Industry Hard Talk: Infrastructure Sector Players on Closing Funding Gaps

Jakarta, Aug 3 – At the Industry Hard Talk Session of the 12th WIEF in Jakarta, representatives and players from the infrastructure sector highlighted themes on ways to close funding gaps in infrastructure.

Bakti Santoso Luddin, President Commissioner at Indonesian state-construction company Wijaya Karya, recounted problems his company faced, and a difficulties in securing long-term financing. This forced them to be creative in implementing all available types of funding, for actually for the long term projects.

Luky Eko Wuryanto, Vice President and Chief Administration Officer of the Asian Infrastructure Investment Bank, outlined two aspects of the investment dynamic in infrastructure: first, construction that is characterized by high-risk and capital-intensive and demands long-term funding. Second, the operational period, which carries lower risk. At this stage, businesses tend to be more stable and sustainable. Once infrastructure projects are completed, they will offer long-term benefits, not just for the operator, but also for the public at large. Governments should pay close attention to investors’ intentions, and determine which part of the project they wish to be involved in.

Ahmad ZulKarnain Onn, Executive Director of Investments and Head of Strategic Management Unit at Malaysia’s Khazanah Nasional Berhad, considered ASEAN region demography actually offers all the necessary ingredients to provide long-term financing for infrastructure projects. He pointed out how the region now has more affluent people, a better life expectancy and more savings for retirement, all of which form a good foundation to allow long-term funding to be accessible. Infrastructure projects require policy synchronization, as well as clear and consistent laws. Governments must eliminate ‘unattended’ disincentives that impede long term financing.