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/span>As the government sets higher financing in domestic infrastructure projects, major lenders are also looking to expand their contributions to the sector.

The government, through the Public Works Ministry, said recently that the realization of infrastructure financing was estimated to reach Rp 469.7 trillion (US$38.73 billion) in 2014, up from Rp 438.1 trillion
in 2013.

Data from the Ministry shows that of the figure targeted in 2014, 44.5 percent will be taken from the state budget (APBN); 22.1 percent from the regional budget (APBD); 19.1 percent from state-owned enterprises (SOEs); and the remaining 14.3 percent from the private sector.

It says that with the new projects, the total financing realization from 2010 until the end of 2014 will amount to Rp 1.87 quadrillion, equal to around 5 percent of the country's gross domestic product (GDP).

Supported by the government's plan, banks are hoping to capitalize on the opportunities afforded by it.

State-run Bank Negara Indonesia (BNI) is among the lenders seeking to cash in on the infrastructure projects.

BNI business banking director Krishna R. Suparto said that the lender was looking to seal loan agreements with state-owned port operators Pelindo II and Pelindo III as they planned on expanding their facilities.

Pelindo II, also known as the Indonesia Port Corporation (IPC), manages several ports, including Tanjung Priok Port ' which is the country's busiest port ' in North Jakarta; Boom Baru Port in Palembang, South Sumatra; and Pontianak Port in Pontianak, West Kalimantan.

Meanwhile, Pelindo III also handles a number of ports, such as Tanjung Perak Port in Surabaya, East Java; Trisakti Port in Banjarmasin, South Kalimantan; and Benoa Port in Bali.

Krishna said that the value of each agreement could amount to around Rp 1 trillion and that BNI would partner with other lenders to provide the loans.

'Construction and engineering are among our top eight priorities in business banking due to the huge potential they offer,' he said.

In the first nine months of 2013, BNI's outstanding loans channeled to basic infrastructure projects amounted to Rp 44.81 trillion, a 14.8 percent rise from the same period in 2012. The infrastructure loans made up for 19 percent of BNI's lending throughout the January-September 2013 period.

Construction and transportation projects dominated the loans by more than 40 percent, followed by power plants, telecommunication and oil and gas.

Krishna said that BNI would also pursue business opportunities in the renewable energy sector.

'We would like to venture into geothermal business. We are mulling over the names [of possible partners],' he said.

Bank Mandiri finance and strategy director Pahala N. Mansury said that, in an effort to expand its infrastructure and construction lending segment, the bank hoped to work with several property developers in constructing houses under the Public Housing Ministry's program this year.

He acknowledged that Mandiri had not really focused its business in that sector.

Its latest financial report, dated September 2013, reveals that infrastructure- and construction-related loans stood at Rp 58.83 trillion, equal to only 13 percent of its total outstanding loans.

'Hopefully we will see a 17 percent to 20 percent increase in that sector this year, while our overall lending growth is set at between 16 percent and 18 percent,' he said.

Separately, PermataBank wholesale banking director Roy Arman Arfandy said that the private lender ' which is equally owned by Astra International and Standard Chartered Bank ' already had power plant project, worth $200 million, in the pipeline for this year.

'Our focus is in projects that last less than seven years and we prefer to finance the projects indirectly, meaning we will channel the loans to the projects' suppliers or contractors,' he said.

Meanwhile, during a gathering last week, the Financial Services Authority (OJK) stressed out the importance of higher banking support in that sector.

OJK commissioner for banking supervision Nelson Tampubolon said that the superbody would
review exiting regulations to enable banks to obtain better flexibility in disbursing the loans.

The Indonesian Financial Statistics (SEKI), published by Bank Indonesia (BI), reveals that the amount of lending channeled to infrastructure-related sectors stood at Rp 903.82 trillion as of November 2013, a 27 percent rise from the Rp 711.58 trillion reported in the previous year. The amount represented 28 percent of the total outstanding loans.

However, according to Standard Chartered Bank Indonesia economist Fauzi Ichsan, bank financing is the least of the obstacles faced in developing the infrastructure and construction sectors.

He argued that the government must first find solutions to end long-standing matters, such as land clearing and tariffs.

'That's where the real problems lie. The government's ability to realize the projects comes next,' he said.