REPUBLIKA.CO.ID, JAKARTA -- Bonds will be an alternative source of financing by an infrastructure bank to be established by the government.

"We will establish an infrastructure financing agency with bonds as a source of financing. We hope the bonds to be issued would be equivalent to government bonds," Minister of Finance Bambang Brodjonegoro said on Thursday, April 2.

The government plans to establish an infrastructure bank by merging PT Sarana Multi Infrastruktur and the Government Investment Center (Pusat Investasi Pemerintah).

He said the bond funds in addition to state capital participation, could give capital sustainability to the infrastructure bank to support infrastructure development in Indonesia.

He said the government did not want the new bank to be established to end up like Bapindo (former state development bank), which finally changed status into general bank for difficulty in raising capital for financing.

He said the government is serious in establishing the infrastructure bank as a new model of financing facility for infrastructure projects to attract foreign investors to do business not only in manufacturing , service and retail sectors.

"We need to attract more interest of foreign investors in infrastructure," he said.

The infrastructure bank will have an initial capital of 25 trillion IDR from the government in state capital participation and the transfer of assets of Pusat Investasi Pemerintah to PT Sarana Multi Infrastruktur.

The infrastructure bank is expected to serve not only as a provider of long term fund for infrastructure projects , but also as an agent of development for the country's economy, Bambang said.

In addition the infrastructure bank is also expected to be able to create synergy with private investors, private equity and the banking sector to promote its participation in funding infrastructure projects.

The National Development Planning Board (Bappenas) has estimated that Mid Term National Development Plan (RPJMN) would need 5,519 trillion IDR for infrastructure development in 2015-2019 or around 1,102 trillion IDR a year.

The government alone could not provide the fund. The fund for infrastructure development set in the 2015 state budget is only 290 trillion IDR, therefore, the participation of the private sector is needed.

The Indonesian banks' credits for infrastructure development are only 244.8 trillion IDR or 16.8 percent of their total credits.

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