Updated News July 3, 2012

In the News:

Government Relations and Economic Development

Indonesian exports fall 8.55% in May
Reuters - 03/07/2012

Indonesian exports fell for a second straight month in May on lower commodity prices and a new tax policy but the fall is unlikely to tempt the central bank to cut its policy rate as the rupiah remains volatile.

Bank Indonesia will likely leave its benchmark rate on hold throughout this year in the hope that exports will rebound and inflation remains within target, while pursuing other policy measures to strengthen the currency, this year’s worst performer among emerging Asian currencies after the Indian rupee.

Along with declining exports, Indonesia on Monday reported a surprising increase in inflation. For June, the consumer price index rose 4.53 percent from a year earlier, above the median forecast in a Reuters poll of 4.28 percent and higher than May’s 4.45 percent.

The increase reflects rising food prices ahead of the Islamic fasting month, and the rate remains within the central bank’s target for the year of 3.5-5.5 percent inflation.

Exports in May fell 8.55 percent - more than April’s 3.46 percent drop - as global commodities declined and Indonesia’s government imposed a 20 percent tax for 65 mineral products excluding coal, analysts said.

Imports increased 16.09 percent in May - compared with 11.65 percent in April - and for the latest month, Indonesia had a trade deficit of $490 million. In April, there was a $640 million deficit.

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Trade gaps likely to continue
Linda Yulisman, The Jakarta Post - 03/07/2012

Indonesia recorded a negative trade balance for a second straight month in May, as exports remained under pressure from weak global demand while imports soared on capital goods purchases for investment.

Analysts said monthly trade deficits would likely be the norm as long as the nation’s traditional export destinations, particularly the US and China, continued to suffer from fallout from the eurozone crisis.

“We really cannot control the course of our trade balance because it depends greatly on the recovery in the Europe and the US. We’ll likely see trade deficits continue until the third quarter of this year,” Latif Adam, an economist from the Indonesian Institute of Sciences (LIPI), said.

The nation’s trade balance stayed in the red in May, recording a US$485.9 million deficit, which followed a $641.1 million deficit in April, the first since July 2010, according to the Central Statistics Agency (BPS).

Imports surged 16.09 percent year-on-year to $17.21 billion in May, while exports dropped 8.55 percent to $16.72 billion.

The cumulative value of imports grew by 16.62 percent in the first five months of 2012, compared to the same period last year, while exports tread water, rising 1.48 percent in the same period.

Deputy Trade Minister Bayu Krisnamurthi described the situation as “quite serious and not easy” but “manageable”.

“The short-term outlook is still hard, although the mid-term outlook is promising. The key is the global economic recovery,” Bayu said.

The government earlier anticipated that the nation’s trade surplus for 2012 would drop to one-fifth of last year’s $26.06 billion. The trade surplus in the first five months of the year was $1.52 billion, down from $11.72 billion in the same period last year.

Two consecutive months of trade deficits should serve as a warning for the government to intensify its market diversification push into non-traditional export destinations and to encourage the creation of value-added products, Latif said.

Ahmad Erani Yustika, an economist at the Institute for Development of Economics and Finance (INDEF), said that a global reevaluation of commodity prices would couple with dwindling demand to deepen the nation’s export slump.

According to the BPS, exports of minerals (mainly coal) and vegetable oil (mainly palm oil) contributed 16.94 percent and 13.37 percent, respectively, to the nation’s total of non-oil and gas exports of $162.02 billion in 2011. Indonesia is the world’s largest exporter of thermal coal and palm oil.

“The prices for our primary commodities will continue to fall in the international market. An annual trade deficit is likely,” Erani said.

He also highlighted that the high growth in imports resulting from the dependence of domestic manufacturers on imported raw materials and intermediary goods, would also threaten the country’s trade balance in coming months.

Imports of raw materials and intermediary goods comprised 73.05 percent of the value of all imports in the first five months of the year, which stood at $79.9 billion, while capital goods accounted for 19.96 percent and consumption goods comprised 6.99 percent.

Trade Minister Gita Wirjawan, who relinquished his post as chairman of the Investment Coordinating Board (BKPM) last month, said soaring imports was a necessary pain as Indonesia continue to climb the value chain.

Realized foreign investment (FDI) in Indonesia hit a record high in the first quarter, coming in at Rp 51.5 trillion ($5.7 billion), up 30 percent from the same period in 2011.

Gita said that the influx of raw materials and capital goods was a positive sign for realized investment in the country and that the benefits would be felt in the next six to 18 months.

Industry players said that Indonesian exports would receive a considerable boost starting this month as Muslims all around the globe prepare for increased consumption during the holy month of Ramadhan.

“There will be an increase of up to 10 percent in demand from earlier months,” Fadhil Hasan, the executive director of Indonesian Palm Oil Producers Association (Gapki), said

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Energy and Mining

Oil thievery causes huge losses to Pertamina   
Rabby Pramudatama, The Jakarta Post - 03/07/2012

The upstream business unit of the state-owned oil and gas company PT Pertamina, Pertamina EP, lost 59,000 barrels of crude oil in June alone due to thievery in Jambi and South Sumatra.

The company claimed that the crimes continued because the police had not taken any measures to crack down on the perpetrators.

“We are very concerned [with the situation] because law enforcers have yet to respond to our report regarding the pillaging and the thievery,” Pertamina EP spokesman Agus Amperianto said on Monday.

The report said the thieves siphoned off the oil by drilling holes in the pipeline.

There were around 235 cases of similar thefts recorded across the nation this year.

Pertamina EP operates the Tempino-Plaju pipeline, which stretches from Jambi to South Sumatra delivering as much as 330,000 barrels of oil per month.

The company estimated that its total losses from the pipeline had reached 100,000 barrels of crude oil with an estimated value between Rp 90 billion (US$9.5 million) and Rp 100 billion.

Agus said the police’s sluggish response in cracking down on perpetrators had created a sense of impunity among the criminals.

The losses at Tempino-Plaju pipeline, which have been increasing month by month, proved that the law enforcers haven’t done their jobs, he said.

According to the company’s records, as quoted by Antara news agency, there were only 10 cases of theft in 2009, increasing to 131 cases in 2010 and 420 cases in 2011. The first half of this year has seen 431 cases, records show.

The cases mostly occurred in Baying Lencir district, Musi Banyuasin regency, South Sumatra.

Agus added that the crimes had also caused damage or even losses to the company’s assets. Agus said the company feared the crimes would lead to fires or environmental damage.

Pertamina EP, a subsidiary of Pertamina, operates across areas totaling approximately 140,000 square kilometers. Its core business is the exploration and exploitation of oil and gas across the archipelago, which is divided to three regions: Sumatra, Java and eastern Indonesia.

Pertamina itself operates six refineries in Dumai, Riau; Plaju, South Sumatra; Balongan, West Java; Cilacap, Central Java; Balikpapan, East Kalimantan; and Kasim, West Papua; with a combined capacity of 1.03 million barrels per day (bpd), but produces only 677,000 bpd of fuel products.

In separate report, Agus said that last week, 312 pieces of production pipeline were stolen. He said about 50 perpetrators who used two trucks were identified during the incident.

“The perpetrators threatened the company’s security guards at gunpoint,” he said.

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Bumi’s $231 million investment on hold
The Jakarta Post - 03/07/2012

Coal mining firm PT Bumi Resources (Bumi) has not yet received US$231 million in funds it expected to receive during the first half of this year from an investment that is expected to help the company pays its debts, shareholder says.

The funds are invested at local asset manager PT Recapital Asset Management and are due to be repaid to Bumi Resources on August 27, 2012.

“The management of Bumi Resources [Bumi] is engaged in an active dialogue with Recapital regarding the timing of the repayment,” London-listed Bumi Plc., which controls the majority stake in Bumi Resources, said in a disclosure file submitted to the London Stock Exchange on Monday.

Recapital is 99 percent owned by Recapital Advisor and Recapital Securities, which is controlled by Rosan Roeslani, a non-executive director of Bumi Plc. and also the president director of Indonesian coal miner PT Berau Coal Energy (BRAU).

Bumi Resources and Recapital entered into an agreement on August 27, 2008, allowing the asset manager to manage $350 million of the coal miner’s funds for a period of six months, according to Bumi’s 2011 financial report.

The agreement was added with a second one signed on September 2, 2009, with $50 million funds to manage for another six-month period.

Bumi Resources and Recapital last year extended the agreement until August 27, 2012, triggering a comment from Bumi Plc.’s shareholder Nathaniel Rothschild, who called for a “radical cleaning up” in Bumi’s financial management.

Rothschild’s comment, which was made public through a purposed leaked letter, led to a spat with the Bakrie Group conglomerate, which is owned by Aburizal Bakrie, chairman of Indonesia’s Golkar political party.

Rothschild has now been ousted from co-chairman position to become an independent director of Bumi Plc.

Bumi Resources is planning to repay $600 million debt to the China Investment Corporation (CIC) this October using funds from the company’s investment in several places including those in Recapital, corporate secretary Dileep Srivastava has said.

Srivastava added that the loan was supposed to be paid in 2014, but Bumi Resources aimed to cut loans to a level of a one-time adjusted EBITDA (earnings before tax, depreciation and amortization) by the end of 2013.

Bumi is also in talks with strategic investors to divest 20 percent of its overall 87 stake in PT Bumi Resources Minerals (BRMS) to raise funds for the debt repayment, according to him.

Bumi Minerals announced on Monday a steep drop in net profit in the first quarter of this year on lower contribution from its subsidiary, PT Newmont Nusa Tenggara (NNT).

Net profit in the January-March period was at $62,871 compared with $37.01 million net profit booked in the same period last year.

Revenue was 70 percent higher at $7.03 million in the first three months of the year, versus $4.14 million in the same quarter last year, but NNT’s net income contribution slid to $2.19 million from $41.22 million.

“As expected, the income contribution from NNT continued to drop. This is due to the lower copper and gold production rate from NNT’s Batu Hijau mine site,” Bumi Minerals said in a written statement.

The Batu Hijau mine site’s copper and gold outputs dropped 49 percent and 76 percent, respectively, due to the ongoing development project that is currently taking place there.

Shares in Bumi traded at Rp 1,160 apiece on Monday, up 4.5 percent from the previous day. The stock has tumbled 46.67 percent since the start of this year.

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PLN stops importing components
Rabby Pramudatama, The Jakarta Post - 03/07/2012

The president director of PT Perusahaan Listrik Negara (PLN), Nur Pamudji, has issued an executive order demanding all procurement processes under the company to cut down on imports and prioritize purchasing products manufactured in Indonesia.

“This policy is effective as of July 1. I must say that this [new] policy is not aimed at efficiency, but rather to support domestic manufacturers,” Pamudji told journalists on Monday during a working visit to Muara
Karang power plant in North Jakarta.

Pamudji said such a policy would help create more jobs for Indonesians.

“Even though we buy domestic components at the same price as imported ones, PLN’s money will circulate domestically and will, therefore, help our national economy,” he said.

Pamudji said the company was constantly maintaining its power plants, many of which had been operating for decades, and had in the past been relying on imported products.

PLN previously imported components such as boilers, condensers, turbines, generators and transformers, from China, Japan and Europe.

Pamudji said several local manufacturers in Surabaya, Cilegon and Bandung had made a commitment to supply PLN with the required components.

“I assured you we would not import anything that could be manufactured domestically,” he said.

PLN has also revealed its plan to purchase switchgear from local producers within three months after the Idul Fitri holiday.

Separately, Bambang Aggono, the general manager of PLN’s subsidiary PT Pembangkit Jawa Bali, said that the company had launched a maintenance program called “Remaining Life Assessment [RLA]” to extend the lifetime of its power plants.

“It’s [the RLA] a method of predicting or detecting the condition of power plants’ components, which will help decision makers create scheduled inspections and maintenance so that maintenance costs will decrease,” he said.

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Indonesia Issues Safety Recommendations on Sukhoi Jet
AIN Online - 02/07/2012

Even though its investigation is ongoing, the Indonesian National Transportation Safety Committee (NTSC) issued five safety recommendations on June 26, relating to the May 9 crash this year of a Sukhoi Superjet 100 regional airliner on a demonstration flight from Jakarta. All 45 people aboard were killed when the aircraft slammed into the side of a hill near Mt. Salak shortly after takeoff.

The NTSC wants the Indonesian Directorate of Civil Aviation to ensure that the crews of future demonstration flights conducted during IFR conditions pay strict attention to published minimum altitudes. The committee also wants a copy of the complete crew and passenger manifest available in the Operation Service office prior to takeoff.

The NTSC publicized a number of recommendations specifically aimed at the Sukhoi Aircraft Company as well. The committee wants assurances that pilots will review current procedures for the preparation and conduct of a demonstration flight and to arrange for additional crew training for these trips, especially when they’re conducted in mountainous territory.

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Long Lines Plague Indonesia's Merak Port
Antara - 02/07/2012

Truck traffic came to a standstill at the typically congested road to Merak Port, in Banten, West Java, on Monday as truck drivers say in a four-kilometer-long queue for more than ten hours.

Long lines have plagued the port for the past five days as truck traffic increases ahead of the school holiday season. On Sunday, the queue reached six kilometers.

“We expect the Merek [traffic] conditions to return to normal this afternoon,” General manager of port operator Inland Waterland Transportation Service (ASDP) Supriyono said on Monday.

One of the port’s loading docks is currently under-going repairs, he said. The port has provided 21 additional ferries to try to mitigate the congestion.

“We want trucks drivers to be patient and line up in order, so the traffic will be smooth,” Supriyono said.

Some drivers have spent 15 hours waiting in line and were still at least a kilometer from the entrance.

“We’ll probably be able to cross to Sumatra later this afternoon as we’re still one kilometer from the port,” Nurhadi, one of drivers, said.

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Wika obtains Rp 565.8b new contracts
The Jakarta Post - 03/07/2012

State construction company PT Wijaya Karya (WIKA) secured two new contracts worth Rp 565.8 billion (US$59 million) for the construction of a toll road owned by state toll road operator PT Jasa Marga (JSMR).

The contracts comprise the development of two toll roads, which are the 5.95-kilometer Gempol-Pandaan toll road package 1 and 2 in East Java for
Rp 225 billion, and 2-kilometer Bogor Ring Road section 2 connecting Kedung Halang-Kedung Badak in Bogor, West Java, for Rp 340.8 billion.

The two toll road projects are expected to be completed within 15 to 17 months.

Wika secured Rp 7.54 trillion contracts as of the end of June, out of the target to book Rp 16.52 trillion in new contracts throughout this year, up 35 percent from last year’s Rp 12.2 trillion.

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Hutama Karya Explores Projects in ASEAN
Indonesia Finance Today - 03/07/2012

PT Hutama Karya (Persero), a state-owned enterprise (SOE) in the property and construction sector, is exploring three projects in several countries in ASEAN, namely the Ministry of Justice building in Dili, East Timor, the construction of toll roads in Manila, the Philippines, and infrastructure projects in Brunei Darussalam.

Tri Widjajanto, Director of Hutama Karya, said the company is currently waiting for the auction announcement for building project in Timor Leste – worth Rp 200 billion (US$ 21.4 million). The project is expected to be realized in the second half of 2012.

"In the Philippines, we will continue the construction of toll roads which was managed by PT Citra Marga Nusaphala Persada Tbk (CMNP). We are at the assessment phase because the project owner is still in the basic design stage," he said.

In the tollroad project, the company will participate in the construction bidding process. Meanwhile, the infrastructure projects in Brunei Darussalam are in the preparation phase and will be opened in the second half of 2012.

According to Tri, the construction and infrastructure projects overseas only contribute three percent to the company’s total revenue.

Ary Widiyantoro, Corporate Secretary of Hutama Karya, said the company tergets to achive a total contract value of Rp 16 trillion, including Rp 11 trillion of new projects and Rp 5 trillion from last year's project appropriations. The targeted acquisition of new contracts in 2012 will be dominated by infrastructure projects, in line with the rising of government budget and SOEs in the sector.

Ary said the company targets this year’s revenue to reach Rp 5.6 trillion, up 55 percent from 2011’s Rp 3.6 trillion. Meanwhile, net profit in 2012 is estimated to reach Rp 170 billion, higher than Rp 110 billion achieved in 2011. "We have allocated Rp 40 billion for capital spending from last year's preliminary earnings and depreciation funds," he said.

PT Waskita Karya (Persero), am SOE in the construction sector, expressed optimism that the company will be able to develop overseas projects on time. Such development projects are the King Saud University and King Abdullah Financial District in Riyadh, Saudi Arabia, which will be completed later this year. The value of these projects amounts to Rp 500 billion.

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GMF to build $52m hangar in September
Nurfika Osman, The Jakarta Post - 03/07/2012

PT GMF AeroAsia, a subsidiary of national flag carrier PT Garuda Indonesia, is going to construct its fourth hangar in September with investment of US$52 million to keep up with Garuda’s expanding fleet.

The new Hangar 4, which will be used to hold aircraft in protective storage, will also enable GMF to repair and overhaul more aircraft, helping it to generate more revenue.

“The aviation industry in the country continues to grow because every airline expands its fleet. This hangar will ensure that we keep up with growing demand and deliver the best services to enhance aviation safety in Indonesia,” GMF’s corporate secretary, Dwi Prasmono Adji, told The Jakarta Post.

The Garuda Group, for instance, will operate 194 aircraft, with an average fleet age of five years by the end of 2015, through its Quantum Leap program. Meanwhile, the country’s largest budget carrier, Lion Air, will operate as many as 178 aircraft by the end of 2016.

Lion and private carrier Sriwijaya Air also use GMF’s hangars, in addition to Garuda.

Hangar 4 will be constructed on an 18,000-square-meter plot of land and will be equipped with a purpose-built docking platform for heavy maintenance of narrow-body aircraft, such as the Boeing-737 family, according to Dwi.

The hangar will also be able to house 16 narrow-body aircraft at the same time.

“Construction will take approximately one year and we expect it to be operational by the end of 2013,” said Dwi.

GMF facilities currently cover 480,000 square meters of built-up floor space, comprising the 22,000-square-meter Hangar 1, and Hangars 2 and 3, which cover 23,000 square meters each.

The existing three hangars are now able to accommodate as many as 29 aircraft.

GMF was also planning to build a fifth hangar, which would house four wide-body aircraft, including the B-747 series and Airbus 330s, at the same time after the fourth hangar’s construction has been completed, Dwi added.

The fifth hangar is projected to commence its commercial operations by the end of 2014.

GMF plans to spend $17 million in investment throughout this year to increase its capability to carry out an overhaul of the B-737 Next Generation series and A-320s’ landing gear. These two planes were currently the most popular ones in the world, Dwi said.

“Local carriers don’t have to send their aircraft to have their landing gear overhauled abroad anymore because GMF already has the facilities. This will also help the carriers to reduce their operating costs,”
he added.

GMF will be able to provide the overhaul service for A-320 aircraft in the middle of next year as the company is currently developing the facilities. The new overhaul facilities will help the firm to collect $113 million in additional revenue.

As of today, GMF AeroAsia has facilities to undertake A-Check — light maintenance — to D-Check, the most comprehensive checks for an airplane. It has also been able to conduct Section 41 modification work on Boeing 747s for the
last 10 years.

Section 41 modification involves replacing or reinforcing the aircraft’s skin, frame, stringer, intercostals and other components in the nose area of Section 41, based on the Service Bulletin published by the US-based Boeing Company.

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Land Acquisition Fund for Disbursement in Second Half
Indonesia Finance Today - 03/07/2012

The Public Service Agency (Badan Layanan Umum/BLU) on Land Acquisition for Toll Road projects targets to disburse revolving fund of Rp 2.4 trillion (US$ 254.4 million) in the second semester of 2012. The revolving fund will be allocated for land procurement of 22 toll roads sections in the Trans Java, Non-Trans Java and Jakarta, Bogor, Depok, Tangerang and Bekasi (Jabodetabek) area toll road networks.

Achmad Ghani Gazali, Head of Toll Road Regulatory Agency (Badan Pengatur Jalan Tol/BPJT), said that the distribution of revolving fund will be boosted to accelerate land acquisition of the 22 toll road sections. The government targets to operate most of the toll road sections in 2014.

The toll road sections are Cikampek-Palimanan, Pejagan-Pemalang, Pemalang-Batang, Semarang-Batang, Semarang-Solo, Kertosono-Mojokerto, Surabaya-Mojokerto, Gempol-Pandaan, Gempol-Pasuruan, Pasuruan-Probolinggo, Waru-Aloha-Tanjung Perak, Ciawi-Sukabumi, Bogor Ring Road, Cinere-Jagorawi, JORR W2 North, Cibitung-Cilincing, Depok-Antasari, Kunciran-Serpong, Cengkareng-Kunciran, Serpong-Cinere, Cimanggis-Cibitung and Bekasi-Cawang-Kampung Melayu.

The BLU’s total managed fund reaches Rp 6.15 trillion. Since 2008 to June 2012, the cumulative funds that are already distributed for land acquisition is at Rp 2.8 trillion. BLU has remaining fund of Rp 3.35 trillion. Achmad Ghani explained that the revolving fund distributed in the first half of 2012 includes the payment of loan for land acquisition of Rp 1.43 trillion given by the Government Investment Center (Pusat Investasi Pemerintah/PIP).

“With fund distribution projection of Rp 2.4 trillion by the end of 2012, there will still be fund of Rp 950 billion by the end of this year,” he said.

Achmad Ghani estimates that BLU will distribute revolving fund of up to Rp 5.6 trillion in 2013 using the funds from the returned fund of toll road operators amounting to Rp 4.95 trillion and additional fund from the 2012 State Budget of Rp 900 billion.

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Ministry’s proposal blocks initiator’s privileges
The Jakarta Post - 03/07/2012

The Finance Ministry has proposed revisions to the presidential decree on the Sunda Strait Bridge project, that could remove some of the initiator’s advantages to winning the contract.

An official document obtained by the press on Monday reveals that the interim head of the ministry’s fiscal agency, Bambang Brodjonegoro, has sent a letter on the revisions to the secretary of the Office of the Coordinating Economic Minister, with copies to ministers Hatta Rajasa and Agus Martowardojo, Deputy Finance Minister Mahendra Siregar, Deputy Public Works Minister Hermanto Dardak and other high ranking

In the letter, dated April 30, Bambang proposed a revision to Presidential Decree No. 86/2011 on the Sunda Strait Strategic Industrial Region Development project which allows the government to provide “support and guarantees” to the project.

Bambang told The Jakarta Post on Monday the revisions were proposed in the spirit of good

The proposed revisions suggest the government could finance a feasibility study into the project. The current decree says that only private funds from the project initiator, PT Graha Banten Lampung Sejahtera - a consortium of Tomy Winata’s Artha Graha Group with the regional governments of Lampung and Banten — can be used to finance a feasibility study.

As the appointed financier of the feasibility study, the consortium would retain a 10 percent preferential right and the right to match the lowest bidder in the project tender. Preferential right means the consortium could bid 10 percent higher than the lowest other bidder and still win.

The right to match means the consortium could obtain information on the lowest bidder and match the bid.

This letter provides another piece of the puzzle on the Sunda Strait Bridge brouhaha.

Recently, the public learned that Agus sent a letter on June 8 to Public Works Minister Djoko Kirmanto, asking about the possibility of using state funds to finance the feasibility study on the project.

When asked if the initiator would lose its preferential rights if the decree was revised, Bambang said that all stakeholders would try to find the best solution to the matter.

Artha Graha vice president director Wisnu Tjandra said that the initiator would only comply with the current regulations as stipulated in the decree.

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AIF Funds Five Infrastructure Projects
Indonesia Finance Today - 03/07/2012

The government ensures five national infrastructure projects secure financing loan from ASEAN Infrastructure Fund (AIF) for US$ 400 million until 2014. Bambang Brodjonegoro, Head of the Fiscal Policy Office, Ministry of Finance, said originally there were nine projects proposed by the government.

According to Bambang, the five projects approved by AIF are divided into two stages of implementation; two projects for the period of 2012-2013 and three projects for 2013-2014. The loan from AIF has a tenor of 10-15 years with three percent interest.

The five projects are the Java-Bali 500 KV Power Transmission Crossing (US$ 75 million), the connectivity strengthening project to enhance economic growth (US$ 100 million), the geothermal power plant project (US$ 75 million), the electricity interconnection project of Sumatra-Malaysia (US$ 75 million), and the regional road development project phase II of Java-Kalimantan (US$ 75 million).

Bambang said the amount of AIF loan to Indonesia is lower than the loan granted to Vietnam. To finance several infrastructure projects in Vietnam, AIF disbursed US$ 425 million by the year 2014, US$ 25 million or 6.25 percent higher compared to that given to Indonesia.

AIF’s financial contribution to Vietnam AIF is highly inversely proportional to what has been contributed in the formation of AIF’s initial capital. Vietnam only contributed US$ 10 million or 2.06 percent of AIF’s total fund, while Indonesia donates US$ 120 million or 24.73 percent of the total under management fund of US$ 485.2 million.

Bambang said before AIF approved the loan for Indonesia, the government filed nine projects to be funded. The total value of the nine projects was US$ 3.4 billion which was planned to be financed by foreign loans amounting to US$ 1.8 billion, US$ 542 million from AIF, and the rest through public-private financing scheme.

The projects which could not be funded by AIF are the port of Belawan Medan, the road construction along the 385 kilometer of Trans Kalimantan, the Sumatra trans road project along the 1580 kilometer, the expansion of road in Parigi-Poso-Tentena-Tidantana along 298 kilometers, and the expansion of road in  Kendari-Asera.

Dedy Supriyadi Priyatna, Deputy of Infrastructure, Ministry of National Development Planning, said the loan from AIF will support the lack of financing from the public private partnership scheme.

AIF’s loan is one of the options offered by other financial institutions to meet the needs of infrastructure financing. The interest rate offered by AIF is higher than other institutions such as the Asian Development Bank (ADB) and World Bank, but lower than export credits. "AIF became one of the options to seek funding for infrastructure projects," he said