I

ndonesia will become a founding member of a cross-border sharia-compliant infrastructure bank to help boost infrastructure development in various countries, a top government official says.

The bank, named Islamic Investment Infrastructure Bank, will be cofounded with Turkey and the Saudi-based Islamic Development Bank (IDB), according to Finance Minister Bambang Brodjonegoro. '€œThe bank'€™s concept is to act like a global infrastructure bank with a sharia approach. So, Indonesia, Turkey and the IDB will become its founding members,'€ Bambang told reporters on Tuesday.

To qualify as a founding member, Indonesia must contribute more than US$300 million '€” the amount previously offered by Turkey as start-up capital for the bank, Bambang said. After signing a formal agreement, founding members will invite other countries to join as shareholders, according to Bambang.

The sharia infrastructure bank is expected to be established in the second half of this year, following Indonesia'€™s announcement to join as one of the founding members in the upcoming China-led Asian Infrastructure Investment Bank (AIIB), which is also expected to help finance the country'€™s infrastructure projects.

Financial Services Authority (OJK) chairman Muliaman D. Hadad said recently that Indonesia and Turkey were '€œcompeting'€ to become host of the bank'€™s headquarters, with Indonesia eager to boost infrastructure development.

In a bid to boost economic growth, President Joko '€œJokowi'€ Widodo has pledged to improve Indonesia'€™s infrastructure developments. According to the National Development Planning Board (Bappenas) in its 2015-2019 National Mid-Term Development Plan, the country will need Rp 5.5 quadrillion ($416.4 billion) for infrastructure projects.

This year alone, the government has budgeted Rp 195 trillion for infrastructure projects, and is calling on international and domestic lenders to help with additional finance.

Last week, World Bank president Jim Yong Kim met with President Jokowi in Jakarta, and offered the Indonesian government up to $12 billion in additional funds for the next three to four years.

Indonesia'€™s loan from the US-based World Bank accounts for approximately 60 percent of the country'€™s total debt from multilateral organizations. The WB is Indonesia'€™s largest development partner.

Also on Tuesday, Bambang said the government was convinced the first phase for the establishment of Indonesia'€™s first infrastructure bank could be completed in August this year through the merger of state infrastructure-financing firm, Sarana Multi Infrastruktur (SMI) and state investment unit, the Government Investment Center (PIP).