1. 1 st ASEAN – EU Business Summit (AEBS) Infrastructure Sector Sandiaga S. Uno Founding Partner of Saratoga Capital ASEAN EU Business Summit 2011 Jakarta, May 5 2011

2. Issues According to World Economic Forum Global Competitiveness Report, Indonesia is ranked #96 (out of 133 countries assessed) in terms of quality of overall infrastructure and #94 in terms of quality of roads. The average speeds during rush hour are slower than 10kph. Things are going to get worse: The number of cars produces will increase from 380,376 currently to 556,908 in 2010. Low penetration in terms of car ownership (barely 1% of people own a car). The problem will get worse in the future if it is not fixed.

3. Outlook USD 121.65b will be needed for Indonesias structure over the coming half decade. The government will finance about 30% of total requirement. (Source:Bappenas) From 2010 to 2014, Transport infrastructure is expected to account for 71% of infrastructure industry value. The value is forecast to increase from USD 26.14b in 2010 to USD 93b by 2014. Transport infrastructures segments (as % of transport infrastructure industry value in 2011): 40.6% Road and bridges 11.2% Railways 4.5% Airports 14.3% Port Harbours and Waterways

4. Sources of Problem Red tape Land acquisition Funding (project delay causes movement in project costs) Only 85km of the 1,095km target for new toll roads have been developed over the past five years. (Use LMS as a case study)

5. Governments Initiatives to Attract Private Investment in Infrastructure Project Funding: Creation of Indonesia Infrastructure Fund to provide an alternative source of funding for infrastructure projects. Land capping, which provides a government guarantee that the cost of land on which a toll road will be built is at market price, with the government committing to pay the extra cost if the price of land has increased above this level. Provision of land-revolving fund. PT Penjaminan Infrastruktur Indonesia (PT II), a state owned infrastructure guarantee fund with a guarantee threshold of USD 3b. The fund will help to secure financing at a reasonable price.

6. Infrastructure should be encouraged to stimulate the business climate and should not cause bottlenecks in the distribution of goods and services Indonesia has set economic growth target at 7% in 2012

7. The Constraints in Electricity Infrastructure The availability of adequate transmission network in accordance with power plant construction plan Certainty and reliability of fuel supply of non-fuel (coal & gas) Inhibition of development of telecommunications infrastructure in remote areas because of inaccessibility due to power supply

8. Outlook 2006-2015 about USD 40b needs to be invested in the power sector to keep pace with demand. Status of 2x 10,000 MW phase The first 10,000 MW phase in generating capacity through 35 new coal fired power plants is behind schedule, with most of the plants still under construction The 2 nd 10,000 MW phase will see the addition of 10k MW between 2010 and 2014. It is hoped that 4,000 MW of this will come from IPP. Financing remains the main obstacle to realization. In 2009, government subsidies for PLN reached USD 5.2b. For 2010 alone, PLN has earmarked USD 8b for capex and PLN only has 2.48b. PLN is considering raising loans or issuing bonds totalling USD 5.5b. Over the next 4 years, growth for this industry is expected at an average of 10.3% yoy.

9. Opportunities Given the countrys substantial and under-used coal resources, the fuel represents the most attractive quick fix in terms of short term capacity expansion Indonesia has the worlds third largest capacity for geothermal energy 9

10. Reforming The Infrastructure Sector Breakthrough in setting rates based on current economic conditions Coordination between central government policy and regional policy Law enforcement in terms of implementation of regulations in the field of land acquisition Rationalization and improvement of private sector participation is triggered by government policies Strengthen the regulatory function, the development of a new legal framework 10

11. Thank You @sandiuno Sandiaga Salahuddin Uno www.sandiaga-uno.com ssuno@recapital.co.id