The loan fund would be used to support PT Indonesia Infrastructure Finance (IIF), a non bank private institution," chief representative of the World Bank in Indonesia Rodrigo Chaves said here on Saturday.
"There is a big need for investment in Indonesian infrastructure and population on its way to become a high income country," Chaves said.
Earlier, the World Bank and the International Finance Corporation (IFC) already provided fund for PT IIF to finance commercial infrastructure projects in the country.
Currently Indonesia is facing shortage of around US$60 billion a year to finance infrastructure projects. Meanwhile, the country suffers losses equivalent to more than one percent of its GDP on inadequate infrastructure.
Inadequate infrastructure, caused problem in transport and logistics and poor sanitation and quality of water caused problem in the public health.
Therefore, additional fund will help PT IIF in finance more longer term infrastructure projects, Chaves said.
Lead Financial Sector Specialist Christopher Juan Costain said Indonesian infrastructure market needs long term and sustainable capital especially in rupiah to ensure the infrastructure projects to last financially.
"Fund from the government alone would not be enough to finance the countrys infrastructure projects," Costain said.
In 2009, the World Bank already provided US$100 million for PT IIF for use to finance 18 projects in the transport, electricity, renewable energy and telecommunication sectors.
President Director and CEO of PT IIF Ari Soerono said the additional fund would support long term vision to be the main catalyst for financing development of infrastructure especially by the private sector.
"Bigger participation of the private sector is needed to build large infrastructure in Indonesia," Ari said.(*)