2022 State Budget: Fiscal Policy and Structural Reform

Infrastructure Projects and Financing Schemes Promotion of Infrastructure Development to Accelerate Economic Growth Infrastructure Development is a Key Priority Infrastructure Development in order to: 1. Accelerate growth particularly in rural areas 2. Support industrial development and tourism 3. Reduce unemployment and poverty • Infrastructure fundraising needs: $357.9 bn (or equivalent to IDR4, 796.2 tn) • 245 National Strategy Projects under National Medium Term Plan for 2015 - 2019 with an estimated total cost of IDR 4,197 tn (USD 313 bn) Broad Objective Core Mandates Establishment of PPP Unit Champion project preparation and acceleration of the PPP agenda in Indonesia Improve quality of project selection under KPPIP - OBC criteria Support project preparation through PDF support and highly qualified transaction advisors Act on behalf the Minister of Finance in providing government support and approvals for projects Coordinate all public finance instruments Provide input for PPP Policy program Development and Regulations Implement capacity building for Govt. Contracting Agency (GCAs) One stop shop for PPP promotion & Information ● 37 priority infrastructure projects with an estimated cost of IDR 2,490 tn (USD 180 billion) • Majority of 37 priority projects are expected to commence commercial operation by 2018 - 2022 Additional Mandates Budget Central & regional budget (special allocation fund & rural transfer) ● Primarily to support basic infrastructure projects: Food security: Irrigation, dams etc. Maritime: Seaports, shipyards etc. Connectivity: Village roads, public transportation etc. Public Private Partnership Certain infrastructure projects to be funded and operated through a partnership between the Indonesian government and the private sector Projects ready for auction under the PPP Scheme: Toll roads projects such as Balikpapan-Samarinda and Manado-Bitung Railway projects such as an express line into Soekarno-Hatta International Airport Water supply projects such as the West Semarang Project Various government support for PPP: Project Development Facility (PDF): Helps Government Contracting Agencies (GCAs) in project preparation and transaction Viability Gap Fund: improves financial viability of PPP projects Government Guarantees: Supports PPP projects' bankability by providing sovereign guarantees Infrastructure Financing Fund: Provided through PT SMI and IIGF Availability Payment (AP): GCA pays private partner based of availability of infrastructure services SOE & Private Sector Government to inject capital into SOES: Intended multiplier effect to develop more infrastructure projects • Key focus areas: Infrastructure and maritime development Transportation and connectivity Food security Medium term infrastructure developments to focus on: Water Supply Airports Seaports Electricity and power plants Housing Mining Note: OBC: Outline Business Case; PDF: Project Development Facility; GCA: Government Contracting Activity Source Ministry of Finance; Bappenas; KPPIP: "Komite Kebijakan Percepatan Penyediaan Infrastruktur" or National Committee for the Acceleration of Infrastructure Delivery Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) 203

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