Tuesday, 12 January 2010

Insurance Fund to Protect Indonesia Infrastructure Investments

The government has established a state-owned guarantee fund to protect investors in infrastructure projects from any "unfavorable" policies that could hurt their investments, the Finance Ministry said on Tuesday. The fund-called PT Penjaminan Infrastruktur Indonesia (PII) - will act like an insurance company, compensating investors for losses if, for example, a promised tariff hike on a toll road did not materialize. Investors will have to pay premiums but not as high as those charged by traditional insurance firms. "The objective in establishing PPI is, firstly, to reduce the cost of financing public-private partnerships (PPPs) by improving the quality of the PPP projects and their creditworthiness," Arif Baharudin, the Finance Ministry's director of state assets, said. PII was formally established last week and will report directly to the finance minister. The government has injected Rp 1 trillion (US$ 107 million) as initial capital the Finance Ministry said.
Source: The Jakarta Globe, p. B, 6 January

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