In her remarks before PT SMI executives and employees, Sri Mulyani Indrawati expressed her appreciation for the company’s increased portfolio of financing to local governments, which has shown rapid growth. However, she would like to see that regional development proceeds in a more sustainable manner.

“It is important to make sure that in the future, we will not have what we call remote, outermost and least developed areas in Indonesia,” she emphasized.

PT SMI has the main mandate to finance infrastructure development in the country to achieve equitable development, which is one of the pillars of Indonesia Vision 2045. In addition to infrastructure financing, PT SMI has been taking part in regional financing since 2015 when the company took over assets and the role of Pusat Investasi Pemerintah as a local government financing institution.

Throughout the COVID-19 pandemic, PT SMI took on an expanded role of mitigating the impacts of significant changes in the local economy through the regional National Economic Recovery (PEN) loan program. Since December 2022, 92 local administrations have benefited from loans through the PEN program, with a total commitment of Rp 34.7 trillion (US$2.26 billion).

“In distributing PEN loans, integrity and accountability are always at our core. One of the innovations we have come up with to maintain both is by digitally transforming our regional loan application process through the Regional Financing System (ReFina), which allows measurable accountability and transparency,” the minister added.

Recently, ReFina was awarded the first place in Best Innovation from the Finance Ministry.

In his presentation before the minister, PT SMI president director Edwin Syahruzad highlighted the company’s innovations and inventions in infrastructure financing since its establishment in 2009 to become a catalyst for national development financing through three main business pillars, financing and investment, advisory and project development.

As of 2022, PT SMI has financed 435 infrastructure projects worth Rp 819.94 trillion, producing a multiplier effect of 5.6 times the total financing commitment amount and 26.87 times the paid-up capital. As a catalyst for development in Indonesia, PT SMI has always been eager to seek alternative sources of funding, such as by issuing green bonds and global bonds as well as engaging and collaborating with the private sector in infrastructure project syndications.

As an infrastructure financing company, PT SMI has also been tasked by the government to provide support for the new capital city Nusantara (IKN) project. PT SMI will help the IKN Authority in finding innovative financing for city’s infrastructure projects and preparation for 20 infrastructure projects in various sectors such as hospitals, hazardous and toxic waste management, waste management, broadband access, transportation and water supply systems.

In addition, PT SMI has been appointed as the Energy Transition Mechanism (ETM) country platform manager to manage the financing of the energy transition in Indonesia. This assignment is not totally new to PT SMI as it has been managing the SDG Indonesia One, a blended finance platform providing financing for climate change adaptation and mitigation projects, since 2018.

As of February, PT SMI has partnered with 17 institutions to develop a financing and investment strategy for energy transition by leveraging all the available resources, both commercial and non-commercial such as grants and technical assistance. Those partners working with PT SMI in its role as ETM country platform manager include multilateral and bilateral institutions, banks, philanthropic organizations and think tanks.

Edwin added that in designing a financing and investment scheme for the energy transition in Indonesia, environmental and social aspects are a priority. Working with the Asian Development Bank, PT SMI has prepared a Strategic Environmental and Social Assessment through which an audit will be conducted, risks will be identified and a risk mitigation plan will be developed from the environmental and social perspectives as a basis for a recommended energy transition scenario.

“We are taking this step to meet the objective of energy transition in Indonesia, so the transition can be both equitable and affordable,” Edwin continued.

Because of its diversified roles in financing, from infrastructure financing to loaning the regional administrations, PT SMI is being prepared to transform into a national development financing institution, especially to address the challenges in regional economic development, where equal access to infrastructure is required by the different regions to correspond to their characteristics.

According to Sri Mulyani, PT SMI holds a highly strategic role in meeting the demands for development financing, so the expectation for the company’s transformation into a development financial institution is to become a source of legacies for the country’s development. To support the transformation process, an initiative introduced by PT SMI on its 14th anniversary was the SMI Institute. Three core programs, i.e., research and fellowship, capacity building and training and knowledge sharing, will be the focus of the SMI Institute.

Sri Mulyani also highlighted the importance of PT SMI in maintaining integrity, accountability and transparency in its business activities. The finance minister added that reputation and public trust that PT SMI has earned, as evidenced by the company’s being named the most reputable institution on national media, are something to be grateful for.

“Please continue to be an institution that makes all of us proud,” Sri Mulyani encouraged.

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