projects
      • Construction of healthcare facilities1

      67%67%67%
      • Services, including hospital management, specialist hospital/clinic, mental hospital, dental clinic, and laboratory and medical check-up services

      67%67%67%
      • Private maternity hospital, clinic general medical services/public hospital/ public medical clinic, residential health services, and basic healthcare services facility

      0%0%0%
      • Construction of education facilities

      67%67%67%
      • Non formal education services (vocational training, computer education, and language education)

      67%67%67%
      • Formal education services

      With licenseWith licenseWith license
      • Government buildings

      67%67%67%
      • Prisons and correction centres

      100%100%100%
      • Public housing

      100%100%100%
      • 1For investors from ASEAN countries, maximum foreign capital ownership allowed of 70%

      For investors from other member countries of the Association of Southeast Asian Nations (ASEAN), the maximum capital ownership allowed in the construction of health-care facilities is 70%.

      Source: Government of Indonesia, Presidential Regulation No. 44 of 2016 on Lists of Business Fields That Are Closed to and Business Fields That Are Open with Conditions to Investment.

      Standard Contracts

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      Parameter201720182019
      What standardized contracts are available and used in the market?
      • PPP/concession agreement

      • Performance-based operation and maintenance contract

      • Engineering procurement and construction contract

      • Yes
      • No
    • Social Infrastructure

      Sector Master Plan

      There are no specific details on the sector master plans for health care, education, public housing, and other types of social infrastructure available in English. The various social infrastructure PPP projects listed in PPP Yearbook 2019 are:

      Pipeline of PPP Social Infrastructure Projects

      Project Name Status Sector Responsible Agency (Implementing Unit) Investment
      ($ million) (Rp trillion)
      Indonesia National Cancer Center, Dharmais Hospital PPP Under preparation Health care Minister of Health (Ministry of Health) 170.00  2.4
      Pirngadi Hospital PPP Under preparation Health care Mayor of Medan (Regional Development Planning Agency of Medan City) 48.93  0.7
      Zainoel Abidin General Hospital PPP Under preparation Health care Governor of Nangroe Aceh Darussalam (Provincial Government of NAD) 139.74  1.9
      Sidoarjo General Hospital PPP Prequalification Health care Regent of Sidoarjo 23.88  0.3
      Gorontalo Regional Hospital PPP Prequalification Health care Governor of Gorontalo 54.80  0.8
      Relocation of Salemba Correctional Facility PPP Under preparation Correctional Facilities Minister of Law and Human Right (Directorate General of Correctional Facility) 94.52  1.3
      Nusakambangan Industrial Correctional Facility PPP Under preparation Correctional Facilities Minister of Law and Human Right (Directorate General of Correctional Facility) 35.81  0.5
      University of Sam Ratulangi Teaching Hospital PPP Under preparation Education Minister of Research and Technology/Head of National Research and Innovation Agency (University of Sam Ratulangi) 28.09  0.4
      Institut Teknologi Bandung’s Cirebon Campus Development PPP Under preparation Education Minister of Research and Technology/Head of National Research and Innovation Agency (Institut Teknologi Bandung) 29.36  0.4
      Ciputat Market PPP Under preparation Urban facility Mayor of South Tangerang (Industry and Trade Department) 16.87  0.2
      Teluk Bintuni Industrial Zone PPP Under preparation Industrial zones Minister of Industry (Directorate General of Chemical, Textile, and Various Industries) 441.41  6.1

      NAD = Nangroe Aceh Darussalam, Rp = Indonesian rupiah (national currency).

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta, Indonesia

      The PPP Book also provides information on prospective PPP infrastructure projects in Indonesia.

      Prospective PPP Social Infrastructure Projects

      Project Name Government Contracting Agency
      Central Kalimantan Provincial Hospital Provincial Government of Central Kalimantan
      Jogja Agro Techno Park PPP Provincial Government of DI Yogyakarta
      Tanjung Adikarto Fishery Zone PPP Provincial Government of DI Yogyakarta
      Ngawi Industrial Zone PPP Regency Government of Ngawi
      Ocean Research Center Indonesian Institute of Sciences
      Traditional Markets (Jombang and Serpong Markets) Municipal Government of South Tangerang
      Badung Utility Ducting Regency Government of Badung

      DI = Special Region.

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta. https://library.pppknowledgelab.org/documents/5826/download.

      Projects under Preparation and Procurement

      Social Infrastructure Public-Private Partnerships under Preparation and Procurement

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      Note: “-” includes: no projects, data not available, or not applicable.

      Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). Public–Private Partnership: Infrastructure Projects Plan in Indonesia. Jakarta, Indonesia (3 years: 2017–2019). https://www.bappenas.go.id/files/9314/8767/3599/PPP_BOOK_2017.pdf, https://www.bappenas.go.id/files/PPP%20Book/PPP%20Book%202018%20FINAL.pdf. https://library.pppknowledgelab.org/documents/5826/download.

    • Social Infrastructure

      Features of Past PPP Projects

      Procurement of PPP Projects

      Social Infrastructure Public-Private Partnerships procured through various modes

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      Note: “-” includes: no projects, data not available, or not applicable.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      PPP Projects Reaching Financial Close

      Social Infrastructure Public-Private Partnerships reaching Financial Close

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      Note: “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      PPP Projects with Foreign Sponsor Participation

      Social Infrastructure Public-Private Partnerships with Foreign Sponsor Participation

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      Note: “-” includes: no projects, data not available, or not applicable according to the database.

      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Government Support to PPP Projects

      Government Support for Social Infrastructure Public-Private Partnerships

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      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Payment Mechanism for PPP Projects

      Payment Mechanisms for Social Infrastructure Public-Private Partnerships

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      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Typical Risk Allocation for PPP Projects

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      Risk TypePrivatePublicSharedComment
      DemandMajority of the social infrastructure projects are based on availability payments, where the availability payments are backed by guarantees from IIGF. Consequently, the demand, revenue collection, and tariff risk generally sits with the contracting agency.
      Revenue CollectionMajority of the social infrastructure projects are based on availability payments, where the availability payments are backed by guarantees from IIGF. Consequently, the demand, revenue collection, and tariff risk generally sits with the contracting agency.
      TariffMajority of the social infrastructure projects are based on availability payments, where the availability payments are backed by guarantees from IIGF. Consequently, the demand, revenue collection, and tariff risk generally sits with the contracting agency.
      Government paymentGenerally, sits with the private sector; however, IIGF usually provides public sector guarantee against default of payments by contracting agency.
      Environment and social
      Land acquisitionLand acquisition is a slow and complex process in Indonesia; the private sector has no appetite to take the land acquisition risk.
      Interface
      Handover
      Political
      Foreign exchange (FOREX)
      • Yes

      GCA = government contracting agency, IIGF = Indonesia Infrastructure Guarantee Fund.

      Sources: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta. https://library.pppknowledgelab.org/documents/5826/download; World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

      Financing Details

      Parameter 19902017 19902018 19902019
      PPP projects with foreign lending participation UA UA UA
      PPP projects that received export credit agency/international financing institution support UA UA UA
      Typical debt:equity ratio 70:30
      Time for financial closure 6 months
      Typical concession period

      Health care: 12–17 years

      Correctional facilities: 15–25 years

      Education: 20 years

      Other social infrastructure: 20–25 years

      Typical financial internal rate of return 10%–15%

      UA = Unavailable.
      Government of Indonesia, Ministry of National Development Planning (BAPPENAS). Public–Private Partnership: Infrastructure Projects Plan in Indonesia. Jakarta (3 years: 2015, 2017, and 2019). https://www.bappenas.go.id/files/PPP%20Book/PPP%20Book%202015.pdf, https://www.bappenas.go.id/files/9314/8767/3599/PPP_BOOK_2017.pdf, https://library.pppknowledgelab.org/documents/5826/download.
      Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020).

    • Social Infrastructure

      Tariffs

      No information on the tariffs for social infrastructure projects is available.    

    • Social Infrastructure

      Challenges

      • Hospitals are an untested sector for private sector involvement in Indonesia. Two hospital PPP projects are being tendered. Their success would create a precedent for the use of hospital PPPs as a way to meet the challenges involved in hospital construction, expansion, and management, thus paving the way to future hospital PPPs.