Indonesia to See Birth of State Development Bank in 2016

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  • TEMPO.CO, Jakarta - Finance Minister Bambang Brodjonegoro plans to establish Indonesian Development Bank (IDB) in 2016. The aim is to help smooth the development of projects that uses a public private partnership (PPP) scheme.

    "We will prioritize developers that are willing to take on long-term development projects," the minister said on Tuesday, September 2.

    According to Bambang, one of the obstacles in developing infrastructure with PPP scheme is funding. Indonesian banks, Bambang said, prefer to disburse consumer loans rather than to developers. This makes investors reluctant to take part in working on infrastructure projects.

    "Loans can only be obtained from either the IMF or the ADB," Bambang revealed.

    With the establishment of a state development bank, developers can have an alternative source of domestic. The IDB, which will be derived from PT Sarana Multi Infrastruktur (Persero), can serve as a representative of interests between the government and public and private developers.

    Sometime ago, the ADB approved a loan US$400 million (Rp5.6 trillion) worth to Indonesia to help strengthen the financial sector. The interest charged for the loan is lower than commercial loan's interest as it focuses on development. The ADB's loan is not to be used in sectors with high levels of income.