Roads
-
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
- 1ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf
Foreign Investment Restrictions
Parameter 2017 2018 2019 Maximum allowed foreign ownership of equity in greenfield projects 100% 100% 100% LEARN MORERoads
Sector Laws and Regulations
The maximum equity investment allowed for foreign investors in greenfield projects in the roads sector has been 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.
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:
- 1L.V.H. Tampubolon. 2019. Financing for Sustainable Public Transportation. Presentation at a meeting at BAPPENAS. Jakarta. 13 November. https://balitbanghub.dephub.go.id/index.php/file/118
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
LEARN MORERoads
Sector Master Plan
PPP Toll Road Projects Under Preparation, 2019
Name of Project Distance (km) Investment Cost ($ million) (Rp billion) Gedebage–Tasikmalaya–Cilacap 206.6 57.59 799.8 Kamal–Teluk Naga–Rajeg 38.6 23.16 321.6 Semanan–Balaraja 31.9 16.00 222.2 Akses Patimban 37.7 6.35 88.2 Riau Non-Toll Road Preservation 43.0 1.11 15.4 km = kilometer, Rp = Indonesian rupiah (national currency).
Note: Rp1 = $0.000072.
Source: Government of Indonesia, Ministry of National Development Planning (BAPPENAS). 2019. Public–Private Partnership: Infrastructure Projects Plan in Indonesia 2019. Jakarta, Indonesia. https://library.pppknowledgelab.org/documents/5826/download; Indonesia Toll Road Authority (BPJT). https://bpjt.pu.go.id/.
PPP Toll Road Projects Under Procurement, 2019
Name of Project Distance(km) Investment Cost ($ million) (Rp billion) Jembatan Balikpapan–Penajam Paser Utara 7.90 15.53 215.7 Solo–Yogyakarta–NYIA Kulon Progo 93.14 28.85 400.6 Yogyakarta–Bawen 76.36 17.38 241.4 km = kilometer, NYIA = New Yogyakarta International Airport, 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; Indonesia Toll Road Authority (BPJT). https://bpjt.pu.go.id/.
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
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
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
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
- 1World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots: Indonesia. https://ppi.worldbank.org/en/snapshots/country/indonesia (accessed 24 August 2020)
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
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
Risk Type Private Public Shared Comment Traffic Collection risk Competition risk Government payment risk The 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.
- 1BPJT. http://bpjt.pu.go.id/
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
-
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
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 2020–2024 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.
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
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
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
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
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
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
Risk Type Private Public Shared Comments Demand risk The demand risk, the tariff risk, and the revenue collection risk are with the public sector. Revenue collection risk The 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 risk 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 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 1990–2017 1990–2018 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
- 1ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.
-
Ports
-
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
- 1ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.
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
Parameter 2017 2018 2019 Maximum allowed foreign ownership of equity in greenfield projects 49% 49% 49% LEARN MOREPorts
Sector Laws and Regulations
The maximum equity investment allowed for foreign investors in greenfield projects in the port sector has been 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.
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
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
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
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
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
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
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
Risk Type Private Public Shared Comment Demand risk Market practice in the ports sector is that the private party bears this risk. Competition risk (exclusivity) Tariff risk In 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 risk The 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 1990–2017 1990–2018 1990–2019 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.
- 1ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.
-
Airports
-
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
- 1PT Angkasa Pura I. 2018. Growing Steadily to Enter Global Class Standard: Annual Report 2018. Jakarta. https://ap1.co.id/contents/file/616-AP1_AnnualReport2018.pdf; PT Angkasa Pura II. https://www.angkasapura2.co.id/en/.
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.
- 1ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.
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
Parameter 2017 2018 2019 Maximum allowed foreign ownership of equity in greenfield projects 49% 49% 49% LEARN MOREAirports
Sector Laws and Regulations
The maximum equity investment allowed for foreign investors in greenfield projects in the airport sector has been 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.
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
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
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
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
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
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
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
Risk Type Private Public Shared Comments Demand The demand risk, the tariff risk, and the revenue collection risk are with the private sector. Revenue collection The demand risk, the tariff risk, and the revenue collection risk are with the private sector. Tariff The demand risk, the tariff risk, and the revenue collection risk are with the private sector. Government payment Not applicable 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
Financing Details
Parameter 1990–2017 1990–2018 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 9–12 months 9–12 months 9–12 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
- 1ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.
-
Energy
-
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.
- 1ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.
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
Business Activity Maximum % of FDI Allowed Power generation 100% Power transmission 100% Power distribution 100% Oil and gas 75% LEARN MOREEnergy
Sector Laws and Regulations
Presidential Regulation No. 44 of 2016 imposes maximum limits on foreign ownership of various aspects of the energy business, as shown below. For instance, power generation projects above 10 megawatts (MW) can be 100% foreign-owned during the concession period, provided that the projects were developed under a PPP scheme. This regulation is currently under review.1
- 1ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.
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
Type of Contract Availability 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
LEARN MOREEnergy
Sector Laws and Regulations
PLN does not use a standard form of power purchase agreement (PPA), unless it is for a renewable energy project. The form of the PPA differs from project to project, though most projects have similar risk allocations. The general principles of a PPA are currently set out in MEMR Regulation No. 10 of 2017 on Principles of Power Purchase Agreements, as last amended by MEMR Regulation No. 10 of 2018. The types of risks allocated under a PPA generally include
- natural force majeure,
- government force majeure,
- power-load requirements,
- limits of transmission capability,
- fuel availability,
- land acquisition issues, and
- generator performance.1
Currently, all renewable energy projects in Indonesia are developed under the build–operate–own–transfer (BOOT) scheme, in which PLN is the sole offtaker of the electricity produced. The independent power producers (IPPs) own and operate the production facilities for a limited period, as mentioned in the PPA with PLN.2
- 1ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.
- 2Power Technology. Solar Companies Struggle with Renewable Energy Policy in Indonesia. https://www.power-technology.com/comment/solar-powerindonesia/.
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
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
- 1ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.
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
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
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
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
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
Risk Type Private Public Shared Comment Demand risk Revenue collection risk Tariff risk Government payment risk Environmental and social risk As 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 risk The 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 risk There 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 condition Not applicable Grid performance risk Hydrology risk Exploration and drilling risk This 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.
- 1ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.
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
- 1ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.
-
Water and Wastewater
-
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
- 1World Bank. 2020. Water Supply & Sanitation. In World Bank, Indonesia Public Expenditure Review: Spending for Better Results. Washington, DC: The World Bank Group. http://pubdocs.worldbank.org/en/756411590233766450/ID-PER-2020-Ch12-Water-Supply.pdf.
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
Parameter 2017 2018 2019 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.
Standard Contracts
Type of Contract Availability PPP/concession agreement Bulk water supply agreement Performance-based operation and maintenance contract Engineering, procurement, and construction contract - Yes
- No
LEARN MOREWater and Wastewater
Sector Laws and Regulations
Most projects proposed under the national PPP program are based on the build–operate–transfer (BOT) model, but there is no standardization of contracts. Concession structures have been used for the Umbulan Water Supply Project, Bandar Lampung Water Supply System, Jakarta West Water Concession, Jakarta East Water Concession, and Tangerang City Water Concession.1
- 1ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.
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
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
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
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
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
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
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
Risk Type Private Public Shared Comments Demand Both 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 Collection Both 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. Tariff While 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 Payment Generally, 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 1990–2017 1990–2018 1990–2018 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% 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
- 1ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.
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
- 1 ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.
-
ICT
-
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
- 1Frost & Sullivan. 2018. Digital Market Overview: Indonesia. Santa Clara, CA. https://ww2.frost.com/files/3115/2878/4354/Digital_Market_Overview_FCO_Indonesia_25May18.pdf.
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
- 1Frost & Sullivan. 2018. Digital Market Overview: Indonesia. Santa Clara, CA. https://ww2.frost.com/files/3115/2878/4354/Digital_Market_Overview_FCO_Indonesia_25May18.pdf.
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).
- 1Frost & Sullivan. 2018. Digital Market Overview: Indonesia. Santa Clara, CA. https://ww2.frost.com/files/3115/2878/4354/Digital_Market_Overview_FCO_Indonesia_25May18.pdf.
Foreign Investment Restrictions
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 $1.55 billion (Rp21.5 trillion), and would be implemented on a PPP basis. The private operator would be responsible for construction of the fiber-optic cable network, and would recover the costs based on the availability of infrastructure services by means of availability payments from the Telecommunications and Information Accessibility Body (BAKTI), under the MCI. These availability payments are guaranteed by the Indonesia Infrastructure Guarantee Fund (IIGF).
- Three packages of the Palapa Ring project, including the Palapa Ring East Package, Palapa Ring West Package, and the Palapa Ring Central Package, have been successfully completed by MCI. The remaining packages of the Palapa Ring project are expected to be implemented under the RPJMN 2020–2024.
- 1Indonesia Investments. Government Development Plans of Indonesia. https://www.indonesia-investments.com/projects/government-developmentplans/item305; Frost & Sullivan, Digital Market Overview: Indonesia.
Details on the Palapa Ring Project
Project Name PPP Type Investment ($ 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
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.
- 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:
ICT
Features of Past PPP Projects
Procurement of PPP Projects
ICT Public-Private Partnerships procured through various modes
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
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
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.
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
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
Risk Type Private Public Shared Comment Demand The 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 collection The 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. Tariff The 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 payment The 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 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
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 1990–2017 1990–2018 1990–2019 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.
ICT
Challenges
Poor governance and capacity issues likely to cause delays in PPP agreement.1
- 1ADB. 2019. Public–Private Partnership Monitor (second edition). Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitorsecond-edition.pdf.
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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
Parameter 2017 2018 2019 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 license With license With 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.
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
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
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
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
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
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
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
Risk Type Private Public Shared Comment Demand Majority 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 Collection Majority 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. Tariff Majority 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 payment Generally, sits with the private sector; however, IIGF usually provides public sector guarantee against default of payments by contracting agency. 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
LEARN MORESocial Infrastructure
Features of Past PPP Projects
Most social infrastructure projects are based on availability payments that are backed by guarantees from the Indonesia Infrastructure Guarantee Fund (IIGF).
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 1990–2017 1990–2018 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 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.
Social Infrastructure
Govt. Expenditure on Education (% of GDP)
Education Spending (% of total spending)
Total Health Expenditure (% of GDP)
Health Spending per Capita
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/