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n recent months Indonesia has been celebrating a series of firsts: from the first Indonesia pavilion at the World Economic Forum in Davos; to being rated, for the first time, investment grade by all three major rating agencies and launching the world’s first ever Komodo bond by a state-owned enterprise.

This is testament to President Joko “Jokowi” Widodo’s commitment to building a more globally competitive and international economy.

Indonesia is one of the fastest growing economies in the G20, forecast to expand by 5.4 percent in 2018, the largest member of ASEAN and becoming an increasingly attractive destination for foreign direct investment.

At the center of President Jokowi’s vision is infrastructure development. A landmark program is in place encompassing vital infrastructure such as seaports, toll roads, airports and power plants.

The President has said “connectivity between Indonesia’s 17,000 islands and 34 provinces is essential to fostering growth that is Indonesia-centric rather than Java-centric.”

A core enabler of this growth is access to the international capital markets. The Indonesian
government recognizes that private sector funding can play a significant role in bridging the gap between government spending and the country’s infrastructure ambitions.

Mandiri Group, particularly its largest lender Bank Mandiri and its securities unit Mandiri Sekuritas, is proud to spearhead this reform. Their newest market investment instruments, Global Indonesia Rupiah (IDR) Bonds, are opening up the capital markets to global investors.

Global IDR Bonds are Indonesia rupiah-denominated bonds sold in foreign markets. Their structures are similar to Renminbi-denominated bonds, commonly known as Dim Sum bonds or Indian Rupee-denominated bonds, also known as Masala bonds. And London Stock Exchange Group is honored to support the emergence of this new asset class.
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Britain became the first country outside the Islamic world to issue a sovereign Sukuk bond.

These Global IDR Bonds have come to be known as Komodo bonds, named by President Jokowi in honor of Indonesia’s famous large species of lizard.

A number of state owned enterprises, such as PT Jasa Marga, Indonesia’s toll road operator, and PT Wijaya Karya, one of Indonesia’s largest engineering, procurement and construction companies, are leading the way in accessing this new channel of international finance.

Last year, Jasa Marga issued the world’s first Komodo bond by a state-owned enterprise on London Stock Exchange’s International Securities Market, raising Rp 4 trillion (US$303 million).

It was a landmark transaction for Indonesia and the United Kingdom, underlining London’s status as an international center for debt finance, innovation and a strong partner to Indonesia.

Only a month later, Wijaya Karya celebrated the listing of their first Komodo bond, raising Rp 5.4 trillion on London’s International Securities Market. This is the largest Komodo bond issuance to date and further proof of the partnership between Indonesia and the UK.

Through their London listings, Jasa Marga and Wijaya Karya are paving the way for other Indonesian issuers to access a new, liquid and international investor base, whilst securing offshore financing without foreign exchange risk.

Both bonds attracted global investor support and were more than two and half times oversubscribed, a clear demonstration of strong investor demand.

Both Bank and Mandiri Sekuritas have been vocal in their support of widening and diversifying Indonesia’s capital markets.

The fixed-income segment is proving to be particularly attractive for global investors looking for established investment tools.

With a more stable economic outlook, Mandiri Group is confident investors are optimistic about getting better yields through Komodo bonds compared to US dollar bonds.

But why London as a partner? Certainly there are strong historic and cultural ties but above all, London is in a complementary time zone to Indonesia, offers the world’s most liquid and diverse pool of international investor capital, deep secondary markets and a credible and independent regulator.

London has a unique ability to support Indonesia in its long term plans, which extends beyond Komodo bonds.

For example, the UK is in a strong position to help Indonesia access opportunities in Islamic financial products.

In 2014, Britain became the first country outside the Islamic world to issue a sovereign sukuk bond, structured in such a way as to generate returns to investors without infringing Islamic law.

Indonesia is at the vanguard of a new transformation: innovation in long term infrastructure financing. This is a cause that both London Stock Exchange Group and Mandiri Group fully support.
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Nikhil Rathi is CEO of London Stock Exchange Plc. Kartika Wirjoatmodjo is CEO of Bank Mandiri Group.