AREAS OF OPPORTUNITY
TBY talks to Dr. Bambang Brodjonegoro, Minister of National Development Planning (Bappenas), on acquiring financing for infrastructure projects and boosting private sector involvement in the country.
BIOGRAPHY
Bambang Brodjonegoro took office as the Minister of Bappenas in 2016 and previously served as the Minister of Finance from 2014-2016 in the cabinet of Joko Widodo. Under the administration of Yudhoyono, Brodjonegoro was the deputy Minister of Finance starting in 2011. Prior to his political career, he served as the Director at the Islamic Development Bank from 2009-2011 and as dean of faculty in the economics department at Indonesia University from 2005-2009. He graduated from the faculty of economics, University of Indonesia, with a master’s degree in urban planning. He holds a doctoral degree in regional planning from the University of Illinois.To what extent will PPPs be utilized in the infrastructure sector moving forward?
Our main duty is to support the government in accelerating infrastructure development and the source of financing for the development could be from the budget, state-owned enterprises (SOEs), or the private sector. In our five-year plan through 2019, we have laid out that the budget might contribute a maximum of 40%. In our estimation, SOEs will contribute around 23%, which means there is still 37% left that has to be fulfilled by the private sector. Our role is to select the infrastructure projects that are eligible for one of these schemes of financing, with the objective to involve the private sector more. We have two schemes to do so: PPPs and equity financing. For both, our task is to promote these projects domestically and internationally, and we actively go on roadshows to meet with potential investors. In the past, FDI in Indonesia was mostly in manufacturing; however, we now have infrastructure as a real opportunity. For PPPs, we have a strong backlog of 90 projects, including social infrastructure such as hospitals, correction facilities, and educational institutions. For equity financing, which is pure private sector, we promote projects such as toll roads, power plants, airports, seaports, and oil and gas infrastructure.
How can you make private sector involvement more attractive?
For equity financing and PPPs, we have concessions for the private sector. For PPPs, the idea is that this is private sector money; it has a certain period of concessions depending on the project type, and if the project is not that viable for the private sector, then the government can step in with a guarantee or a viability care fund. For equity financing, it is even more attractive as the private sector does not participate as an active developer but rather a shareholder. We can support project recycling so it does not have to be on a greenfield site but can be brownfield or operating site. We target long-term fund managers such as pension funds, welfare funds, and life insurance, offering better returns than bank deposits at least 13%.
What unique opportunities for growth are in the SME sector, and how can you capitalize on entrepreneurship?
As an emerging country and member of the G20, we have aspirations to be a developed country, not just with a large GDP but also with a sizable GDP per capita. One critical oversight of our development strategy is the lack of entrepreneurship, both in terms of quality and quantity. Without significant entrepreneurship, we cannot be a developed country. The problem in Indonesia is that we are targeting the number of SMEs without checking if they are active in productive or value-added sectors, or mostly working as traders or retail. These professions are harder to scale into larger business models, and our challenge is to have our micro-entrepreneurs be more productive, either in agriculture, manufacturing, or services. We have always treated farmers and fishermen as though they are not entrepreneurs though they hold the greatest potential, and one strategy is to empower them more. Another strategy is to improve and promote vocational schooling. For this, we need to shift the mindset by promoting the importance and the prospects of these skills, especially to graduates that have the potential to become new entrepreneurs, applying their skills directly.
How do you follow trends and strategize on the development of the economy?
Our economy has to be adaptive to any new innovation, while also monitoring closely the impact of the digital economy for job creation. We still have around 5% unemployment, equivalent to 8 million people. With a more dominant digital economy, we need to be more creative in finding these opportunities. For future innovation, we would like to have job opportunities rather than just sophistication of IT. We should adapt the digital economy while absorbing unemployment.
AREAS OF OPPORTUNITY
TABLE OF CONTENTS
Interview
Dr. Bambang Brodjonegoro, Minister , National Development Planning (Bappenas)
TBY talks to Dr. Bambang Brodjonegoro, Minister of National Development Planning (Bappenas), on acquiring financing for infrastructure projects and boosting private sector involvement in the country.
read articleInterview
Thomas Trikasih Lembong, Chairman, Investment Coordinating Board (BKPM)
Thomas Trikasih Lembong is the Chairman of BKPM. He was a former Minister of Trade of Indonesia from 2015-2016. Prior his appointment in the cabinet, he had a long professional career. He was a Co-Founder, Chief Executive Officer, Managing Partner, and Partner at Quvat Management Pte Ltd and also served as President Commissioner at PT Graha Layar Prima Tbk (BlitzMegaplex) since 2012. He was previously employed with Principia Management Group and the Equity Division of Morgan Stanley (Singapore) Pte. Ltd, among others. He received a bachelor's degree in architecture and urban design from Harvard. He also was elected Young Global Leader by the World Economic Forum in 2008.
read articleGuest Speaker
Tevita Lavemaau, Former Minister of Finance and National Planning , Tonga
TBY talks to Tevita Lavemaau, Former Minister of Finance and National Planning of Tonga, on the effect of climate change on the country, its work to combat inequality, and further areas of cooperation with Indonesia.
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Dr. Tito Sulistio, President Director, Indonesia Stock Exchange (IDX)
TBY talks to Dr. Tito Sulistio, President Director of Indonesia Stock Exchange (IDX), on the strong performance of the capital markets, its goals to increase the number of listed companies, and the growing importance of digital innovation.
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Amien Sunaryadi, Chairman, Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas)
TBY talks to Amien Sunaryadi, Chairman of Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), on preparing new block offerings, attracting greater investment into the sector, and pushing for exploration.
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Ronald Walla, President Director, PT Wismilak Inti Makmur
TBY talks to Ronald Walla, President Director of PT Wismilak Inti Makmur, on offering the public a more relevant value proposition, strengthening the ideology of Indonesia's founding fathers, and forging bigger profit margins.
read articleReview
In the House
As strong economic growth, an optimistic political outlook, and a partially successful tax amnesty to repatriate offshore wealth continue to drive up housing prices in Indonesia's major urban centers, demand for new housing and shares in developers plummeted in 2017.
read articleInterview
Teddy Tjokrosaputro, President Director, PT Rimo International Lestari (RIMO)
TBY talks to Teddy Tjokrosaputro, President Director of PT Rimo International Lestari (RIMO), on stepping back forcefully from the brink, using affordable housing as a springboard, and laying the groundwork for the country's future.
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