Facilitating Infrastructure Financing

PT Sarana Multi Infrastruktur (Persero) (PT SMI) is an AAA class (local corporate rating) infrastructure financing firm, established in 2009. It is 100% owned by the government of Indonesia, through the country’s Minister of Finance. As winner of the 2017 Indonesia Business Awards in the 2017’s Best in Business category, we interviewed the firm’s Marina Novita to learn more.

PT Sarana Multi Infrastruktur (Persero) (PT SMI) is a AAA class (local corporate rating) infrastructure financing firm, established on 26th February 2009 and is owned 100% by the government of Indonesia through the country’s Minister of Finance. PT SMI’s head office located in Jakarta, at the heart of capital city of Indonesia.

The firm’s Marina Novita begins by detailing the role of the firm and the sectors they support.
“PT SMI plays active role in facilitating infrastructure financing, as well as project preparation and advisory services. PT SMI support the government’s infrastructure development agenda, through public-private partnership projects. As such, PT SMI serve as a catalyst in accelerating infrastructure development in Indonesia.

“Eligible sectors that can be financed by PT SMI include: toll roads & bridges; transportation; oil & gas; telecommunication; waste management; electricity; irrigation & waterway; water supply; social infrastructure (urban infrastructure, education facilities infrastructure, regional infrastructure, tourism infrastructure, health infrastructure and prison infrastructure), the expansion of electricity infrastructure includes energy efficiency and railway rolling stock.”
“The total value of projects that we’ve been involved since 2009 is ~IDR 232 trillion, which is the equivalent to $17.4 billion.”

Marina then underlines how it feels to be part of the 2017 Indonesia Business Awards in the 2017’s Best in Business category, plus something of the qualities the firm can offer to potential clients.

“It was a mix of excitement and surprise to win this award, as our hard work was recognised and has paid off. Behind any award is hard work and solid team work, plus a result-oriented group of people providing excellent service delivery and innovative products that meet the clients’ needs. Winning an award such as this also tells that our firm is reaching a certain level, that could not be achieved by other. We are therefore very honoured that our stakeholders recognised all of this.

“In addition, we believe that reliable human resources (HR) are an indispensable factor supporting the firm’s drive for excellence and sustainability. Therefore, management put great attention to the growth and the enhancement of our HR competencies, through: targeted recruitment, supervision, coaching, development programmes; providing opportunities for employees to develop competence via training; remuneration strategy to stay competitive in the market; paying attention to the achievement of performance and contributions based on employee promotion guidelines and providing a comfortable office environment to enhance comfortability as well as loyalty.”

Marina turns the conversation towards the important role that innovation plays in the firm’s work, and their role as an industry-shaping and progressive business in Indonesia.

“As a catalyst for the acceleration of national infrastructure development, as a state-owned company under Ministry of Finance, we have an active role in financing infrastructure projects in Indonesia. We also assist with project preparation, through consultation services and development activities. As a firm, we have a mandate to support the acceleration of infrastructure development. One focus of this mandate is the government and the public-private partnership (PPP) programme, which involves various financial institutions, both private and multilateral.

“Being aware of the need for large scaled infrastructure development, the firm has created some innovations through long-term financing schemes. In addition, we have been innovative where finance products are concerned by offering other financing schemes such as subordinated loans, mezzanine loans, cash deficiency support, convertible loan and equity investment (equity) that are complimentary with financing products offered by banks. By offering such product, the firm tries to close the gap to accelerate the financial close of infrastructure projects in Indonesia.

“The firm also has established a corporate culture namely I-SPRINT (integrity, service excellence, partnership, resilience, innovation and trust). The implementation of a shared work culture is important for the firm to ensure employees’ ability to uphold and support the firm values, that also aligned with firm strategies and business activities.”
Marina then turns the spotlight on what the region has to offer for a business such as PT SARANA MULTI INFRASTRUKTUR (PERSERO).

“The $1.7 trillion infrastructure financing gap in Asia (based on Asian Development Bank projection) is said to be a ‘problem’ of the region’s success, which will require more facilities over the coming years. The bottleneck is coming up, simply because of the fast growth within the region, plus improvements in living standards and sustained growth, all of which would raise new issues for these countries to handle.

“In Indonesia for example, The National Medium Term Development Plan (2015- 2019), states that the infrastructure needed to support the increasing economic growth amounts to IDR4,796 trillion. The three highest sectors are electricity, road, and port respectively 20.8%, 15.3% and 12.3%. However, the government funds available in the state and local budgets to meet these needs, only amounts to IDR 1,978,6 trillion. The remaining amount is expected to be financed by SOEs, totalling IDR 1,066.2 trillion and private investors, of around IDR 1,751.5 trillion.
“PT SMI was formed as part of the government’s strategy to overcome the obstacles of infrastructure development, especially to promote private investment in it by creating innovative products and services to close the gap of infrastructure needs.”

In closing, Marina is eager to highlight the firm’s hopes for the future.
“Supporting sustainable development goals (SDG), by providing equality infrastructure development for both central and sub national level in several ways is our aim for the future. This includes providing unique financing products and municipal financing, as well as leveraging the balance sheet to explore various capital market instruments. We also want to optimise collaboration with multilateral and development banks, as well as bilateral agencies to enhance our capacity in terms of both financing and knowledge improvement.

“We’ve covered a lot already, but I do want to mention once again thank you for this wonderful award. It will be a good recognition for us and a strong reason that we must do more and more and give the best contribution to the nation.”