New paradigm important in financing infrastructure projects: Minister

New paradigm important in financing infrastructure projects: Minister

Finance Minister Sri Mulyani gave a keynote address at the "Indonesia Investment Forum 2018" seminar in Nusa Dua, Bali, Tuesday (9/10/2018). (Ministry of Finance Information and Communication Service Bureau)

Nusa Dua, Bali (ANTARA News) - Finance Minister Sri Mulyani Indrawati said change in paradigm is very important in financing the government infrastructure projects under the present condition.

It is impossible to rely on traditional financing system to carry on with the massive projects with limited state budget, Sri Mulyani said as a key speaker at an "Indonesia Investment Forum" highlighting the annual meeting of the International Monetary Fund and the World Bank here on Tuesday.

However, change in paradigm necessitates macro economic stability to give greater certainty for private investors, the Minister said

"We could not make new paradigm without macro economic stability. Therefore, the government would continue to coordinate with Bank Indonesia and the Financial Service Authority," he said.

The change in the paradigm includes in financing scheme through cooperation between the government and corporations, involvement of state-owned companies or through the use "blended finance".

Under cooperation with corporation, the government would seek to provide guarantee and readiness of project for private investors such as in fund for the procurement of land clearing.

"Inviting the private sector means there is process of procurement of goods and service and good project preparation as it is impossible to involve private investors without improvement in quality," she said.

It is always difficult to create transparency, she said, adding "the bottle neck is always in transparency."

In addition, the risk for investors has to be reduced in long term project such as the currency risk.

Sri Mulyani said she was confident that the scheme of alternative financing could be a successful with the support of investment instrument, government guarantee through state companies.

In addition support from the macro economic stability which has been successfully maintain in the past several years with steady economy growth of 5 percent from year to year, low inflation and fiscal stability.

Chief Commissioner of the OJK Wimboh Santoso said new paradigm in the procurement of infrastructure is important as Indonesia as a developing economy is one of the favorite investment destinations in the world.

Wimboh said OJK has sought to promote infrastructure financing through various financial instruments or more sophisticated market development.

"Creation of jobs and development of projects useful in the future is important to create sustainable development," he said.

Meanwhile, Minister of State Enterprises offered investment opportunity worth US$42.1 billion to the private sector in 78 infrastructure projects of state companies.

Also addressing the "Indonesia Investment Forum" were Coordinating Minister for Economy Darmin Nasution and Governor of Bank Indonesia Perry Warjiyo.

Reporting by Satyagraha
Editing by Bustanuddin

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