ADB Invests $140m in Indonesia Infrastructure

MANILA ~ The Asian Development Bank said this week it would invest US$140 million in an Indonesian government-backed fund to support vital infrastructure projects in that country.

Conceived in 2007 and also supported by the World Bank, Australia and Japan, the fund was designed to provide long-term loans, equity or guarantees for building roads, power plants and other major infrastructure projects urgently needed by Indonesia.

The fund was launched last month in Jakarta.

The announced ADB investment includes $40 million for a 20-percent equity stake in the fund, called the Indonesian Infrastructure Financing Facility, and a 25-year loan of up to $100 million to the state-owned infrastructure holding company, PT Sarana Multi Infrastruktur.

“There is a huge gap between needed infrastructure investments and the available financing. That has significantly constrained the expansion of crucial infrastructure in Indonesia,” said Arjun Thapan of the ADB’s Southeast Asia department.

The fund “will finance commercially viable infrastructure projects by offering long-term financing and by providing the intellectual capital needed to catalyze public-private partnerships,” said Philip Erquiaga of the bank’s private sector operations department.

“By limiting its exposure to 20 percent of the cost of any project, (the fund) is expected to finance up to $5.5 billion of projects in its first five years of operations,” Erquiaga added.

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