Luky Eko Wuryanto Deputy Minister for Infrastructure & Regional Development, Coordinating Ministry of Economic Affairs Executive Secretary of KP3EI

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1 Luky Eko Wuryanto Deputy Minister for Infrastructure & Regional Development, Coordinating Ministry of Economic Affairs Executive Secretary of KP3EI 0

2 MP3EI aims to accelerate Indonesia s economic transformation through cross-entity synergy and collaboration In creating economic transformation for Indonesia, MP3EI policy rests on three pillars 1 Developing economic potential through economic corridors 2 Strengthening national connectivity 3 Strengthening national human resources capability and science & technology 2010 GDP ~ US$ 700 B GDP/capita: US$ 3, th largest economy 2014 GDP: US$ ~ 1,2 T GDP/capita: US$ ~ th largest economy 2025 GDP: US$ 3,8 4,5T GDP/capita: US$ 12 th largest economy and to date, MP3EI has supported Indonesia s economic growth through various initiatives 84 key projects groundbreaking since MP3EI launch in 2011 Cross-stakeholders coordination for sound projects implementation Debottlenecking to resolve challenges in projects implementation MP3EI is abbrevia)on of the Masterplan for Accelera)on and Expan)on of Indonesia s Economic Development (in Indonesian language)

3 MP3EI infrastructure projects offer potential opportunities of ~USD 64 billion for private sector participation MP3EI Infastructure Project Funding Sources* MP3EI Infrastructure Project Funding Gap per Infrastructure Sector Private Funds 400 (19%) 24% PPP 536 (25%) SOE Mixed Funds 27% 24% 152 (7%) APBN 599 (28%) Funding 41% Gap 8% State Budget (APBN) Funding Gap: ~ USD 64 Billion 41% Funding gap calculation based on: MP3EI Database per 31 August 2012 (477 Projects) Funding gap formula: Investment value (allocated State Budget + SOE). Private sector funded projects are assumed 100% fully covered. ICT sector is not included in the calculation as the projects list still under progress of validation Energy funding gap requires further validation with PLN 1% State-Owned Enterprise Funds Road & Bridges; 11.0% Railway; 22.5% Seaport; 21.5% Energy; 34.3% Water (logistics); 0.2% Airport; 10.6% Potential PPP opportunities are largest in the energy, railway and seaport sector. There are also opportunities in the road, airport and water sector.

4 The government will lead the infrastructure development by funding 15 projects that will ground break in 2014 The 15 Infrastructure projects to be funded by the Government have a total investment value of US$ ~ 3.72 Billion 2014: : 25 Infrastructure Projects (62%) 15 Infrastructure Projects (38%) Kalimantan 2 Projects US$ Million Sulawesi 2 Projects US$ Million Papua-Maluku 1 Project US$ Million Sumatra: 3 Projects US$ 1.13 Billion Java: 4 Projects US$ Million Bali-Nusa Tenggara 2 Projects US$ Million National ICT Project (Palapa Ring): US$ Million The 15 infrastructure projects funded by the Government will be a significant development for infrastructure development in Indonesia and improve Indonesia s competitiveness through a significant reduction of logistical costs

5 25 Priority Projects that are planned for groundbreaking before 2017 have large potential to be funded through PPP schemes Those 25 projects, which will be groundbreaking before 2017, have a total investment value of US$ ~32 Billion 2014: 15 Infrastructure Projects (38%) 2017: 25 Infrastructure Projects (62%) 2017 MP3EI High Priority Projects in 2017 Road 12 Projects Water Supply 2 Projects Railway 3 Projects Airport 1 Projects Energy 3 Projects Seaport 4 Projects Funding sources for infrastructure projects planned for groundbreaking in 2017: 5 projects directly funded through State Budget (20%) Kalimantan 3 Projects US$ 3.9 Billion Sulawesi 5 Projects US$ 5.6 Billion Papua-Maluku 1 Project US$ Million 16 Potential PPP Projects (20%) 3 projects indirectly funded through State Budget (Loans) (12%) 1 project funded by State-Owned Enterprise (4%) Sumatra: 9 Projects US$ 10.3 Billion Java: 6 Projects US$ 10.7 Billion Bali-Nusa Tenggara 1 Project US$ Million 16 High Priority Projects with groundbreaking before 2017 will be offered to the private sector through Private- Public Partnership (PPP) schemes.

6 25 High Priority Projects will be ready for groundbreaking between 2015 and 2017 and 16 projects of these projects have potential to be funded through a PPP scheme Sumatra Investment Value (US$ Mill) Toll Roads Medan Binjai (15.8 km) Palembang Indralaya (22 km) Pekanbaru Kandis Dumai (135 km) 1,529.9 Bakauheni Terbanggi Besar (150 km) 2,372.4 Tebing Tinggi Kisaran Rantau Prapat (178 km) 1,396.2 Panimbang Serang (83 km)** 1,191.0 Lubuk Pakam Tebing Tinggi (43.5 km)* Seaports Hub Kuala Tanjung 2,794.5 Tanjung Sauh at Batam Not yet available Sumatra Kalimantan Toll Road Balikpapan-Samarinda (99.02 km) Purukcahu Bangkuang Mangkatip Railway (290 km) Coal-Fired Power Plant Asamasam 5-6 (2x100 MW)* Kalimantan Investment Value (US$ Mill) 1, , Sulawesi Sulawesi Papua-Maluku Investment Value (US$ Mill) Road Palu Parigi (37.4 km) Toll Road Manado Bitung (46 km) International Hub Bitung 3,208.4 Railway Makassar Pare-Pare ( km)* Hydro Electric Power Plant Karama 1,375.5 (4x112.5 MW)* Java Investment Value (US$ Mill) Access Road to Purwakarta Industrial Area (7.8km)* 71.2 Umbulan Water Supply* Cilamaya Port and Access Road (30km) 4,175.6 Karawang Airport & Access Road 3,746.5 Railway Madiun Surabaya (165 km Double Track) Coal-Fired Power Plant Indramayu 4 (1 x 1000 MW)* 2,116.0 Java Bali-NT Investment Value (US$ Mill) Water Supply South Bali** Bali Nusa Tenggara Papua-Maluku Investment Value (US$ Mill) Road Enarotali Tiom (240 km)** Notes: Blue-marked projects are potential PPP-projects. All projects are expected to groundbreak (GB) in 2017, except: *) GB in 2015 and **) GB in 2016

7 Project Profile: Trans Sumatera High Grade Highway The Highway lies along the east coast of Sumatera, connecting 7 major cities, 8 national activity centers, 5 airports, and 6 seaports. As part of ASEAN Highway network to support rapid and fair economic growth in the island. Key project information Total length of aproximately 2,800 km Target time: partially GB in 2014 and 2017 Implementing entity: Ministry of Public Works and Local Governments Total project value (see table below) Section Land acq. Construction Investment (US$ mill) (US$ mill) (US$ mill) A. Main Corridor A1. Lampung - Palembang , ,398.2 A2. Palembang - Pekanbaru 255 2,067 3,627 A3. Pekanbaru - Medan , ,319.7 Total Main Corridor , ,344.9 LEGEND: Green line : Phase 1 Red line : Phase 2 Blue line : Phase 3 B. Connection Corridor B1. Medan - Banda Aceh , ,982.3 B2. Palembang - Bengkulu B3. Pekanbaru - Padang B4. Medan - Sibolga Total Connection Corridor , ,982.3 GRAND TOTAL , ,327.2

8 Project Profile: Samarinda Balikpapan Toll Road The road network in Kalimantan is part of the priority BIMP-EAGA Multi Modal Transportation System, with the objective primarily of enhancing the efficiency of distribution of goods and services. This toll road has been designated by Government decree and is a component of the ASIAN Highway as well as the ASEAN Highway network. Key project information Total length of aproximately 99.4 km Target time: Tender in 2016, Groundbreak in 2017 Implementing entity: Ministry of Public Works The estimated project cost is US$ million, which includes: a) Construction Cost: US$ million b) Land Acquisition Cost: US$ million Project Status: Section Length (km) I II III Acquired Status Land (km) About 1.5 km of toll road Right of Way (ROW) has been constructed Required total area calculation and sum of cut plant Required total area calculation and sum of cut plant BIMP EAGA is the "Brunei Darussalam Indonesia Malaysia Philippines East ASEAN Growth Area" IV Road facility inventorying V Price negotiations between P2T and BPN with landowner

9 Project Profile: West Semarang Water Supply Key project information Total capacity of 1,050 liter/sec (from Jatibarang Dam* Target time: Tender in 2013, Groundbreak in Implementing entity: Municipality Government of Semarang Estimated Project Cost is US$ 79.7 Million. Estimated FIRR: 10.9% Estimated EIRR: 24.3% Project Status: OBC/Review of Pre-FS completed. PDF activities have been done by PPP Network Enhancement Project (JICA). The project is currently entering the transaction stage. Transaction activities are handled by IIF and Bappenas (IRSDP). *Jaitbarang Dam is currently under construc)on, will be completed in 2013 and fully opera)onal in Central Java The Project Service Area covers 31 sub-districts in 3 District, below 100 m above sea level. Existing services serve ± 25,000 HH PDAM users. Planned services will serve ± 80,000 HH, 3 big industrial zones and an international airport. Zone 1, 2, and 3 are residentialand industrial area. Zone 4 & 5 are mixed used area.

10 Project Profile: Hydro Electric Power Plant Karama Key project information Total capacity: 4 x MW Hydropower with reservoir of 1445 million m 3 Target time: Groundbreak in The Hydro Electric Power Plant of 450 MW in Karama River, West Sulawesi province, support the provision of electricity in West, Central and South Sulawesi. Implementing entity: PLN (State-Owned Electricity Company) Connection to Central Sulawesi Grid Estimated Project Cost is US$ 1,376.5 Million, which consists of: Land Acquisition Costs of US$ Million Construction Costs of US$ 1,262.7 Million. Project Status: Review of Pre-FS completed Consortium ANZ has done review of FS, preliminary market sounding and coordination with PT PII for government guarantee In progress of determining compensation option for initiator and preparation of transaction. Connection to South Sulawesi Grid

11 The current progress of Public-Private Partnership (PPP) scheme in Indonesia Project Preparation No specific support for land acquisition Uncertainty on the process of land settlement with land owners; bottleneck for many infrastructure projects, esp. roads Unclear implementing authority; difficulty in coordinating acquisition process and financing Regulatory preparation support New land law (UU no.12/2012) guarantees land acquisition for public necessity, that would iron out the hurdle of land acquisitions Allocation of Land Revolving Fund as a land acquisition fund to provide bridging finance for toll road investors in acquiring the lands. Financial Support Fiscal support was not guaranteed Government Support (Direct and Contingent) is the most critical issue impacting potential investors ability and willingness to participate in PPP transactions. Existing viability gap funding mechanism is unwieldy and not conducive to the potential investors Enactment of regulatory fiscal support Perpres 56/2011 specifically contemplates direct (fiscal and non-fiscal) government support, including land acquisition, and government guarantee Regulation of MOF no.223/2012, regulating Viability Gap Funding Infrastructure fund to finance commercially viable project Specific improvement Toll Road General PPP scheme General provisions of PPP for Toll road projects requires further defined tangible government s support Need more incentives to commit investment More supportive PPP scheme Perpres 13/2010 PPP incorporates government s guarantee in tendering & concession design Allowing annual tariff increase Extension of concession period up to 40 years

12 REPUBLIC Of INDONESIA COORDINATING MINISTRY FOR ECONOMIC AFFAIRS Luky Eko Wuryanto Deputy Minister for Infrastructure & Regional Development Coordinating Ministry of Economic Affairs Executive Secretary, KP3EI Jalan Lapangan Banteng Timur No. 2 4, Jakarta Pusat - Indonesia Phone: ; Fax: lukyeko@gmail.com 11