NO

ASPECTS

INDONESIA

1.

Legal and Regulatory Framework

- Law No. 2/2012 on Land Procurement for Development in Public Purpose

- Presidential Decree No.71 of 2012 jo Presidential Decree No. 40 of 2014 on Land Procurement Implementation for Public Purpose

- Presidential Decree No. 42 of 2005 jo Presidential Decree No. 12 of 2011 on National Committee on the Acceleration of Infrastructure Development (KKPPI)

- Presidential Decree No. 67 of 2005 jo Presidential Decree No. 13 of 2010 jo Presidential Decree No. 56 of 2011 jo Presidential Decree No. 66 of 2013 on Public Private Partnership in Infrastructure Provision.

- Presidential Decree No. 78 of 2010 on Presidential Decree for Guarantee Application

- Minister of Finance Decree No. 260 of 2010 on Standard Procedure of Risk Management of Infrastructure Provision by Private Sector

- Ministry Of Finance Decree No. 223 of 2012 on Feasibility Support Toward Part Of Construction Cost In Cooperation Between The Government And The Business Entities In The Provision Of Infrastructure

- Bappenas Minister Decree No. 3 of 2012 on General Guidelines of PPP in Infrastructure Provision

- Bappenas Minister Decree No. 6 of 2012 on Procedure in Listing Infrastructure Projects Plan

- Sectoral laws and regulations related to infrastructure projects

2.

Involved Government Agencies

- Coordinating Ministry of Economic Affairs (Chairman of National Committee of Policy for Infrastructure Acceleration/KKPPI)

- Ministry of National Development Planning/National Development Planning Board (BAPPENAS)

- Ministry of Finance

- Indonesia Investment Coordinating Board (BKPM)

- Other Ministries/Local Government (Government Contracting Agency / GCA)

3.

Supporting Agencies

Main institutional and financing elements of PPP include:

- KKPPI to assist with high level coordination of PPP issues and/or policies.

- PPRF in Ministry of Finance as the risk management unit (RMU), to manage government supports associated with PPP projects.

- PT. SMI1 and PT. IIF2 to support PPP projects' preparation in order to increase their bankability.

- IIGF3 to support the provision of guarantees for PPP projects.

- PDF to fund project preparation.

- Public Private Participation Central Unit (P3CU) to support selection of well-developed PPP projects.

- MOU between the Ministry of Finance, BAPPENAS and the Indonesia Investment Coordinating Board (BKPM) to define their roles and responsibilities and accelerate the PPP process.

4.

Available Sectors

- Transportation infratructure, which includes airport services, provision and/or service of ports, railways infrastructures;

- Road infrastructure, which includes toll roads and bridges;

- Irrigation infrastructure, which includes channel of raw water distibutor;

- Water supply infrastructure, which includes raw water intake building, transmission network, distribution network, water supply management installation;

- Waste water infrastructure, which includes waste water management installation, collecting and main network, and waste infrastructure which includes waste collectors and disposal sites;

- Telecommunication and informatics infrastructure, which includes telecommunication network and e-government infrastructure;

- Electricity infrastructure, which includes power plants, including geothermal, transmission, or electricity distribution; and

- Oil and gas infrastructure, which includes oil and gas transmission and/or distribution

5.

Eligible Tender Participants / Project Initiator

- Indonesian Legal Entity

- Foreign Legal Entity/entities. A consortium which contain various business entities is allowed to join the bidding process without establishing Indonesian legal entity , but it is required to establish an Indonesian Legal Entity once appointed as the winning bidder.

6.

Types of Project

Solicited Projects:

PPP Projects initiated by the Government of Indonesia.

- Screening process is based on combination of criteria from Bappenas regulation and MoF regulation and also government contracting agencies.

- Screening will be done under coordination and discussion between every stakeholders of PPP in Indonesia (Bappenas, MoF, BKPM, government contracting agencies, other related stakeholders).

- Ready-to-offer projects will be listed publicly.

Unsolicited Projects:

PPP Infrastructure Projects initiated by a Business Entity and/or a Foreign Legal Entity, which criteria are:

- not included in the master plan within that business sector;

- technically integrated with the master plan in that business sector;

- economically and financially viable, and

- does not require government support in the form of fiscal contribution (financial)

Compensations for unsolicited projects include:

- Additional value with a maximum of 10%, or

- Right to match, or

- Government purchase of the initiated project, including its intellectual property rights

7.

PPP Project Stages and Implementation

PPP project stages and implementation is set out in Bappenas Minister Decree No. 3 of 2012 on General Guidelines of PPP in Infrastructure Provision. Solicited and unsolicited project has each their own respective stages and procurement process.

A. SOLICITED PROJECTS

Solicited projects is carried out in four main stages:

1. Planning, which includes project identification and selection, and establishment of priority project list.

2. Preparation, which involves the preparation of preliminary assessment on pre-feasibility study, and the preparation of project readiness assessment.

3. Transaction, which includes the completion of preliminary assessment prior on pre-feasibility study, marked by its final report and the draft of business entity procurement plan, and

4. Implementation Management, which involves planning and execution of implementation management of the PPP agreement.

Procurement process for solicited projects are carried out in two stages:

1. Planning

2. Implementation

Details on project stages and implementation, along with the procurement process, are as follows:

SOLICITED PROJECT STAGES AND IMPLEMENTATION

STAGE I

STAGE II

STAGE III

STAGE IV:

PLANNING

PREPARATION

TRANSACTION

IMPLEMENTATION MANAGEMENT

Project identification and selection

Define priority list

Preliminary study to pre-feasibility study

Project readiness study

Completion of pre-feasibility study

- Business entity Procurement planning

- Business entity procurement implementation

- Preparation for contract signing

Planning of contract implementation management

Contract implementation management

Output:

- project priority list

- Preliminary study documents

Output:

Project preparation documents

Output:

Pre-feasibility study documents

Output:

- Contract documents

- Guarantee documents and regress documents

Output:

Project funding; EPC contract; operational contract

Output:

Periodical report of project implementation management

Request for government support and/or government guarantee

Confirmation/ approval of government support and/or government guarantee

Allocation, disbursement, supervision & monitoring of government support and/or monitoring & evaluation of the implementation of guarantee contract & regress contract.

Environmental study by Government Contracting Agency (GCA)

Environmental study by business entity

Land Procurement prospecting

ROLE OF AGENCY/ INSTITUTION

Government Contracting Agency (GCA) and/or BAPPENAS

GCA, KKPPI, BKPM, BAPPENAS, Ministry of Finance (PPRF), IIGF, BPN, KLH

GCA, KKPPI, PPRF, IIGF, BKPM, BAPPENAS, BPN

GCA, PPRF, IIGF, BKPM, BAPPENAS, KLH

Public Consultation:

Spreading Information

Public Consultation:

Consultative Interaction

Public Consultation:

Probing of Market Sounding

SOLICITED PROJECT PROCUREMENT STAGES (Based on Presidential Decree No. 56 of 2011)

1) Procurement Planning

1. Establishment of Procurement Committee; and

2. Preparation of Procurement Plan.

a. Preparation of procurement schedule and announcement;

b. Preparation of the pre-qualification documents;

c. Preparation of the initial projected price (HPS);

d. Preparation of public tender documents; and

e. Checking and evaluating market interest (market sounding).

2) Procurement Implementation

1. Pre-qualification

a. Prequalification announcement

b. Registration of prospective participants

c. Expression of interest

d. Prequalification documents submission

e. Evaluation and clarification of prequalification documents

f. Define list of participants who passed prequalification

g. Prequalification result validation

h. Result announcement

2. Bid implementation

a. Preparation of participant list

b. Invitation for participants to enter the bid

c. Bid explanation

d. Bid documents submission

e. Bid documents retrieval

f. Bid evaluation

g. Report on procurement results

h. Define winner

i. Announcement of winner

j. Decision Letter of winner

3. Preparation of contract signing.

a. Winner establish a business entity

b. Contract signing

B. UNSOLICITED PROJECTS

Unsolicited projects are carried out in two main stages:

1. Project approval

2. Project procurement

UNSOLICITED PROJECT STAGES AND IMPLEMENTATION

APPROVAL

PROCUREMENT

STAGE 1

STAGE 2

STAGE 3

STAGE 4

- Preparation of Documents of Project's Concept & Qualification of prospective initiator (CP)

- Government Contracting Agency (GCA) evaluates Documents of Project's Concept

- GCA issues letter of approval for CP to continue preparation of pre-feasibility study

- CP carries out completion of feasibility pre-study

- GCA thoroughly evaluates Documents of Pre Feasibility Study

- GCA issues letter of approval for CP to continue preparation of feasibility study

- CP carries out completion of Documents of Feasibility Study and Compliance of Prequalification Requirements

- GCA thoroughly evaluates Documents of Feasibility Study and Documents of Compliance of Prequalification Requirements

- GCA determines CP as an Initiator's Business Entity (BUP) and determines compensation for BUP

- PJPK prepares Plan of Procurement of Business Entity competitively and openly

- Expression of Interest (EOI)

- Business Entity (BU) submits expression of interest

- Pre-qualification (PQ)

- BU participates in PQ

- Request of Bid

- Submission & Evaluation of Bid Documents

- Request of Bid (RfP)

- Submission & Evaluation of Bid Documents

- Determination of Winner - Value Bonus Option

- Determination of Winner - Right-to-Match Option

- Determination of Winner

- Contract preparation and signing

9.

Government Support

- Government supports in the form of (PP56/2011):

• Licensing,

• Land Procurement,

• Partial construction ,

• Tax incentives,

• Fiscal contribution in financial forms, and/or

• Other forms are determined by the Minister/Head of Institution/Head of Regional Government.

- Government support shall be included in the procurement document.

- Government support in the form of fiscal contribution shall be listed in the state budget and/or regional government budget.

- Examples of government support in infrastructure projects: land fund, feasibility support toward part of construction cost in cooperation between the government and the business entities in the provision of infrastructure (VGF), geothermal fund, tax allowances, etc.

10.

Government Guarantee

■ Government guarantees include:

- Financial compensation, and/or

- Other form of compensation, given by the Minister of Finance through risk-sharing scheme, while considering the principles of financial risks management and control in the state budget.

■ Government guarantees shall be included in the procurement document.

■ Government guarantees in the form of financial compensation shall be awarded by the Minister of Finance through Indonesia Infrastructure Guarantee Fund (IIGF, or PT. Penjaminan Infrastruktur Indonesia). Potential investors may also seek other guarantees from other financial institution (outside Government of Indonesia's guarantee).

11.

Land Procurement

Land Procurement is undertaken by the Minister/Head of the Institution/Head of the Region before procurement documents are submitted.

Law No. 2 of 2012 on Land Procurement for Development in Public Purpose has some important principles as follows:

- Land for public purposes has to be provided by the State;

- Affected people rights are respected and treated justly;

- Based on principles of human rights;

- Forms of compensation are based on consensus;

- Amount of compensation will be based on consensus and fair and just compensation;

- Role of Appraiser to determine the amount of compensation;

- Certainty in the process;

- Reducing speculation;

- Land Procurement for public purposes in emergency situation.

Phases of Land Procurement:

12.

Foreign ownership shares

According to Presidential Regulation Number 39 of 2014 on List of Businesses Closed or Conditionally Open for Capital Investment and sectoral regulation, there are more open business fields related to infrastructure projects, especially using PPP scheme:

No.

Business Fields

KBLI

Conditions

Remarks

1.

Piped Water Supply

36001

Max 95%

Foreign Capital Ownership

2.

Power Plants

35101

Foreign Capital Ownership

(more than 10 MW)

Max 95%. For projects developed under PPP framework, max 100% during concession period.

(Power plants with less than 10 MW are currently reserved for small and medium enterprises and hence closed to foreign investment)

Transmission of Electricity

35102

Max 95%. For projects developed under PPP framework, max 100% during concession period.

Foreign Capital Ownership

Distribution of Electricity

35103

Max 95%. For projects developed under PPP framework, max 100% during concession period.

Foreign Capital Ownership

3.

Toll Road

52213

Max 95%

Foreign Capital Ownership

4.

Management of non hazard waste disposal

38211

Max 95%

Foreign Capital Ownership

5.

Airport Services

52230

Max 49%

Foreign Capital Ownership

6.

Port facilities

52221,

52222,

52223

Max 49%. For projects developed under PPP framework, max 95% during concession period.

Foreign Capital Ownership

7.

Fixed Telecommunication Network

61100

Max 65%

Foreign Capital Ownership

Mobile Telecommunication Network

61200

Max 65%

Foreign Capital Ownership

13.

Project lists

In 2014, there are at least 10 infrastructure projects using PPP scheme, which are ready to be offered to potential investors, since they have completed almost all transactional documents needed for the bidding stage.

Those 10 infrastructure projects are listed as follows:

No

Projects

Government Contracting Agencies

Investment (US$
million)*

1

Manado-Bitung Toll Road, North Sulawesi

Indonesia Toll Road Authority (BPJT)

353

2

Tanjung Priok Access Toll Road, DKI Jakarta

Indonesia Toll Road Authority (BPJT)

612.5

3

Cisumdawu Toll Road, West Java

Indonesia Toll Road Authority (BPJT)

985.1

4

Balikpapan - Samarinda Toll Road, East Kalimantan

Indonesia Toll Road Authority (BPJT)

1,200

5

Pandaan - Malang Toll Road, East Java

Indonesia Toll Road Authority (BPJT

399

6

Soekarno - Hatta International Airport - Jakarta Railways, Banten - DKI

Ministry of Transportation

2,570

7

Surakarta Solid Waste Treatment and Final Disposal, Central Java

Government of Surakarta City

30

8

Bogor & Depok Solid Waste Management and Final Disposal, West Java

BPSR West Java

40

9

Southern Bali Water Supply, Bali

National Supporting Agency for Water Supply System Development (BPPSPAM)

218.8

10

Pondok Gede Water Supply, Bekasi, West Java

National Supporting Agency for Water Supply System Development (BPPSPAM)

20

*Investment value according to PPP Book 2013