This presentation was delivered during the 6th Meeting of the OECD Southeast Asia Regional Programme’s Regional Policy Network on Sustainable Infrastructure, which took place on 25-26 April 2022 in Manila, the Philippines. The OECD’s Public Governance Directorate and Environment Directorate teamed up with the OECD Korea Policy Centre to organise the event. The National Economic and Development Authority (NEDA) of the Philippines co-chaired the event alongside the United States, and the Public Private Partnership Centre of the Philippines graciously provided the venue. For more details about the meeting, including the agenda and a short summary record, please visit: https://www.oecd.org/site/sipa/events/sipa-searp-philippines-2022.htm.

1. 6th OECD Regional Policy Network Meeting on Sustainable
Infrastructure
Manila, 25-26 April 2022
Directorate of Government Support and Infrastructure Financing
Management, Ministry of Finance of Indonesia
Innovative Financing to
Promote Sustainable
Infrastructure

2. Outline
1. Indonesia Commitment towards
Net Zero Emission Target in 2060
2. Maintaining Consistency of Fiscal
Policy Responses During the
Pandemic
3. Creative Financing Scheme for
Sustainable Infrastructure
4. Ongoing Initiative
2

3. Paris Agreement dan
Nationally Determined
Contribution (NDC)
2030
Target:
29% with current financial
capacity
41% with International Support
MITIGATION
ADAPTATION
IPPU
forestry
Energy and
transportation Waste Agriculture
314
3.25
497
692 446
11
40
9
4
3
41%
29%
Indonesia
Emission
Reduction
Target
Emission Reduction Targets based on Sector according to NDC
(M Ton CO2e)
Policy Strengthening and Implementation
Carbon
Pricing
Climate
Change
Financing
Technology
Development
and Transfer
Capacity
Building
Carbon trading
Carbon Tax
(Tarif minimum: Rp30/Kg CO2e)
Climate Resilience
Economic
Resilience
1 Social
Resilience
2 Environment
Resilience
3
Long-Term Strategy for
Low Carbon and Climate
Resilience 2060
LCCP Scenario:
• Emission Peak on 5 sector on 2030 =
540 M ton CO2e
• Net-Sink FOLU in 2030
• Net Zero Emission in 2060
Mandate from:
• Paris Agreement Article. 4.19
• Dec.1/CP.21 Para 35
Net Zero Emission 2060
Mention on:
• First NDC (2016)
• Updated NDC (2021)
Climate Change Mitigation
Financing Needs
Reference Scope Cost/Impact estimation
Second Biennial Update
Report, KLHK (2018)
Climate Change Mitigation Cost to
achieve NDC
Accumulative Mitigation Cost
until 2030= USD 241.3 Billion
Roadmap NDC Mitigation
Indonesia, KLHK (2020)
Climate Change Mitigation Cost to
achieve NDC(using the mitigation
action cost approach)
Accumulative Mitigation Cost
until 2030 = USD 263.5 Billion
(USD 23.96 Billion/year)
● The current financing capacity to
achieve the NDC target is still
insufficient.
● The financing gap is amounted
around USD 148 - 263 billion.
Indonesia Commitment towards Net Zero
Emission Target in 2060
3

4. Focused on saving people, recovery and reform to strengthen the foundation of the economy
EXTRAORDINARY
POLICY
REOPENING
POLICY
RECOVERY & REFORM POLICY
IMMEDIATE RESPONSE:
• Emergency Law approved by
Parliament (UU No.2/2020)
• Budget deficit is allowed to be
above 3% GDP, yet only for 3 years
• Central Bank is allowed to purchase
Government Securities in primary
market
PROVISION OF
STIMULUS: REOPENING
Expansion of stimulus and
program reconstruction to
expedite economic recovery
RECOVERY & REFORM ACCELERATION
• Pandemic Handling and Vaccination Programs
• Acceleration of recovery through continuous
National Recovery Program (PEN)
• Economic transformation through structural
reform
2020 2021-2022
HIGH QUALITY
FISCAL CONSOLIDATION
FISCAL DISCIPLINE FOR
LONG TERM
SUSTAINABILITY
• The deficit returns to a
maximum of 3% of GDP
in 2023
• Strengthening the
effectiveness of
productive spending
• Primary balance towards
positive
• Debt ratio is strived to
decrease
• Debt risks are under
control
The Budget moves very dynamically to support the handling of Covid-19 and economic recovery
-1,76%
-5,07%
-6,34% -6,14%
Initial
Budget
Budget
Revision I
-4,7%
-5,5% -5,7%
Budget
Proposal
Budget
2021
The Changes of Budget Deficit during the COVID-19 Pandemic (% of GDP)
2023
Budget
2022
-4,85%
-4,65%
Realization
Pre-Budget
Maintaining Consistency of Fiscal Policy
Responses During the Pandemic
Realization
Budget
Revision II
4

5. Creative Financing Scheme for
Sustainable Infrastructure
Public Private
Partnership
Blended Finance
SDG Indonesia One
An arrangement between public
funding and private financing for
infrastructure projects.
1
2
3
The blended finance scheme is implemented
in order to find optimum financial structure
that combines several funding/financing
sources in one project from Government, i.e.
Budget (Central and Local), Private Sector,
Donors (Development agencies) and
Philanthropists.
PPP scheme could be used as the
backbone of Blended Financing
SDG Indonesia One is a blended
finance platform managed by PT.
Sarana Multi Infrastruktur (SMI) to
finance SDGs from various sources:
philanthropists, international
donors, climate finance institutions,
green investors, commercial banks,
Multilateral Development Banks
(MDBs), etc.
5
Infrastructure Financing Needs
2020-2024
Private:
(USD 185 bio)
(42%)
Infrastructure
investment needs
for
2020-2024:
USD 441
bio
SOE:
(USD 93 bio)
(21%)
Government Budget
(USD 163 bio)
(37%)

6. ▪ Establishment of PPP Unit under the MoF
▪ Establishment of PPP Joint Office with other ministries
as a platform for coordination and a hub with private
sectors
▪ Establishment of Special Mission Vehicles (SMVs):
-PT. PII (IIGF) for managing govt guarantees
-PT. SMI for providing project assistance & financing
-PT. IIF for financing projects
-LMAN for providing land clearing fund
• PPP policy was initiated in 2005. It takes years to establish solid frameworks.
• Now PPP is a proven and workable scheme. So far has 50 projects pipeline and delivered 29 projects signed with amounted
USD 16.83 bio.
INSTITUTIONAL ARRANGEMENT
4
Pillars of PPP
Development
▪ An overarching framework: Presidential
Regulation no. 38/2015 as main umbrella.
▪ Operational guidelines e.g. Minister of Nat
Devt Planning Regulation no. 2/2020
▪ MoF Regulatory package of government
support allocated from budget.
▪ Other regulatory supports (procurement etc)
REGULATORY FRAMEWORK
FISCAL GOVT SUPPORTS
▪ Project Development Facility (PDF):
Project preparation facility
▪ Viability Gap Fund (VGF):
Construction subsidy to Private Co. (SPV)
▪ Government Guarantees
Covering specific risks of PPP projects
▪ Support to Availability Payment (AP) Scheme
Support from Govt Budget for PPP services
▪ Other government support
SECTOR FOCUSES
▪ Basic Necessities
▪ E.g. Drinking Water
▪ Healthcare
▪ Urban Issues
▪ Urban Transport
▪ Waste Management
▪ Housing
▪ Gas Distribution
▪ Other government priority
PPP Scheme as a Backbone for Creative
Infrastructure Financing
6

7. Blended Finance Scheme in
Infrastructure Investment
Railway Design Build Finance Operation Maintenance
Rail track and
Operations Facilities of
Segment B-C-D
Sukuk Project SPV SPV
Rail track, Station, and
Operation Facility of
Segment F
SPV SPV SPV SPV SPV
• Traditionally, Government
programs or projects are
funded from single source i.e.
Government Budget either
from tax, or Loans, or Grants.
• The blended finance scheme
is implemented in order to
find optimum financial
structure that combines
several funding/financing
sources in one project from
Government, i.e. Budget
(Central and Local), Private
Sector, Donors (Development
agencies) and
Philanthropists.
Blended Finance Implementation in Makassar
Parepare Railway
Project and Financial structuring
is the key of Blended Finance
……………………………………………………
……………………..
Railway
Segment B
Palanro - Barru
(26.85 km)
Railway
Segment C
Barru - Pangkep
(16.10 km)
The planned railway will
pass through the towns
of Maros, Pangkajene,
and Barru en route
between Makassar and
Parepare
● The shift from
private vehicles and
truck freight to
public transport will
reduce greenhouse
gas emissions.
● The new public
transport will
improve mobility
and access to jobs
and reduce travel
time and costs.
Siding Track
(3.77 km)
Siding Track
(1.19 km)
STA
Garongkong
Port
Railway Segment D
Pangkep - Maros
(64.05 km)
……
..
…..
…………
……
Railway
Segment F
(8.85 km)
…………
……
Railway
Segment F
(6.63 km)
STA STA
Tonasa
Cement
Bosowa
Cement
Lesson learned: This project implementing ESG. In order to get financing, lender imposing ESG assessment to the project. However as ESG had not been
embedded since the preparation, it took longer time to fulfil the corrective action plan toward required Environment and Social aspects.
7

8. Other setbacks caused by:
• Tariff policy
• Unsustainable business
model
• High interest rate
Lack of project readiness due
to inadequate process
preparation (including the
risks allocation framework)
Blended Finance
Solution
Use various
sources of funds
from various
stakeholders to
de-risk projects
and increase
bankability
Offers consultation
and project
development
service to improve
project qualities
and readiness
Synergy and
collaborate with
relevant
stakeholders and
strategic partners
Resources and public
sector’s limited ability on
budgeting, planning, and
preparation
SDG Indonesia One was
established in October 2018
USD 3.27 Billion from
34 Partners
Challenges Platform Concept
SDG
Development
Facilities
SDG
De-risking
Facilities
SDG
Financing
Facilities
SDG
Equity
Fund
SDG Indonesia One as Main Blended
Finance Platform
8

9. ❑ Indonesia’s commitment to achieve SDGs and
address climate change issue as stated in
Nationally Determined Contributions (NDC)
❑ Health and social challenges due to Covid-19
pandemic and the continued threat of climate
change is increasingly disrupting the policy
direction of becoming more "green and blue"
❑ The need to capture opportunities in attracting
new investors who have "green and blue"
financing commitment to meet the financing gap in
order to achieve SDGs and NDC target.
ESG principles implementation as
Indonesia’s commitment to addressing
climate change issue as well as capturing
financing opportunities
Ongoing Initiative: ESG Principles
Implementation in Infrastructure Projects
Ministry of Finance is going to implement ESG framework gradually for the government support for infrastructure project
by considering local circumstances
Government Support for Infrastructure Projects
PPP scheme
▪ PDF
▪ VGF
▪ PPP Government
Guarantee
▪ Availability
Payment
Non PPP Scheme
Government
Guarantee for:
▪ Assignment to SoE
▪ National Strategic
Projects
▪ Direct
Lending
Five principles
being adopted,
considering
country’s
circumstances
Sustainability and
Resilience
Mainstreaming gender
equality and
empowering women
Support the protection
of human rights
Leaving No One Behind
Promoting accountability
and transparency
9
Learned from Makassar Pare-Pare project, since 2021 PDF scope
also include assessment on environment and social risk and
impact and start addressing its governance issue ESG will be part of government support business processed

10. 10
ROADS
17
Projects
WATER
10
Projects
ENERGY
4
Project
ICT
4
Projects
TRANSPORT
6
Projects
ENERGY
EFFICIENCY
1
Project
WASTE
TREATMENT
4
Projects
INDUSTRIAL
AREA
1
Project
13
Projects
10
Projects
6
Projects
3
Projects
18
Projects
OPERATION CONSTRUCTION
COMMERCIAL
CLOSE
BIDDING/
TRANSACTION
APPRAISAL/
PREPARATION
(Kurs APBN 2020: Rp14,400)
SUMATERA NON
TOLL ROAD (RIAU)
PEKANBARU
WATER
SOUTH SUMATERA
NON TOLL ROAD
PALAPA RING WEST
PACKAGE 1980 KM
BANDAR LAMPUNG
WATER
BALIKPAPAN- SAMARINDA
TOLL ROAD
PALAPA RING CENTRAL
PACKAGE 1980 KM
MANADO- BITUNG
TOLL ROAD
PALAPA RING EAST
PACKAGE 8454 KM
BEKASI VTCC
PROVING GROUND
WEST SEMARANG
WATER
BATANG- SEMARANG
TOLL ROAD
SERANG- PANIMBANG
TOLL ROAD
UMBULAN
WATER
CENTRAL JAVA
POWER PLANT
CISUMDAWU
TOLL ROAD
JAPEK II ELEVATED
TOLL ROAD
SOUTH JAPEK II
TOLL ROAD
MULTI FUNCTIONAL
SATELLITE
MAKASSAR – PAREPARE
RAILWAY
KOMODO
AIRPORT
KAMIJORO
WATER SURAKARTA
STREET LIGHTING KALENDER
TOLL ROAD
PANDAAN-MALANG
TOLL ROAD
PROBOLINGGO
TOLL ROAD
TELUK BINTUNI
INDUSTRIAL ZONE
SOUTH TANGERANG
WASTE TREATMENT
JATIGEDE WATER
29
Signed Projects
Estimated investment
value USD 16.83 bio
NUMBER OF PROJECTS CLASSIFIED BY SECTORS (50 PROJECTS IN TOTAL)
LEGOK NANGKA
WASTE TREATMENT
SEMARANG-DEMAK
TOLL
SOLO-JOGJA-
KULONPROGO TOLLROAD
BANDARA
SINGKAWANG
JATIBARANG WASTE
BADUNG NON
TOLL ROAD
SEI MANGKEI HOUSING
MERANGIN DAM
HOUSING
3
Project
PDF VGF Penjaminan Bersama PT PII dan Pemerintah Penjaminan PT PII Availability Payment
KARIAN-SERPONG
WATER JATILUHUR I WATER YOGYAKARTA-
BAWEN TOLL ROAD
CALLENDER-HAMILTON
BRIDGE REPLACEMENT
TANJUNG CARAT PORT
CISARANTEN HOUSING
KARAWANG
SPUUR HOUSING
PIYUNGAN WASTE
TREATMENT
WASUSOKAS
WATER
NEW AMBON PORT
BATAM GAS
DISTRIBUTION
PALEMBANG
GAS
DISTRIBUTION
REGIONAL SUMATERA
WASTE TREATMENT
Existing PPP Project Pipeline
10

11. THANK YOU