Minister of Finance Regulation No. 68/2024 (PMK 68/2024) is an Indonesian regulation concerning Government Support for Infrastructure Financing through Public-Private Partnership (PPP) and Other Financing Schemes. The regulation, enacted in 2024, represents a significant reform in Indonesia's infrastructure financing framework by consolidating several previous regulations and introducing new mechanisms for government support in infrastructure development.
The regulation was introduced to streamline and modernize Indonesia's approach to infrastructure financing support. It consolidates several previous regulations, including those concerning project development facilities, infrastructure guarantees, and availability payments. This consolidation aims to create a more cohesive and efficient framework for government support in infrastructure development. According to Article 2, infrastructure financing can be sourced from the State Budget (APBN), Regional Budget (APBD), and/or other legitimate sources in accordance with prevailing regulations.
The regulation establishes five primary forms of government support, as outlined in Article 4. These consist of Pre-Project Development Facility (Pre-PDF), Project Development Facility (PDF), Infrastructure Guarantees, Viability Gap Funding, and Availability Payment processing. Each of these support mechanisms serves distinct purposes in infrastructure development while working together to create a comprehensive support system.
The Pre-Project Development Facility, detailed in Article 7, supports initial project concept development and helps identify optimal financing schemes. This facility plays a crucial role in the early stages of project development, ensuring that projects are well-conceived and properly structured from the outset.
The Project Development Facility, governed by Articles 26-59, provides more extensive support during the project preparation phase. This includes assistance with detailed feasibility studies, transaction advisory services, and other technical support needed to bring projects to market. The PDF can be implemented either directly by the Ministry of Finance or through assigned state-owned enterprises.
Infrastructure Guarantees, outlined in Articles 67-104, represent a significant component of the support framework. These guarantees are implemented through a "single implementer" mechanism via the Infrastructure Guarantee Business Entity (BUPI), providing coverage for various project risks and establishing clear procedures for guarantee claims and processing.
The regulation introduces mandatory Environmental, Social, and Governance (ESG) principles (Prinsip LST) across all forms of government support, as established in Article 5. This represents a significant advancement in Indonesia's infrastructure development framework, requiring comprehensive consideration of environmental impacts, social responsibility, and governance standards in all supported projects.
Article 2 and Article 3 establish flexible financing arrangements that allow for the combination of various funding sources. The regulation permits infrastructure financing to be sourced from state and regional budgets, as well as private sector contributions. This flexibility extends to the utilization of state and regional assets, enabling more creative and efficient financing solutions for infrastructure projects.
The implementation framework is carefully structured to ensure effective coordination among various stakeholders. According to Article 130, the Minister of Finance serves as the budget user for the State General Treasurer Budget Section for viability gap funding allocations. The regulation establishes clear procedures for application submission, project evaluation, and approval processes, with specific timelines for government responses outlined in various articles.
This regulation marks a significant evolution in Indonesia's infrastructure financing framework. Article 5 emphasizes that government support must consider fiscal capacity, fiscal sustainability, fiscal risk management, and targeted use of funds. The regulation aims to increase private sector participation while ensuring projects remain financially viable and environmentally sustainable.
The impact of this regulation is expected to be substantial, particularly in improving project preparation quality and increasing private sector participation in infrastructure development. However, implementation challenges remain, including the need for institutional capacity building and effective coordination among multiple stakeholders.