48
million in the total USD 1.743 billioncommitted to
rehabilitate and develop 154 slums and cities in
the eastern and central provinces of the country.
Indonesia has also proposed to the AIIB projects
in 2016 and 2017 amounting to USD 2 billion,
focusing on priority areas such as energy, road
construction or water purification, 10.000 MW of
electricity.
Although more capital is expected from AIIB,
in fact it is not without complicated problems
when getting loan from this bank, because the
disbursement is slow, accompanied by prolix
paperwork;Ontheotherhand,Chinesecontractors
often include in contract such terms as use of
materials, labor from China. In order to realize
its commitment to infrastructure development,
Indonesia is currently in great need of different
funding sources.
In Chile, highway infrastructure projects are
implemented in the form of BOT, with duration
of 20 - 30 years. Chilean PPP projects have
attracted a large amount of FDI, the main route
linking the North and the South of the country
(Route 5), which was built in the 1990s, attracted
about USD 250 million in FDI from companies in
Mexico and Spain. The bond market is a major
financing channel for transport infrastructure
projects in Chile. In 2008, the corporate bond
market size was USD 19.4 billion (11.4% of GDP).
In particular, infrastructure bonds of PPP projects
accounted for 20% of market size, mainly held
by pension funds and insurance companies (over
90%). Infrastructure bonds in Chile have a long
maturity, 21 years on average, low risk due to
government guarantee. The interest rate of the
infrastructure bonds are relatively low compared
to other types of bonds and the difference is not
negligible compared to the government bonds.
The infrastructure bonds are mainly traded on the
primary market, trading on the secondary market
is not significant.
In Korea, the state budget is not the main
source of finance for infrastructure development.
Korea has actively sought the participation of
the private sectors and foreign investors. In most
infrastructure development projects, the role of
the government is mostly to maintain a stable
investment environment with a uniform legal
system and low tax rate. Private enterprises and
foreign investors are encouraged to maximize
their business opportunities. Public-Private
Partnership (PPP) is also available with a variety
of supporting tools such as construction subsidies,
credit guarantees, minimum revenue guarantees,
operating subsidies, and long transition deadlines,
etc.As one of the first countries inAsia to accelerate
the implementation of PPP, with the promulgation
of the Private Investment Promotion Act 1994,
however, PPP only really developed robust since
1998 with the promulgation of PPP Act (PPI), a
relatively comprehensive set of PPP regulating
how to manage, identify financial support and
risk handling system. Korea has a mechanism
to encourage private sector participation in PPP
proposals. The private sector may propose to a
competent authority to carry out a project in form
of PPP if the project is evaluated as potential.
Based on the initial proposal review, a bonus score
may be awarded to the original proposer no more
than 10% of the project’s total VFM. The original
proposer may change its proposal, however, the
maximum bonus is 5% of the total points value
under VFM.
South Korea has developed a variety of
supportingtools,encouragingprivateinvolvement
in PPP projects such as: Government financial
support through construction subsidies or long-
term loans if it is needed to maintain appropriate
use fees; Support for land, land use right and
other assets in the course of PPP, allowing private
sector investors to use and benefit from public
assets and state-owned assets in areas planned to
be allocated to the project without consideration;
Credit guarantee and option to acquire
infrastructure projects through the Infrastructure
Credit Guarantee Fund (ICGF), the Government
guarantee credit to ensure repayment obligation
to investors.
The acquisition can be made in case of force
Vietnamhasahighproportionof its investment
in infrastructure compared to the world, but its
infrastructure does not meet the requirements
of economic and social development.
According to the World Bank and the Asian
Development Bank, Vietnam needs to increase
its investment in infrastructure by 11-12% of
GDP to maintain its current growth.
