rainier haryanto, program director · lesson learnt and reformed actions ... committee for...
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Business As Usual? –Reformed Approaches to Deliver Indonesia InfrastructureRainier Haryanto, Program Director
16th November 2015
Presentation Outline
Indonesia Infrastructure - IssuesIndonesia Infrastructure - Issues
Lesson Learnt and Reformed ActionsLesson Learnt and Reformed Actions
National Strategic Projects and Priority ProjectsNational Strategic Projects and Priority Projects
KPPIPKPPIP
Question and AnswersQuestion and Answers
2
INDONESIA INFRASTRUCTURE –ISSUES
Development Planning Target to achieve economic growth of 6-7% p.a. in 2015-2019
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Enggano
Kertajati
Singkawang
MuaraTeweh
Miangas
Maratua
Tojo Una-Una
Pohuwato
Moa
Namniwel
Taria
Kenyam
Aboy
Sultan Hassanuddin
Banda Aceh
Belawan
Kuala Tanjung
Dumai
Batam
PangkalPinang
Pontianak
Panjang
Padang
Tj. Priok
Cilacap
Tj. Perak
Lombok
Kupang
Palangkaraya Banjarmasin
Makassar
Maloy
Bitung
Halmahera
SorongJayapura
Merauke
Ambon
KorowayBatu
Sea toll concept as a means to support Indonesia in becoming the world maritime axis. • develop 24 new seaports • increase number of substantial
vessels (pioneer cargo, transport vessels, pioneer crossing vessels)
• develop 60 crossing ports
Strengthen connectivity through air transport infrastructure development• develop 15 new airports• develop air cargo facilities in 6
locations • increase number of pioneer
airplanes
Improve transport efficiency by road development and maintenance• develop 2,650 km of new roads • develop 1,000 km of new toll roads• rehabilitate 46,770 km of existing
road
Reduce logistic cost by improving railway infrastructure develop new tracks in Java, Sumatra, Sulawesi, and Kalimantan:
2,159 km inter-urban railways1,099 km urban railways
Develop urban transport• develop Bus Rapid Transit
(BRT) in 29 cities• develop Mass Rapid Transit
(MRT) in 6 metropolis and 17 large cities.
Achieve electrification ratio of 96.6% by 2019 through generating capacity improvement • develop power plants with total
capacity of 35,000 MW
Ensure efficiency of fuel productionby optimizing domestic refineries• build new oil refineries of
2x300,000 barrels• Expand existing refineries in
Cilacap and Balongan
Energy Related
Logistic Related
Location of 24 new seaports & 15 new airports
Source: Bappenas
Achieving food sovereignty through irrigation system improvement• develop 33 new dams and 30
hydropower plants• expand 1 million ha irrigation system • rehabilitate existing irrigation system
Infrastructure Financing Sources, 2015-2019(Based on National Development Planning Ministry Exercise)
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National and Regional Budgets
Financing Gap
SOEs ~ 22.23%~ 106.7 US$
~ 175.1 bill US$
NOTES:1) Hypothetical number, not for quotation. Official number of needs only include budget ceiling for National and
Regional Budgets as approved by Ministry of Finance on January 20152) Portion of National Budgets based on agreed budget ceiling by the Ministry of Finance as proposed by the
National Development Planning Ministry3) All estimates only based on the large investment and rehabilitation projects, e.g., not calculating the operational
costs in detail.
Total Need of Strategic
Infrastructure Investment1)
(480 bill US$) 3)Private Investment (PPPs, Off Balance
Sheet,Loan, Obligations,
etc ~ 36.52%)
National Gov’t Budgets
~ 29.88%2)
~ 143.3 bill US$
Regional Gov’t Budgets ~ 11.37%
~ 54.5 bill US$
FOREX Assumption is based on conversion rate of IDR 10,000 per US$
Alternative Financing Schemes
Lot of Opportunities
for Private Sector
Plan and Reality
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Budget/Funding mechanism
Human Resources
Environmental assessment process
Location Permits
Government Supports and Guarantees
Spatial Planning
Forestry Permits process
Overlapping Regulations
Procurement Process
3,000 ft
3 ft
High level
On the ground realities
Coordination and commitment
Political Decision, Groundbreaking
Implementation
BIG DISCONNECTION
Need intensive debottlenecks for
comprehensive problems solving, periodic MONEV,
and clear Action Plan
Presentation Outline
Indonesia Infrastructure - IssuesIndonesia Infrastructure - Issues
Lesson Learnt and Reformed ActionsLesson Learnt and Reformed Actions
National Strategic Projects and Priority ProjectsNational Strategic Projects and Priority Projects
KPPIPKPPIP
Question and AnswersQuestion and Answers
7
Lesson Learnt - Applying “Project Laboratory Approach” is a MUST ... !
To get the Expected Output
1. There should be a detailed Action Plan (AC) with clear timeframe and indication of who’s doing what. AC need to be signed by every stakeholders (PICs).
2. There should be dedicated working teams to consis-tently monitor and making sure of the agreed AC follow ups.
3. Unresolved problems from technical level should be reported and resolved at the decision-making level (minister’s level)
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Reformed Actions by the Government to Accelerate the Delivery of Infrastructure Projects
Fiscal reforms Institutional reforms Regulatory reforms
Supported by improving awareness of Indonesian infrastructure issues, convergent reforms are building a better business environment for tomorrow’s investment
• Investing in Indonesian infra-structure has been regarded as risky with uncertain returns on investment.
• Indonesia did not have any fiscal mechanisms that could support the development of infrastructure investment
• Indonesia suffered a lack of leadership to implement the changes needed for the infrastructure sector to grow
• Regulatory reforms are the backbone of long-term structural change. Indone-sian regulatory corpus has been characterized by some ambiguities and conflicting regulation
Indonesia now has fiscal supports to improve project
attractiveness, such as VGF and Availability Payment. It has also established land revolving fund to improve risk-sharing scheme.
Establishment of KPPIP(Committee for Acceleration of Priority Infrastructure Delivery) and empowerment of existing
institutions (PT. SMI and IIGF) to fill in the gap in enhancing project
bankability. Ministry of Finance has established PPP Unit to
provide PDF and TA.
The GoI has ratified the revised regulations related to PPP,
Availability Payment, Direct Lending and land acquisition. Moreover, policy deregulations have been included as
one of the main aspects of the Economic Policy Packages.
issu
esR
efor
ms
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Attracting Private Investment - The difference between then and now...
THEN
Although reforms are done in a “learning by doing” approach, but all of the above improvements are already in place.Now it requires a political courage, a policy consistency and a sense of urgency by the government to unlock the infrastructure
development for the country*PDF/TA: Project Development Facility/ Transaction Advisory
Committee for Acceleration for Priority Infrastructure Delivery (KPPIP) was set up with clear mandate i.e. to be the central coordinating agency and debottlenecking champion
Lack of clear championship at top
Championship at top
Following facilities are set up and empowered:• OBC Facility and Quality Guidelines in KPPIP• PDF/TA* under PPP Unit MoF• Potentially centralized Project Preparation facility in Bappenas
Poor quality of project preparation and limited budget
allocation
Project Preparation
Quality
GoI has ratified Law No.2/2012 and its implementing regulations (incl the recently revised Pres Reg 30/2015) which provides certainty for land acquisiton duration for investors
Severe delay in land acquisition process
Land Acquisition
Improved fiscal supports with MoF plays more active role: • PPP Unit is set up under MoF• Viability Gap Funding is available (MoF Reg 223/2012)• MoF Reg 190/2015 re: Availability Payment has been ratified,
allowing for elimination of demand risk from private sector
Lack of fiscal support and lack of proper risk allocation
between Govt and private sector
Project Bankability
Presidential Reg 82/2015 allows Govt Guarantee to be provided to SOEs which receives direct lending from financial institutions or specifically assigned by Pres. Reg to deliver projects.
Limited coverage of government guarantee
Govt Guarantee
NOW
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NATIONAL STRATEGIC PROJECTS AND PRIORITY PROJECTS
National Strategic Projects and Priority Projects
Roads RailwaysWater & Sanita-
tionEnergy Electrici-
ty Ports Airports
4 3 3 2 7 2 1
Priority Projects
Priority Projects
(Type A - 22 Projects)
National Strategic Projects
Looking at the delays and hindrances in delivering strategic projects, the Government is developing the Presidential Regulations and Presidential Instruction for National Strategic Projects.
KPPIP was mandated to select National Strategic Projects and coordinate their deliveries. From the list, KPPIP will identify the priority projects which will receive additional facilities such as Pre-Feasibility support, funding scheme determination platform and dedicated debottlenecking support.
Roads Railways Airports Ports Housing Energy
52 18 17 13 3 7
PSN Distribution
Water & Sanitation
BorderDevelopment Dams Technology Estates Mining
10 7 60 3 26 6
Agrarian & Fisheries Electricity
3 1 ProgramOther
CMEA/CMMA Projects
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National Strategic Project (PSN)’s Facilities and Privileges
1. Permits and Non-Licensing
The PSN that already has the Borrow-to-Use Permits for Forest Areas (IPPKH) no longer needs the Location Designation licence for a forest area. The process for Location Designation licence will be carried out together with the process for issuing Environmental Permit, Building Permit, Disturbance Permit and Building Plan Approval through a single data access. The PSN can immediately start its construction stage after receiving the Designation Location license, Environmental Permit and Building Permit.
2. Government Procurement
Procurement by direct appointment can be conducted for consultancy service up to a value of IDR500 million. The Government can directly appoint an international firm or a consultant service provider that has previously been engaged by the related ministries or institutions and has maintained a good reputation. Multi-years budget is allowed if the engagement can not be completed in a single financial year.
5. Debottlenecking
The Government can exercise discretion to debottleneck issue in delivering the PSN as per the prevailing regulations. In the case where no Law/Regulation exists, the Government is able to decide/act using Good Governance principle.
The implementation of PSN will support the local content.
4. Local Content
6. Spatial Planning
PSN locations will be set as Holding Zones when the Minister of Environment and Forestry has not approved the revision of the designation and the function of the forest area. When the designated project location is converted to a forest area, project implementation can continue by granting IPPKH. Adjustment of the Spatial Planning for the PSN will be performed as per the prevailing regulation.
The Government will support Business Entities in procuring land through land acquisition prioritisation and state land utilisation. Business Entities’ expenses related to the land acquisition can be reimbursed to the Government and payment can be made through the State Budget/Local Government Budget. These reimbursements can be considered as part of the investment cost.
3. Land Acquisition7. Government Guarantee
The Government will provide guarantees to the PSN that are implemented by the Local Government and Business Entity. In this case, the Local Government must provide project guarantee in advance prior to requesting any Guarantee from Central Government.
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Pres. Reg. on National Strategic Projects stipulates acceleration on permits/non permits and the roles of central and regional One Stop Service
Central PTSP processes permits and non-licensing (e.g. Location Permit, Environmental Permit, Borrow-to-Use Permits for Forest Areas, Building Permit and fiscal and non-fiscal facility) in 5 working days at the latest once all required documents are complete and correct. For permits issued by Regional Governments, the process will be done by Regional PTSP.
PTSP is able to process permits and non-licensing in 5 working days
The PSN can immediately start its construction stage after receiving the Location Determination License, Environmental Permit and Building Permit.
The PSN may start construction after obtaining 3 permits
Ministers, head of institutions, governors, and/or regents/mayors provides the relevant recommendations for permits and non-licensing issuance in 5 working days at the latest, except for these following permits and non-licensing:• Environmental Permit (60 working days);• Borrow-to-Use Permits for Forest Areas (30 working days);• Non-licensing for tax facility e.g. Income Tax and/or Value Added Tax (28 working days).
Ministers, head of institutions, governors, and/or regents/mayors can issue Permits and non-licensing that are not environmentally harmful in a form of checklist (e.g. Building Permit, Disturbance Permit and Building Plan Approval).
Permits that are not related to environment should be issued in form of checklist
Unless stipulated in the Law/Gov. Reg., recommendations for permits and non-permits should be issued within 5 working days except for the specific 3 permits
Since Central and Regional PTSP will borne the mandates as stipulated in the PSN Pres. Reg, there is a need to ensure there are sufficient manpower resources and capacity to execute them.
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KPPIP Priority Project’s Facilities and Privileges
Priority project will receive facilities to re-do/revise the existing pre-feasibility studies in forms of funding or pool of consultant to ensure high quality project preparation. KPPIP has allocated more than 50% of its budget for OBC facility.
OBC Facility by KPPIP/Bappenas
PPP Unit in Ministry of Finance will prioritize projects with PPP potential as listed in KPPIP Priority Projects List. The projects will be prioritized to receive Project Development Facility / Transaction Advisory (PDF/TA), application for government support, Viability Gap Funding (VGF), and/or Availability Payment.
Prioritization of PPP projects at PPP Unit, Ministry of Finance
Priority projects will be prioritized for debottlenecking efforts through stakeholder coordination facilitated by KPPIP with supports from internal full time experts from professionals. KPPIP is also able to establish ad hoc working team to resolve specific issues.
Priority Debottlenecking Support and Working Team Facilities To encourage on schedule project implementation
with good quality, KPPIP will introduce incentive/disincentive* scheme on Project Owner’s performance. The incentive may be additional priority project quota for the Project Owner in the coming year, supports for related studies, etc. Disincentives may be the Project Owner placement in KPPIP blacklist for future priority project candidates, and refund of OBC fund provided by KPPIP.
Incentive/Disincentive* scheme for project
*The incentive/disincentive scheme is a work in-progress.15
KPPIP
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Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
KPPIP was established to revitalize KKPPI1 functions by downsizing the organizational structure, authorizing synergized decision makings and involvement since the project preparation stage, and strengthening capacity building in internal committee.
KPPIP members include ministries and institutions that play significant roles in project preparation
Coordinating Ministry of Economic Affairs
Ministry of Finance
Ministry of National Development Planning/Bappenas
Ministry of Agrarian and Spatial Planning (BPN)
Coordinating Ministry of Maritime Affairs2
Ministry of Environment & Forestry 2
1 KKPPI or Komite Kebijakan Percepatan Penyediaan Infrastruktur, in English called Committee for Acceleration of Policy and Infrastructure Provision was the committee prior to the revitalization of KPPIP2 Proposed revision of Presidential Reg. 75/2014;3OBC: Outline Business Case; 4PDF: Project Development Fund
In carrying out its mandates, KPPIP strengthens its internal synergy by dividing the work and preventing duplication efforts so that efficient and effective infrastructure delivery can be achieved
Examples of line Ministries/Institutions involvement based on each line Ministry/Institution mandates:
o Assessing and providing OBC facility for bottom-up projectso Developing Pre-Feasibility standard and quality guidelines
o Debottlenecking on issues related to land acquisition and supporting acceleration efforts
o Providing OBC3 facility for top-down projectso Monitoring and debottlenecking of projects on economic issues
o Reviewing and approving Government support and guaranteeo Providing PDF4 facility for PPP projects
EKON
• KPPIP involves other line Ministries/Institutions in infrastructure sector (economy or social) when making decision.
• KPPIP has established the Electricity Team (UP3KN) and the Development of Bontang Oil Refinery Acceleration Team. Will form the Land Acquisition Acceleration Team etc.
Exis
ting
Mem
bers
Prop
osed
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UP3KN Working Unit
Bontang Oil Refinery Working Team
Other Working Teams
Team for Land Acquisition Acceleration
Finance Team
Legal Team
KPPIP is supported by a Full-time PMOCommittee
Coordinating Minister of Economic AffairsMinister of Finance
Minister of National Development PlanningMinister of Agrarian and Spatial Planning
Implementation Team
Sectoral Working Team
Pool of Consultants
Full-Time PMO
Professional1. Act as the single point of contact for all government agencies, potential funders and private sector investors for coordinating and delivering the Strategic & Priority Infrastructure projects;
2. Coordinate the delivery of the projects to be on-time, within the budget and at the best quality;
3. Enable and facilitate the GCAs' capabilities to deliver projects via various fiscal and technical support schemes.
Mission
Champion in Managing and Delivering the Strategic & Priority Infrastructure Projects in Indonesia
Vision
Inte
r-S
ecto
ral
Wor
king
Tea
ms
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KPPIP Mandates
Top down projects (from
President/Vice President)*
Bottom Up Projects(Proposed by Line
Ministries and Regional Govt)
* OBC (Outline Business Case) is the output of pre-feasibility study. FBC (Final Business Case) is the output of feasibility study.** Project owner is the ministry, agency head, regional heads, SOE/ROE heads established as the responsible party in priority infrastructure delivery.
3. Determination of funding scheme &
source for priority projects
State Budget
SOE appointment
PPP/Strategic Funding
Coordinate between the project owner** and Bappenas related to funding source (State Budget, Regional Budget, ODA)
SOE appointment aims to accelerate implementation and leverage SOE financial capacity.
PPP Unit at MoF to coordinate FBC* development and do transaction advisory to implement PPP projects(involving internationally reputable consultant).
2. Determination
of Priority Projects
4. Monitoring &Debottlenecking
KPPIP assists development of
Action Plans and monitor
debottlenecking efforts
KPPIP’s six main tasks as stipulated in Pres. Reg. No. 75/2014
5. Determine strategy and policy6. Facilitate capacity and institutional building related to Priority Infrastructure delivery
1. Development of pre-feasibility study
(OBC*) quality standard and revise/re-do when necessary (3-
6 months)
Groundbreaking
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[Initiatives] Tools currently developed by KPPIP
OBC GuidelineKPPIP is developing OBC Guideline which consists of required elements in the OBC to ensure that the pre-feasibility study from Project Owners satisfies the standard for good quality project preparation. Value for Money (VfM) analysis is included in the Guideline to determine the most beneficial funding scheme for the project.
Together with KPPIP, Bappenas also provides fund for Pre-Feasibility Study. Moreover, Ministry of Finance has developed PPP Unit which will provide Project Development Fund for Final Business Case (FBC) and Transaction Advisor.
Funding Scheme GuidelineThis sector-specific guideline is the tool to determine the most optimal funding scheme by using the elements of OBC. This Guideline will ensure that the projects offered to investors are bankable and prepared based on an international quality standard.
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[Initiatives] KPPIP is developing an integrated IT SystemKPPIP is currently developing an integrated IT system for providing database on projects’ latest status which can be effectively utilized for monitoring purposes.
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DatabaseProject
information such as map, track, existing study
and latest project status.
An integrated IT system with
monitoring capacity for stakeholders, so that
they can have real time data.
Platform data outlook that is efficient and functional using a user-friendly framework.
Record decisions related to projects and synchronize the implementation schedule that can be utilized by stakeholders.
[Immediate initiatives] KPPIP establishing a pool of consultants
KPPIP
KPPIP will procure and conduct early screening for consultants, both firms or individuals, that are applying.
Some firms and individual consultants that are suitable will be given the Multi-years Umbrella Contract inside the pool of consultants.
When needed, KPPIP can direct appoint firms and individual consultants that are most needed for the project.
KPPIP Pool of Consultants
Direct appointment for the pool of consultants.
Benefits of having a pool of consultants
• Avoiding a lengthy procurement process when KPPIP needs consultants for managing the project.
• Providing a quality of pool of consultant that can be utilized by the PMO and Working Teams of KPPIP.
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Current KPPIP’s Priority Projects - already agreed at the ministerial meeting in March 2015
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8. SHIA Express Railway (Rp 24T)
9. West Semarang Water Supply (Rp 765 M)
10.Balikpapan –Samarinda Toll Road (Rp 11,4T)
11. Manado – Bitung Toll Road (Rp 4,3T)
OBC Developm
ent
Ready for PPP
Tender Permit and Land Acquisiti
on
Financial Close*
Construction**
1. New oil refinery (Rp 75 -140T)
2. Jakarta Sewerage SystemZona 1 (Rp 7T)
3. Airport Revitalization (brownfield)
4. Kuala Tanjung Int. Hub. Seaport (Rp 30T)
5. Bitung Int. Hub. Seaport (Rp 34T)
6. Panimbang – Serang Toll Road
7. Upgrading existing refineries (Cilacap, Dumai, Plaju, Balongan, Balikpapan)
12.HVDC (Rp 20T)13. Indramayu Power Plant
(Rp 20T)14.Sumatera Transmission
(Rp 35T)15.MRT Jakarta South -
North (Rp 25T)16.Sumsel 9, 10 Power
Plants17.Central and West Java
500 kV Transmission Line
19. 4 sections of Trans Sumatera toll road (Rp30T)20.Makassar – Pare Pare Railway (Rp 6,4T)21.Water to Energy –Development of Hydro Power Plants Karangkates IV&V, Kesamben, and Lodoyo22.NCICD Phase A (Rp20T)
18. Sumsel 8 (One package with Sumsel8, 9, 10 with total investment value of Rp 54T)
19.Batang Power Plant/Central Java Power Plant (Rp 40T), Target: October 2015
KPPIP’s additional15 projects in line with the Nawacita
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1. Inland Waterways/CBL Cikarang-Bekasi-Laut Jawa, (Pelindo II)2. Jabodetabek Circular Line (Kemenhub)3. Jabodetabek Light Rail (PT. Adhi Karya)4. Trans Sumatera Railway (Kemenhub)5. Connectivitiy Improvement to support Special Economic Zone/ KEK (Kemen PU&Pera,
Kemenhub)6. East Kalimantan Railway (Kemenhub)7. Purukcahu – Bangkuang Railway (Pemprov Kalimantan Tengah)8. Railway to support KEK Sei Mangkei (Kemenhub)9. Kertajati Airport (Pemprov Jawa Barat)10. Palapa Ring Broadband (KemenKominfo)11. Technopark Development (KemenRistek & Dikti)12. West Java Port as a replacement to the Cilamaya Port (Kemenhub)13. South Sumatera Light Rail 14. High Speed Railway15. New Karawang Airport
Some KPPIP Achievements to Date
Acceleration on the Project Preparation and the Decision Making ProcessBontang Oil Refinery Revived the project preparation process, which has been delayed for 5 years.
Facilitated the preparation of an Outline Business Case (OBC) by allocating an amount of ~IDR14 Billion for the engagement of an international company to conduct the work.
Panimbang – Serang Toll Road
Facilitated the preparation of Value for Money review, which is part of a project preparation process under Public-Private Partnership scheme and a basis of justification to determine the funding scheme.Developed a standard in preparing the Pre-feasibility Study/Outline Business Case (OBC) for a toll road project.Facilitated the preparation of an Environmental Impact Analysis (EIA), which is required for the land acquisition.
Acceleration to determine the Project Funding SchemeJakarta Sewerage System (JSS)
Provided a guideline in preparing the OBC, that becomes a basis for the funding scheme recommendation, in accordance with the standards set by KPPIP Facilitated meetings among the stakeholders to assess recommendation on the funding scheme and subsequently, obtained an approval at Ministerial level.
South Sumatera Light Rapid Transit (LRT)
Reviewed the existing financial assessment of the project.Reviewed the SOE capability for developing the project.Provided a recommendation to the decision maker on the project funding scheme.
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Presentation Outline
Indonesia Infrastructure - IssuesIndonesia Infrastructure - Issues
Lesson Learnt and Reformed ActionsLesson Learnt and Reformed Actions
National Strategic Projects and Priority ProjectsNational Strategic Projects and Priority Projects
KPPIPKPPIP
Some Project UpdatesSome Project Updates
Question and AnswersQuestion and Answers
26
KPPIPMenara Merdeka, 8th floor
Jl Budi Kemuliaan I No 2, Jakarta 10110E-mail : [email protected]
Landline : +62 21 2957 3771
TERIMA KASIH / THANK YOU