Iakarta KADIN encourages establishment of infrastructure banks

Iakarta KADIN encourages establishment of infrastructure banks

Jakarta (ANTARA News) - The Jakarta Chamber of Trade and Industry (KADIN) needs the support of an infrastructure bank as an alternative to funding resources in infrastructure projects in Jakarta.

"A sustainable infrastructure development program needs the support of an infrastructure bank with the issuance of regional administration asset-based bonds," Chairman of the Jakarta KADIN Eddy Kuntadi said in a meeting of Jakarta KADIN leadership on Wednesday.

He did not care whether the infrastructure bank is a new bank or one already in existence, its focus is merely switched to funding infrastructure projects.

"This is important as Indonesia is facing an ASEAN Economic Community 2015, meaning that logistic integration is needed especially transportation infrastructure like ports and airports in 2013, but is currently still non-existent, while this concerns our competitiveness," Eddy added.

One of the infrastructure development projects mentioned on the occasion is the expansion of Tanjung Priok port by Indonesia Port Corporate (the former PT Pelabuhan Indonesia II) in the Kalibaru area increasing 7 container terminals and 2 liquid terminals to accommodate the docking of large ships in Jakarta.

However Eddy acknowledged that development of infrastructure banks need a firm legal umbrella.

"In other words if the government is willing to distribute part of its assets in building this bank, it needs a government`s flexibility," Eddy said.

Besides infrastructural banks, in the field of funding Eddy also said that KADIN is trying to set up a regional credit underwriting company for micro, small and medium businesses to facilitate the obtainment of bank credits.

"We already have the support of the regional administration for this initiative because the aim of KADIN is to struggle for the interest of 30 thousand micro, small and medium businesses (UMKM) to facilitate the obtainment of capital credits listed on the Jakarta KADIN office, but there are 100 thousand other UMKMs which have not been listed," Eddy said.

Earlier, President Susilo Bambang Yudhoyono has asked Bank Indonesia (BI) to facilitate the formation of infrastructure banks to support the development of infrastructure in this country which has been posing an obstacle to economic development.

Bank Indonesia Governor Darmin Nasution mentioned one condition for the success of infrastructure banks which the government will set up is totally free from investment and needs to be professionally managed.

Other conditions include a firm legal umbrella for long term funding and stable economic growth as well as low inflation.

Darmin said there are three sources of funding which need to be prepared namely the State Budget as form of government support, the issuance of increasingly cheaper bonds because Indonesia`s investment grade rating and funds from state enterprises in the form of securities.