Jakarta, 26 July 2024 – PT Indonesia Infrastructure Finance (“IIF”) and Millennium Challenge Account-Indonesia II (“MCA- Indonesia II”) have signed a Blended Finance Delivery Mechanism (“BFDM”) Grant Agreement. The agreement was signed by Reynaldi Hermansjah, President Director of IIF, and Maurin Sitorus, Executive Director of Millenium Challenge Account Indonesia II. This collaboration aims to strengthen the long-term infrastructure financing in Indonesia through innovative and sustainable financing schemes.

The ceremony was witnessed by Deputy Minister II of the Ministry of Finance of the Republic of Indonesia, Thomas Djiwandono, United States of America Ambassador Designated to Indonesia, Kamala Lakhdir and CEO of Millenium Challenge Corporation, Alice Albright.

“This grant demonstrates the Indonesian government’s commitment to building sustainable and environmentally friendly infrastructure in accordance with the sustainable development goals, which include halting climate change and safeguarding the environment” said Thomas Djiwandono, Deputy  Minister II of the Ministry of Finance of the Republic of Indonesia.

BFDM itself is an innovation to combine various funding sources, such as commercial loans, grants, and investments, to support sustainable development projects. In addition, the BFDM scheme also helps a project achieve financial close faster and more efficiently to support development projects can be implemented immediately and provide benefits to the community.

Specific criteria in the blended finance scheme include the calculation of the Economic Rate of Return (ERR) for each project and the participation of IIF in the form of co-investment. Moreover, in the blended finance mechanism, gender equality and social inclusion are emphasized as key parameters.

President Director of IIF, Reynaldi Hermansjah said, “This collaboration between IIF and MCA Indonesia II is an important step in supporting infrastructure development in Indonesia. The BFDM scheme itself will help to mitigate refinancing risks while increasing financial stability for infrastructure project development, thereby encouraging institutional investor participation resulting in strengthening the Indonesian capital market”.

MCA-Indonesia II is an entity formed by the Government of Indonesia to implement the

$649 million Indonesian Infrastructure and Finance Compact Program. This compact program is a grant partnership between the Indonesian government and the Millennium Challenge Corporation from the United States which aims to increase access to finance for infrastructure projects and micro, small, and medium enterprises (MSMEs) in Indonesia.

In addition to that, the Executive Director of Millenium Challenge Account Indonesia II, Maurin Sitorus emphasized that “This partnership with IIF increases the support of the compact program for sustainable infrastructure projects,” according to Maurin Sitorus. “Together, we are committed to supporting economic growth in Indonesia through innovative financing schemes.”

The collaboration between IIF and MCA- Indonesia II is expected to provide a significant contribution to sustainable infrastructure development in Indonesia. Through the BFDM scheme, Indonesia will be able to build sustainable and low-risk infrastructure, so that it can ultimately maximize competitiveness and community welfare.

PT Indonesia Infrastructure Finance

PT Indonesia Infrastructure Finance (“IIF”) is a private non-bank financial institution, which is engaged in infrastructure financing and advisory services that are professionally managed and focused on commercially viable infrastructure projects. IIF was established on 15 January 2010 at the initiative of the Government of the Republic of Indonesia – Ministry of Finance of the Republic of Indonesia together with the World Bank Group, Asian Development Bank (ADB) and other multilateral institutions. In its operations, IIF applies best practices based on international standards in providing credit, risk management, good corporate governance, and social and environmental protection standards to ensure the sustainability of infrastructure development in Indonesia.

Further Queries:

Nastantio W. Hadi

Head of Legal and Corporate Secretary Division

PT Indonesia Infrastructure Finance

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