IFC, a member of the World Bank Group, together with Standard Chartered Bank and Deutsche Bank, agreed to provide loans of US$250 million to PT Indonesia Infrastructure Finance, an infrastructure financing company.
IIF was established in 2010 as part of the development strategy of the Indonesian government and multilateral agencies to address private capital constraints in Indonesia's infrastructure sector. IIF has invested in toll roads, telecom towers, hydropower, and gas-fired power plants with total commitments to date of US$204 million, which are expected to rise to US$377 million by the end of this year.
Mr. Sukatmo Padmosukarso, President Director Chief Executive Officer of IIF, stated:
This is our first commercial debt financing with a long-term maturity structure, which is particularly scarce in Indonesia amid volatile international market conditions. The financing is a big boost to our Company's infrastructure investments and helps diversify our funding base. IFC's financing for IIF complements the investments we make directly into infrastructure projects in Indonesia and underlines our strategy to support sustainable infrastructure and green growth in East Asia Pacific," said IFC Indonesia Country Manager Sarvesh Suri.
Indonesia's infrastructure investment stands at only 3% of its gross domestic product, far below India's 7.5% and China's 10%. In 2012, about 30% of Indonesia's population had no access to reliable electric power - one of the lowest penetration rates of electricity supply in Southeast Asia - and more than half of the population has no access to safe water. Insufficient infrastructure investment has slowed the development of Indonesia's economy.Global Head of Financial Institutions Standard Chartered Bank, Peter Heidinger commented:
Standard Chartered has been in Indonesia for more than 150 years. In line with our brand promise -Here for good, we are proud for being able to contribute to the development of infrastructure projects in Indonesia through IIF which we have worked with since 2012. This loan facility is an extension of our commitment to support the various requirements of IIF and the related stakeholders including the Indonesian government under the Public Private Partnership model.
Meanwhile, Managing Director and Head of Loan Trading and Syndication, Asia, at Deutsche Bank. Amit Khattar stated:
Deutsche Bank is pleased to support this key development in Indonesia's infrastructure sector and the critical role that IIF will play in financing key projects.