TEMPO.CO, Jakarta - The Asian Development Bank (ADB) has approved a $100 million, equal to Rp1.4 trillion, financial intermediary loan to the Government of Indonesia to help catalyze private sector investments in infrastructure projects.

“The loan will help mobilize private sector investments to develop and finance much-needed infrastructure projects,” said ADB Country Director for Indonesia Winfried F. Wicklein in a press release received by Tempo today, Oct. 22, adding that it will help close the infrastructure financing gap in Indonesia and raise the quality and standards of infrastructure projects.

According to Wicklein, quality infrastructure is critical to more inclusive growth in Indonesia, requiring infrastructure services to support a modern, competitive middle-income economy and provide basic services to its people. He views that Indonesia’s infrastructure financing gap remains significant, with annual investment needs that are estimated to be more than $70 billion. Accelerating infrastructure development will be a medium-term development priority of the Indonesian government.

He says thaT under the Leveraging Private Infrastructure Investment Project, the government will on-lend the ADB loan proceeds to PT Indonesia Infrastructure Finance (IIF) through PT Sarana Multi Infrastruktur (SMI), a state-owned enterprise. SMI and IIF are important institutions in Indonesia’s infrastructure financing landscape that provide project finance, advisory services, guarantees, and project development support to infrastructure projects.

With ADB’s assistance, IIF will lend at commercial terms to infrastructure projects adhering to IIF’s and ADB’s standards and guidelines. The loan will support projects in health, renewable energy, telecommunication, and transportation sectors.

“ADB’s assistance is anticipated to leverage a multiple of the loan amount in the form of additional private sector investments in important infrastructure projects and in doing so help deliver value for money to the government,” said ADB Country Economist Yurendra Basnett.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members—49 from the region.