EXPANDING OPPORTUNITIES FOR INFRASTRUCTURE INVESTMENT IN DEVELOPING COUNTRIES by: Desi Arryani President Director PT Jasa Marga (Persero) Tbk Pic : Bali Mandara Toll 4th Road Engineering Association Of Asia and Australasia March 23rd, 2016

INDONESIA IN THE FUTURE 16th largest Economy in the world In 2030 7th largest Economy in the world Mc Kinsey Global Institute Source : Mc Kinsey Global Institute

Lack of accessibility and connectivity in infrastructure CHALLENGES Indonesia economy continues to grow but it is not equally distributed throughout Indonesia Lack of accessibility and connectivity in infrastructure This gap of accessibility and connectivity in infrastructure must be resolved immediately by the Government

Freeway Provision in United States, China and Malaysia BEST PRACTICES Freeway Provision in United States, China and Malaysia Economic Growth Increase 2-3 times Economic Growth Increase 2-4 times Economic Growth Increase 5-9 times Overall, the results reveal that provision of Infrastructure is one of the main indicators to drive economics’ growth. Source ; World Bank 2014 4

Information Communicaton and Technology NATIONAL CONNECTIVITY National connectivity needs to be strengthened, therefore the economy can grow and competitiveness in regional and international level may increase WHAT SHOULD BE IMPROVED to strengthen national connectivity ???? SISLOGNAS National Logistic System SISTRANAS National Transportation System Regional Development RPJMN and RTRWN Information Communicaton and Technology 5

MEDIUM TERM NATIONAL DEVELOPMENT PLAN 2015-2019 (RPJMN) 2.650 km of New street 1.000 km of Toll road 46.770 km of Toll road maintenance Construction of 15 new airports Procurement of 20 pioneering aircrafts Airport development for Air cargo service in 6 locations Construction of 3.258 km railway in Java, Sumatera, Sulawesi and Kalimantan Construction of 24 new ports Procurement of 20 pioneering cargo ships Air cargo in 6 locations Construction of ferry port in 60 locations Procurements of 50 ferry units Construction of BRT in 29 cities Construction of rapid mass transit in 17 big cities

RPJMN (2015 – 2019) Government Target: 1000 Km Toll Road Jasa Marga Medium Term Plan (2015 – 2019) Jasa Marga contributes 731* KM from 1000 KM Note : *) Based on toll roads owned by Jasa Marga, construction will be finished on 2019.

INFRASTRUCTURE DEVELOPMENT NOWADAYS Lack of provision in infrastructure is one of the Indonesia lag factor compared to other country To Accelerate Economic Growth Requires huge investment and long-term Limited Government Fund Public Private Partnership schemes is urgently required OPPORTUNITY

TOLL ROADS GROWTH IN INDONESIA RPJMN (2015 – 2019) Government Target 1000 Km Toll Road : 250 km /year Era Orde Baru (1978 – 1998) = 520 km  26 km/year Era Reformasi (1998 – 2010)  9,25 km/year Era Kabinet Bersatu II (2010 – 2014)  target 120 km  in 2013, total constructed toll road only 43,5 km  14,5 km/year Total Operated Toll Road (1978-2016) : 965.84 km Average growth : 𝟗𝟔𝟓.𝟖𝟒 𝒌𝒎 𝟑𝟖 𝒚𝒆𝒂𝒓 = ±𝟐𝟓 𝒌𝒎/𝒚𝒆𝒂𝒓 Toll Road Development Challenge Land Acquisition Permittance Funding GOVERNMENT DONE INVESTOR

TOLL ROADS GROWTH IN INDONESIA ASSUMPTIONS CONCLUSION GOVERNMENT TARGET OF 1000 KM TOLL ROAD (2015-2019) COMPLETED IN 40 YEARS USING SAME METHOD AND SYSTEM 8 x Presidential Election

PUBLIC PARTNERSHIP PARTNER (Build Operate Transfer) PPP SCHEME In principle, government have to develop new road network To Accelerate Development Toll Road PUBLIC PARTNERSHIP PARTNER (PPP) SCHEME PPP SCENARIO : RISK SHARING BETWEEEN GOVERNMENT AND INVESTOR (Every Risk is owned by the party Most Likely To Control That Risks) PPP SCHEME BOT (Build Operate Transfer) SBOT (Supported Toll Road) BOO (Build Own Operate) BTO (Build Transfer Own) Operasional Contract VGF 11 11

Deficit Cash Flow on Initial Operation TOLL ROAD INVESTMENT CHARACTERISTICS Business Plan Chart Deficit Cash Flow on Initial Operation 5 Risk Toll Road Investment Characteristics : Long term investment with 8-14 years pay back period High investment for construction cost Land acquisition bridging fund Deficit Cash flow in ramp-up period (5 years)

Government of Indonesia COMPANY STRUCTURE 18 Toll Road Business Subsidiaries 4 Non-toll Road Business Subsidiaries Government of Indonesia 70% Public 30% Edit dibagi tol dan non tol

The Largest Toll Road Operator in Indonesia Leading toll road operator in Indonesia with 38 years of experience. Manages and operates 593 km of toll roads in Indonesia – 61% share. Jasa Marga operates most of the busiest toll roads in Indonesia – 80% share of average daily traffic on toll road. Urban concentration in Jakarta metropolitan area – some of Indonesia’s busiest toll roads. Regional concentration in Java and Sumatera – most populated islands in Indonesia. Tambah market share traffic 80%

ICR = 𝑬𝑩𝑰𝑻𝑫𝑨 𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝑪𝒐𝒔𝒕 JASA MARGA NEW PROJECTS Concesson/Section Expiration Length Investment Cost Jasa Marga (km) (Rp trilion) Ownership 1 Bogor Outer Ring Road (1) 2054 11,00 4,00 65% 2 Semarang-Solo (part of Trans Java) (2) 2055 72,60 7,30 73,91% 3 Gempol-Pasuruan (part of Trans Java) 45 years from effective date 34,20 4,17 98,09% 4 JORR2 (Cengkareng-Kunciran) 35 years from effective date 14,20 4,98 76,20% 5 JORR2 (Kunciran-Serpong) 11,20 2,86 60% 6 JORR W2 North (section of JORR) (5) 2044 7,70 2,01 7 Surabaya-Mojokerto (3) 2049 36,30 4,03 55% 8 Gempol-Pandaan(6) 37 years from effective date 13,60 1,31 89,17% 9 Nusa Dua-Ngurah Rai-Benoa (4) 10,00 10 Medan-Kualanamu-Tebing Tinggi 40 years from effective date 61,70 4,71 11 Solo-Ngawi (part of Trans Java) 90,10 9,21 59,99% 12 Ngawi-Kertosono (part of Trans Java) 87,02 7,05 13 Cinere-Serpong 10,14 2,57 14 Porong – Gempol 2,80 100% 15 Batang-Semarang (part of Trans Java) 75,00 11,04 16 Pandaan-Malang 37,62 5,97 17 Manado-Bitung 39,90 5,12 18 Balikpapan-Samarinda 99,35 9,97 19 Jakarta-Cikampek Elevated 36,84 16,23 80% 20 Jakarta-Cikampek II 36 years from effective date 64,00 13,37 80%  TOTAL 822.47 120.71   Notes: (1) Section 1: Sentul-Kedung Halang (3.85 km) is operated since 23 November 2009; Section 2A: Kedung Halang-Kedung Badak (1.95 km) is operated since 04 June 2014. (2) Section 1: Semarang-Ungaran (10.80 km) is operated since 17 November 2011; Section 2: Ungaran-Bawen (12.30 km) is operated since 04 April 2014. (3) Section 1A: Waru-Sepanjang (2.30 km) is operated since 05 September 2011, Section 4: Kriyan-Mojokerto is operated since 19 March 2016 (4) Operated since 01 October 2013. (5) Section Kebon Jeruk-Cileduk (5.70 km) is operated since 04 January 2014; Section Cileduk-Ulujami (2.00 km) is operated since 22 July 2014. (6) Section Gempol-Pandaan (13.61 km) is operated since 12 June 2015. (7) Jasa Marga Chosen as the Initiator of Jakarta-Cikampek II and Jakarta-Cikampek II Elevated Toll Roads Jasa Marga with ± 800 km New project and total investment 120 T certainly need breakthrough to execute the project ( ICR = 2.5 ) ICR = 𝑬𝑩𝑰𝑻𝑫𝑨 𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝑪𝒐𝒔𝒕 Therefore, Jasa Marga new toll road projects will be executed using CPF Contract Method 15 15

RISK SHARING AND PROFIT PT JASA MARGA TOLL ROAD DEVELOPMENT STRATEGY RISK SHARING AND PROFIT TOLL ROAD DEVELOPMENT STRATEGY Regional Owned State (BUMD) SOE (BUMN) / Private Company P A R T N E R S H I P Construction Company : More Competitive Construction Cost Construction Pre Financing Contract Financing Company : Funding Cash Deficiency on Ramp Up Period Private Company : Experienced in related business development such as property in toll road corridor Regional Owned State (BUMD): Legalization and Regulation (land acquisition acceleration) Indonesia Infrastructure Guarantee Fund Providing government guarantees for infrastructure projects

THE MULTIPLIER EFFECT OF TOLL ROAD’S EXISTENCE Development of the suburb area - Cimanggis - Cibubur - Sentul Development of the suburb area Cikarang Bekasi Development of the industrial area Cibitung-Cikarang Karawang Investment Opportunity Transportation Factory Outlet Culinary ULUJAMI-BSD Satellite cities : Serpong Bintaro

THE MULTIPLIER EFFECT OF TOLL ROAD’S EXISTENCE BALI MANDARA Time and mileage becomes shorter; Investment opportunities in tourism; Hotels; Café, Mall/Shopping Centre; Small Business, Fisherman; Bali Economic Growth Significantly increased.

THE MULTIPLIER EFFECT OF TOLL ROAD’S EXISTENCE (Increasing number of man power) Increasing number of man power in toll road business (multiplier effect): Man power during construction and operation (every 25 km toll road) is about + 13.200 man power (this number of man power is not included other industrial field due to the existence of the toll road)

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