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lack of long-term financing will continue to be a big problem in the development of the infrastructure if no breakthrough is made to solve the funding gap, an executive from the International Finance Corporation (IFC) said.

“We have seen a shortage in the supply of long-term financing for the development of Indonesian infrastructure facilities,” Adam Sack, IFC manager for Indonesia and Malaysia, told The Jakarta Post on Monday.

He hailed the establishment of PT Indonesia Infrastructure Finance (IIF) as a breakthrough in coping with the lack of long-term financing.

If the new financing body is able to mobilize public funds to support its financing capacity, it will be able to cope with the shortage of long-term financing from existing financial institutions.

The participation of more private companies in the financing of the infrastructure projects will certainly be able to accelerate the development of roads, ports and power plants in the country, he said.

“Only with better power, better telecommunications and better transportation links will economic growth could be accelerated.”

IIF was jointly established by the government through PT (Persero) Sarana Multi Infrastruktur (SMI), which provided Rp 400 billion (US$45 million) as an initial investment, the Asian Development Bank (ADB) with another Rp 400 billion, IFC with Rp 200 billion and another Rp 200 billion from the German investment corporation (DEG). The World Bank and ADB have pledged to provide loans of up to Rp 1 trillion.

“I hope IIF can inspire other institutions to take the same steps because the need for funding is quite huge,” Sack said.

The development of IIF was important in several ways, he added. First, it will be able to directly provide long-term financing to infrastructure projects.

Second, it sends a signal to domestic and international investors that long-term financing is now available.

“For those who might be interested in sponsoring,” he said, “Just come to IIF.”

Other investors might also join to invest alongside IIF to provide necessary funds in the infrastructure development in Indonesia, he added.

“It is in effect signaling the opportunities that are available in Indonesia’s infrastructure sector. I think IIF is very important,” he said.

IFC, he said, was committed to support the Indonesian government’s plans on infrastructure development and would do it in a number of ways.

“First, it had provide Rp 200 billion in investment in IIF. Second, IFC will also directly invest in a number of projects,” he said.

He said that IFC had recently invested in developing a port for a shipping company.

“We are looking at toll roads and several power projects, particularly renewable energy or clean energy. So, we can invest in a number of projects,” said Sack. (ebf)