2023 PPP scheme: SOE dominance in infrastructure projects
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Skema KPBU 2023: Dominasi BUMN di proyek infrastruktur
27 January 2023
By: Muhammad Ridwan and Hendra Wibawa
The government is still providing big opportunities to business entities, both state-owned enterprises (SOEs) and private companies, regarding infrastructure project construction in the political year.
Even though the national politics is heating up, the Public Works and Housing (PUPR) Ministry is still offering infrastructure projects to business entities.
There are at least 31 public-private partnership (PPP) projects worth Rp212 trillion launching in the political year of 2023.
The PPP scheme in infrastructure provision is the solution for the difficulty in financing the government’s infrastructure projects. With PPP, the government provides space for private companies based on a proportional risk allocation principle.
Infrastructure Financing Director General of the PUPR Ministry Herry Trisaputra Zuna said that the offer of PPP infrastructure projects would continue this year.
In 2023, the value of PPP projects in the preparation stage reaches Rp73.83 trillion and the value of projects in the transaction stage reaches Rp138.41 trillion.
“The PUPR Ministry through DJPI (Infrastructure Financing Directorate General) is targeting 14 PPP projects worth Rp73.93 trillion in the preparation stage and 17 PPP projects worth Rp138.41 trillion in the transaction stage,” he said on Thursday (26/1).
According to DJPI’s data, projects in the preparation stage consist of three projects in the water resource sector worth Rp20.74 trillion and six projects in the settlement sector worth Rp17.91 trillion. On the contrary, PPP projects in the transaction stage include Merangin Dam worth Rp6.36 trillion and Batam-Bintan Bridge Construction worth Rp14.74 trillion.
Besides infrastructure projects, Herry explained that the PUPR Ministry was continuously providing housing financing support to low-income citizens for 232,072 units in 2023.
Later, the target will not only be realised through housing financing support that uses the housing loan liquidity facility (FLPP) scheme, but also through the public housing savings (Tapera) program.
Herry added that the FLPP scheme in 2023 would also be accompanied by the down payment subsidies (SBUM) program for 220,000 units worth Rp890 billion and the interest rate subsidies for loan instalments (SSB) program worth Rp3.46 trillion for housing loans (KPR) provided in the previous year that reach 754,004 units.
According to him, housing financing support distribution in 2023 from the state budget (APBN) is set to reach Rp29.53 trillion and from public funds Rp1.05 trillion.
“The target is based on the FLPP scheme that will be provided for 220,000 units with an allocated budget of Rp25.18 trillion and the Tapera scheme for 12,072 units with an allocated budget of Rp1.05 trillion,” Herry said.
He remains optimistic about PPP projects continuing in the political year. For example, he mentioned that there were many PPP projects with signed contracts.
Hutama’s guarantee
On a separate occasion, PT Hutama Karya (Persero) Corporate Secretary EVP Tjahjo Purnomo said that he was still taking chances in PPP projects in 2023 amid the global uncertainty and the political year.
According to him, Hutama Karya (HK) will participate in tenders of PPP projects by considering several factors, such as the commercial, technical, resource allocation, and tender duration aspects.
Tjahjo revealed that Hutama Karya was still studying the PPP projects that they are targeting in 2023.
Meanwhile, public policy observer Agus Pambagio reckoned that the interest of business entities to be involved in PPP projects in 2023 would decline.
Generally, PPP projects are only worked on by state-owned company. They are rarely worked on by private companies, especially PPP projects at a loss.
With that condition, he reckoned that SOEs would retake their role in PPP projects amid the difficult condition.
On the other hand, SOEs are currently in an unhealthy condition. So, most probably, the APBN will be relied on again through state equity participation (PMN).
“PPP is created by the government so that business entities can cooperate with the government. The business entities should have been private companies, but no private company in Indonesia wants to be involved in infrastructure projects with long returns. That is the type of investors in Indonesia. It is getting difficult for me. Hence, all of them are SOEs,” Agus said recently.
