The Indonesian Minister of Finance, Sri Mulyani Indrawati, and the US Secretary of The Treasury, Steven Munchin, have recently signed a Memorandum of Understanding (MoU) to Strengthen Infrastructure Finance and Market Building Cooperation.
The MoU seeks to strengthen cooperation and facilitate collaboration between the Ministry of Finance of Indonesia and the Department of Treasury of the United States of America, on the issue of catalyzing private capital and facilitating financial market development to support investment in infrastructure.
This initiative is pertinent to addressing the challenge of closing the infrastructure financing gap, faced by many countries including Indonesia. It is also well aligned with the Indonesia’s Medium-Term National Development Plan (RPJMN) that mandates strengthened private sector’s participation, which holds large potentials to support infrastructure financing that remains to be tapped.
The MoU stipulates several priority areas of cooperation, including: 1) development of a more liquid regional financial market for infrastructure investments; 2) formulation and identification of financing tools and structures that can catalyze, facilitate, and address barriers to private sector investment in infrastructure; 3) encouraging innovation and sustainability of infrastructure financing; and 4) exploring financial capacity-building and technical collaboration programs in infrastructure financing.
The cooperation aims to leverage the U.S. Treasury’s rich experiences in the development of alternative financing schemes to enable private sector participation, infrastructure projects reviews, as well as capital market strengthening to support investment in infrastructure, that may act as valuable reference points, to accelerate infrastructure development in Indonesia. In particular, the cooperation is expected to support capacity building efforts on the issue of asset recycling management; impact assessment on existing financing; and the development of credit enhancement facilities. In addition, it also intends to facilitate joint technical efforts to support project preparation for infrastructure projects with high potentials to attract private sector’s participation.
The Ministry of Finance of Indonesia and the U.S. Treasury wish that the cooperation would contribute to the strengthening of the existing bilateral relations between Indonesia and the U.S.