Indonesia and Infrastructure Development - PPPand Australian-Japanese Potential Collaboration
SLIM Workshop, Tokyo, 19 April, 2012

Professor John Black,UNSW, Australia and UGM, Indonesia

Personal Introduction• Involved with transport and infrastructure in Indonesia
as consultant and educator since 1974
• Jakarta 1979 - Minister for Transportation• UNDP; Steel Bridge Replacement Program; Advisor
to Minister of Public Works on PPP; Bina Marga
reform with decentalisation• Australian - Indonesian Governance Reform Programon PPP and transport sector (2007 - 2009); UGMBoard• International Expert Ministry of Finance (2011-12)

CONTENTS• Opportunities in Indonesia for infrastructuredevelopment• Relative strengths of Australian Japanese
infrastructure sector• Collaboration and detailed case study ofIndonesian rail project and key messages• The next steps?
• India? Post-tsunami Tohoku reconstruction?

KEY MESSAGES• Huge infrastructure needs over next 10years• Start business partnerships now• Identify Indonesian business partners

KEY MESSAGES• Keep abreast of government regulations• Websites• JETRO/JICA services• Austrade role in Australia

Potential Australian and JapaneseStrengths in Infrastructure• Japanese engineering technology• Japanese presence in Indonesia• Australian project management (in English)• Australian financial institutions and PPPmodality

Project timeline - Peninsula Link
31 /03 /2009
EOI R elease

5 /05 /2009
EOI C lose

31 /03 /2009 - 5 /05 /2009
EOI R esponse D evelopment

1 /06 /2008 - 4/03 /2009
Business C ase & prew ork

1 /06 /2008
Project Start

30 /06 /2009
R FP R elease20 /10 /2009
R FP C lose

30 /06 /2009 - 20 /10 /2009
R FP Bid D evelopment

15 /01 /2010
PB Announced

15 /12 /2009
PB Selected

20 /01 /2010
C ontract C lose8 /12 /2037
C oncession end

8 /02 /2010 - 31 /12 /2012
C onstruction Phase

31 /03 /2009 - 8 /02 /2010
Procurement Phase

8 /02 /2010
Financial C lose

1/01 /2013 - 8 /12 /2037
Operation of infrastructure asset

URBAN RAIL PRE-FEASIBILITYSTUDY AND COMMENTS• Project Study Area - Description• Broad Overview of consultant’s outputs• Project history - background information• Key features of this pre-feasibility study• PT SMI evaluation process and criteria

Jakarta Rail Study Area

Broad Overview Consultant Outputs - 1/3• Inception report (to be delivered immediately
after commencement of assigment stating
detailed workplan and timetable)• Due Diligence report• Alignment Study: Evaluation of Alternatives
and Recommendation report• Alignment Study: Passenger Travel DemandSurvey (Real Demand Survey) report• Pre-Feasibility Study Working Paper: Output
Specification, Basic Design and Cost
Estimation

Outputs - 2/3• Working Paper: Detailed Demand andRevenue Forecasts• Working Paper: Economic Social Cost
Benefit Analysis• Working Paper: Financial Analysis• Working Paper: PPP Modality Analysis• Working Paper: Analysis of Government
Support and/or GuaranteeOutputs - 3/3• Draft Term-sheet of PPP Agreement• Pre-Feasibility Study: Draft Final Report• Pre-Feasibility Study: Final Report• Financial Model (in editable spreadsheet
format and wired/not hard coded) and Report• MDAL/EIA Documents• Monthly progress reports.

KEY MESSAGES• Selection based on technical proposal:
outputs standard practice - but..
• English-speaking Technical Director• Indonesian counterpart Co-Director• Australian experience in PPP• Limited expertise in Indonesia onenvironmental assessment (capacitybuilding)Background History -1••••••2008, a Vice President instruction to conduct PPP procurement for a railway
with PPP Procurement Committee formed by a Minister of Transportation
DecreeCommittee processed the procurement from public announcement ofexpression of interest until the pre-qualification stage
July 2009, Committee qualified three groups of potential investors
The Directorate General of Railway arranged an inter-ministries coordination
meeting relating to the procurement process on 3 August 2009 attended byInfrastructure Deputy of Bappenas, representation from Coordinating Ministryof Economy, MoF, and Procurement Committee
Procurement Committee reported the result of the procurement processincluding indications from qualified bidders on need for Government support
which contradicted the Government initial understanding that project would befeasible without Government support.
The procurement process stopped in 2009 - Government decided to go back to
the planning stage before stating its policy position

Background History - 2••••

Soekarno-Hatta Airport Railway project - one of five show-caseprojects in terms of PPP procurement.
Decision of Vice President on 31 August 2010 and request on 21
December 2010 to Ministry of Finance to confirm financial support
through PT SMI, and to develop further the plan so that it aligned withrelated regulations
6 May 2011, Ministry of Finance launched Decree No.
126/KMK.01/2011 regarding the assignment of Perseroan PT SMI tofacilitate preparation of the PPP Soekarno-Hatta Airport Railwayproject.
Ministry of Transportation at an inter-ministry meeting on 26 April
2011 attended by Ministry of Public Works, Bappenas, BUMN
Ministry (State Owned Enterprises), BPN (the National Land Body),
the Governors of DKI and Banten concluded that the development ofthe Soekarno-Hatta Airport Railway will be investigated as 2 linesBackground History - 3•••

Two lines - Railway Express Line through Pluit under a PPP scheme,
and the Commuter Line through Tangerang under an assignment tothe BUMN Consortium lead by PT. KAI (Indonesian RailwayCompany)
The PJPK of the Ministry of Transportation, under facilitation
supported by PT SMI, requested to proceed a pre-feasibility study ofthe Railway Express Line through Pluit under a PPP scheme in order
to ripen the project before making a formal re-tender as a feasibility
study
The pre-feasibility study will cover an optional route review thatdelivers feasible options to develop. The route could also be located on
an alignment outside of the two alternative routes identified above

KEY FEASURES OF THIS
PRE-FEASIBILITY STUDY
Due Diligence; Alignment studies;Pre-feasibility Components;
Guarantee Application Package

Due Diligence•••
••••
••
•

Develop Pre-Feasibility Study in accordance with Presidential Regulation No.
67/2005 as revised by Presidential Regulations No. 13/2010 and No. 56/2011(PPP Regulations); Minister of Development Planning Decree No. 4/2010 andthe Minister of Transportation Decree No. 83/2010 (PPP Guidelines)
Review of all relevant documents and policy papers as part of due diligence
Fact finding and consultations
detailed output specifications from the MOT
Clarity over project status and permits already issued by relevant authorities
Clarity and next step towards previous study and procurement of the projectand its short-listed bidders
Conformance with national and local spatial plans
Greater Jakarta transport master plan (including airports, railway, toll and nontoll roads, other public transport, etc.)
Background and status of commuter rail via Tangerang - an initiative throughPresidential Regulation 83/2011 and other relevant initiatives
Once these investigations have been reported Ministry of Transportation gives
input to pre-feasibility study in respect to due diligence recommendations

Guarantee Application Package
In accordance to IIGF operation manual, assist MOT in preparing
supporting documents that will include (not least) :1.
Request Letter from GCA (MOT) to IIGF
2.
Project pre-feasibility study
3.
PPP structure
4.
Risk Allocation Matrix and Risk Mitigation Plan
5.
Draft PPP Agreement
6.
Description of government support required (if applicable)
7.
Requested guarantee coverage
8.
Project Cash Flow (in spreadsheet format)
9.
Environment and social viability assessment
10. Project Management Plan, which includes the Procurement Plan
11. Government Contracting Agency Related Information

MESSAGES• Complex political and institutional
environment therefore build early
relationships with potential Indonesianpartners• Due diligence needs Indonesian input

KEY INFORMATION?
•KADIN (Chamber of Commerce) 02 May 2012 until 05 May 2012 - Indonesia
International Infrastructure 2012 in conjunction with Asia-Pacific Ministerial
Conference on Infrastructure Development www.indonesiainfrastructure.com• The Indonesian Economic Development Plan 2011 –2025(http://www.ekon.go.id/activity/2011/02/07/download-file;
http://www.ekon.go.id/media/filemanager/2011/07/06/
m/p/mp3ei-english_final.pdf )• Master Plan for the Acceleration and Expansion ofIndonesia's Economic Development (MP3EI)
visionary goals with aspirations to become the 12thlargest economy in the world.

NEXT STEPS?
• A Concept for a Centre for EvidenceBased Policy Analysis of Infrastructure
and PPP - consultation in 2011-2• Feasibility study in 2012
• Priority studies identified - potential forinternational collaboration• Transparency in infrastructure delivery

THANK YOU
Questions?