Indonesia’s sovereign wealth fund (INA) has completed its investment in two sections of the Trans Sumatera toll road — Medan-Binjai and Bakauheni-Terbanggi Besar — in partnership with state-owned construction firm PT Hutama Karya for 20.5 trillion rupiah ($1.36 billion).
Ridha Wirakusumah, INA’s CEO, said this is an important transaction for INA as it paves the way for more foreign and local investors to participate in Indonesia’s infrastructure development. “It will also help Hutama Karya to develop the economy in Sumatera area as well as reduce logistics cost in the nearby toll area,” he told reporters on Thursday.
Bakauheni-Terbanggi Besar, one of the longest toll road sections in Indonesia, and Medan-Binjai are key infrastructures that will accelerate socio-economic development in Sumatera and the surrounding areas through a logistic network development plan.
The completion of the investment transaction between INA and Hutama Karya for the 17-km Medan-Binjai and 141-km Bakauheni-Terbanggi Besar toll roads will also contribute to improve existing services and pave the way for the development of other sections on the toll road.
The transaction was supported by PT Bank Rakyat Indonesia (Persero) Tbk acting as the sole financier for the refinancing. The financing structure relies on the strength of the toll road assets. INA was supported by Rothschild & Co in this transaction, acting as financial advisor.
He mentioned that INA has invested 50 trillion rupiah so far in four main sectors, including infrastructure, health, digital, and energy. The wealth fund has signed over $25-billion investment commitments with participation from several sovereign wealth funds, pension funds, including Abu Dhabi Investment Authority (ADIA), APG Asset Management, and others.
In May 2021, INA signed an agreement with three other companies to form an up to $3.75-billion investment platform focusing on toll roads in the Southeast Asian country. INA signed the agreement with Caisse de dépôt et placement du Québec (CDPQ), APG Asset Management, and ADIA to establish the investment platform.
Meanwhile, Kartika Wirjoatmodjo, vice minister of state-owned enterprises, said that other toll road sections, including the addition to the Trans Sumatera toll road (Terbanggi Besar-Pematang Panggang-Kayu Agung), Bogor-Ciawi-Sukabumi (Bocimi) toll road, and Bekasi-Cawang-Kampung Melayu (Becakayu) toll road are also open for divestment. “However, we will improve the toll road first before offering it to INA,” he said.
Besides the toll road, state-owned enterprises will also divest other public facilities such as train stations, airports, and others to foreign investors. He explained it will be a way for the state-owned firms to have more liquidities to build more public facilities.