Indonesia Financing Rises for Roads and Airports

Indonesia Infrastructure Finance plans to raise by at least 60 percent the funding that the government-backed company provides to help build roads, power plants and airports in Southeast Asia's largest economy.

The financial institution will increase loans this year to more than 4 trillion rupiah ($347 million), from 2.5 trillion rupiah last year, its President Director Sukatmo Padmosukarso said in Jakarta.

Padmosukarso has met with potential investors in Singapore, Japan and Hong Kong on roadshows.

Indonesia's Ministry of Finance set up the company in 2010 to provide long-term funding and help kick-start transportation and power projects across the archipelago, as the nation seeks to catch up with its neighbors in physical development.

A lack of infrastructure is the main obstacle for investors, Mahendra Siregar, the country's investment chief, said last month.

“The government really understands that Indonesia already lags behind neighboring countries on infrastructure,” Padmosukarso said in an interview.

Shareholders in the company include Indonesia's government, the World Bank's International Finance Corp. and Sumitomo Mitsui Banking, according to Padmosukarso.

Foreign direct investment growth slowed to 9.8 percent in the January-March quarter, from 25.4 percent in the previous three months, according to government data.

Foreign funds have bought $2.9 billion of Indonesian stocks so far this year on optimism for investor-friendly measures from a new government following presidential elections in July.

The company has capital of 1.8 trillion rupiah and is financing roads, hydropower plants, airports and seaports with loans of as much as seven years, Padmosukarso said.

It is limited to financing a maximum 35 percent of each project.