SMI sets up syariah business unit, financing to rise to Rp33t this year

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SMI directors board members brief the press on SMI's financing programs this year. (from left to right: Nasrizal Nazir (director), Edwin Syahruzad (director), Emma Sri Martini (president director), Darwin Trisna Djajawinata (director) - (Photo: TIS/RK)

JAKARTA (TheInsiderStories) – PT Sarana Multi Infrastruktur (SMI) said it is currently in the process of setting up a syariah financing unit called Syariah Business Unit (UUS), which an aim to receive syariah financing and at the same time provide financing to infrastructure projects based on syariah principles.

This business unit is projected to start operating in second half of 2016 pending approval of the Financial Services Authority (OJK) and will be ready to enrich financing schemes provided by the company to infrastructure projects based on syariah principles, SMI President Director Emma Sri Martini said after holding fast breaking with journalists on Thursday (June 9).

The move is also aimed at supporting the government’s drive to optimize non-conventional financing sources such as syariah funds from overseas, in particular from Middle East, which usually has longer tenor than bank loans.

In addition to overseas funding sources, SMI can also utilize domestic syariah funding sources such Hajj Funds, syariah insurance funds, syariah funding from capital market, sovereign wealth funds and others.

In the five months to May, SMI, a state owned company under auspices of the Finance Ministry, has provided loans valued at Rp30.1 trillion to finance various infrastructure projects, including toll roads and power plants. The total value of the projects reached Rp118.7 trillion. The remaining funds came from other financial institutions.

The amount already far higher than the total financing extended by the company in 2015, amounted to R13 trillion.

Edwin Syahruzad, director for Financing and Investment of SMI, expects the total financing provided by SMI this year is likely to be higher than the company’s target of Rp33 trillion. “Given the amount of financing provided in the first five months, this year’s financing target is likely to be higher than the target,” he said.

Among toll road projects that financed by SMI is the Pandaan-Malang toll road project, in collaboration with state owned toll road operator PT Jasa Marga Tbk (JSMR) and PT PP, as the contractor of the project. SMI has an equity of 5 percent, PP 35 percent and Jasa Marga 60 percent.

In the project, SMI also provided the so-called cash deficiency facility to the toll road operator (Jasa Marga) to help cover the debt payment in the early stage after the toll road operates. Edwin said the cash deficiency facility is a helpful financing scheme because usually in the early stage a toll road operates, the traffic is still low, therefore it is not enough to repay the debt installments.

SMI still has ample cash to finance various infrastructure projects in the country. So far, it has secured various funding sources, including syndicated loan worth US$175 million received last year, medium term notes (MTN) worth US$100 million issued in March this year (part of the target US$300 million), as well as loan from PT Bank of Tokyo Mitsubish UFJ (PTMU) of Japan worth US$100 million.

Late last year, SMI also obtained low-rate loan facility from Agence Franchaise de Development (AFD) worth US$100 million to finance renewable energy projects. So far, SMI has drawn down US$10 million. The draw down of this financing depends on the availability of the project.

Darwin Trisna Djajawinata, director for Project Development and Consultation Services of SMI, said initially the company would provide financing to biogas and biomass energy projects, which utilize palm oil wastes. The other projects to be financed by SMI is geothermal and hydro power projects, which are ready for construction.

Indonesia has huge sources of renewable energy such as geothermal, hydro power, solar power, wind mill, biogas, biomass, and others. The government targets to increase share of renewable energy contribution in the energy mixed to 23 percent by 2025 from around 5 percent at present.

The Joko Widodo government is currently focusing in developing various infrastructure projects to help enable the country to record sustainable growth in the long run, including toll roads, ports, airports, power plants and others. (*)

 

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Source: The Insiderstories
SMI sets up syariah business unit, financing to rise to Rp33t this year

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