Presidential Regulation No. 32 of 2020 concerning Infrastructure Financing Through Limited Management Rights (“PR 32/2020”)

August 13, 2020

The Government of Indonesia has introduced a financing scheme for infrastructure as stipulated in Presidential Regulation No. 32 of 2020 concerning Infrastructure Financing Through Limited Management Rights (“PR 32/2020”), which came into force on 14 February 2020. PR 32/2020 provides opportunity for domestic and foreign business entity in private sector to manage and/or operate the existing infrastructure assets in transportation infrastructures (ports, airports, railways & bus terminals); toll road infrastructures; water resource infrastructures; drinking water infrastructures; waste water management system infrastructures; solid waste management system infrastructures; telecommunication & informatics infrastructures; electricity infrastructures; oil, natural gas & renewable energy infrastructures which are owned by the State or State Own Enterprises (“Assets Management”).

The requirements of the Asset Management shall fulfill the following criteria:

1. The infrastructure assets have commercially operated for at least 2 (two) years;

2. The infrastructure assets require operating efficiency improvement;

3. The life of the infrastructure assets for at least 10 (ten) years;

4. For the infrastructure assets which is owned by the State, such assets are accounted in an audited ministry/agency financial statement based on Government Accounting Standard in the previous period; and/or

5. For the infrastructure assets which is owned by the State Own Enterprises, such assets shall have a track record of positive cash flow for at least 2 (two) consecutive years, and have been accounted in the relevant State Own Enterprises audited financial statement for at least 3 (three) consecutive years based on the guidelines for Indonesian financial statement accounting standard.

The foregoing management and/or cooperation scheme shall be set forth under an Asset Management agreement in which the head of Public Service Agency or the Coordinating Minister for Economic Affairs/President Director of relevant State Own Enterprises (whichever relevant) shall be a party thereto, subject to the relevant assets managed thereunder. Further, the Public Service Agency or the Coordinating Minister for Economic Affairs/President Director of relevant State Own Enterprises (whichever relevant) collects the upfront fee from the private sector within 6 (six) months after the execution of Asset Management agreement.

Upon expiration of such agreement, the infrastructure assets will be handed over to the Public Service Agency or the Coordinating Minister for Economic Affairs/President Director of relevant State Own Enterprises (whichever relevant) in accordance with the laws & regulations which governs the corresponding sector and/or state own assets concerned.