14 years of service, PT SMI poised to meet economic challenges towards sustainable development of Indonesia

14 years of service, PT SMI poised to meet economic challenges towards sustainable development of Indonesia

Indonesia’s Minister of Finance Sri Mulyani Indrawati and along with Ministry of Finance officials visited the office of PT Sarana Multi Infrastruktur (Persero) (“PT SMI” or “Company”) to commemorate the Company’s fourteenth anniversary. Her visit was to have an in-person dialogue with the Company’s employees, who go by the moniker “SMIers” and majority of whom are composed of youngsters, to have a better grasp on how their enthusiastic work could help contribute to a more sustainable Indonesia.

SMIers play an extremely crucial role in solving future local, national, and global economic challenges. They each have a unique role as part of PT SMI, as one of the Special Mission Vehicles formed under the Ministry of Finance. In this occasion, PT SMI’s President Director Edwin Syahruzad presented to Minister of Finance on the Company’s performance and achievements as well as milestones passed throughout the 14 years of the Company’s establishment. In his presentation, Edwin mentioned a plan to set up an institute whose focus would be on building local governments’ capacities in regional development, tailored to specific characteristics of each local government. 

The plan is an effort by PT SMI to achieve Equitable Development, which is one of the pillars of Indonesia Vision 2045. To reach this target, PT SMI has been making countless innovations and inventions in infrastructure financing since its establishment in 2009, in order to become a catalyst for national development financing through three main business pillars of Financing and Investment, Advisory, and Project Development.

It is reflected in PT SMI’s role in financing 435 infrastructure projects through the Company’s wide offering of innovative financing products. As of 2022, PT SMI has financed a total infrastructure project value of Rp819.94 trillion, producing a multiplier effect of 5.6 times the total financing commitment amount and 26.87 times the paid-up capital. 

As a catalyst for development in Indonesia, PT SMI has always been eager to seek alternative sources of funding, such as by issuing Green Bonds and Global Bonds as well as engaging and collaborating with private sectors in infrastructure project syndications. These innovations and initiatives have allowed and will continue to allow PT SMI to leverage its assets. Edwin made this presentation of PT SMI’s performance and achievements on Friday (03/03) at the Company’s Office in Sudirman, Jakarta.

Throughout the Covid-19 pandemic, PT SMI had a perceived expanded role, in which as a countercyclical tool in the government’s arsenal, PT SMI worked hard to mitigate impacts of significant changes in local economy through the Regional National Economic Recovery (“PEN”) loan program. According to Edwin, as many as 92 local governments have benefited from loans provided by PEN program as of December 2022, with a total commitment of Rp34.7 trillion.

PT SMI has been taking part in regional financing since 2015, following the transfer of assets and role from Pusat Investasi Pemerintah as a local government financing institution to the Company. In her remarks, Minister of Finance Sri Mulyani Indrawati expressed her appreciation for the Company’s increased portfolio of financing to local governments, which has shown rapid growth. However, she would like to see that regional development proceeds in a more sustainable manner. “It is important to make sure that in the future, we will not have what we call as remote, outermost, and least developed areas in Indonesia,” she emphasised.

“In distributing PEN loans, integrity and accountability are always at our core. One of innovations we have come up with to maintain both is by digitally transforming our regional loan application process through the Regional Financing System (ReFina), which allows measurable accountability and transparency”. Recently, ReFina was awarded the first place in Best Innovation from Ministry of Finance.

To meet the challenges in regional economic development, where equal access to infrastructure is required by different regions to correspond to their characteristics, PT SMI is being prepared to transform into a National Development Financing Institution. According to Sri Mulyani, PT SMI holds a highly strategic role in meeting demands for development financing, so the expectation for the Company’s transformation into a Development Financial Institution is to become a prolific source of legacies to development.

To support the transformation process, an initiative introduced by PT SMI on its 14th anniversary is to launch the SMI Institute. Three core programs, i.e., research & fellowship, capacity building & training, and knowledge sharing, will be the focus of the SMI Institute. “We have prepared the three core programs for local governments, complementary to our inclusive and sustainable regional development financing,” Edwin said.

Indonesia G20 Presidency 2022 became a stage for PT SMI to demonstrate its capability for supporting the government in overcoming global challenges, especially in dealing with impacts of climate change. The government’s trust in PT SMI is placed by appointing the Company as Energy Transition Mechanism Country Platform Manager during the Indonesia G20 Presidency 2022 in Bali, to manage the financing of the energy transition mechanism in Indonesia.

It is a show of appreciation from the Ministry of Finance for the achievements made by the SDG Indonesia One – a blended finance platform providing financing to climate change adaptation and mitigation projects – which the company has been managing since 2018. “PT SMI has so far managed to advance Indonesia’s reputation in the eyes of the world through its role as the Energy Transition Mechanism Country Platform Manager. To build on that, PT SMI needs to ambitiously and aggressively follow up on the support extended to Indonesia in regard to the energy transition agenda.”

As of February 2023, PT SMI has partnered with 17 institutions to develop a financing and investment strategy for energy transition by leveraging all the available resources, both commercial and non-commercial such as grants and technical assistance. Those partners working with PT SMI in its role as ETM Country Platform Manager include multilateral and bilateral institutions, banks, philanthropic organisations, and think tanks. Edwin added that in designing a financing and investment scheme for the energy transition in Indonesia, environmental and social aspects are a priority. 

Working with Asian Development Bank, PT SMI has prepared a Strategic Environmental and Social Assessment through which an audit will be conducted, risks will be identified, and a risk mitigation plan will be developed from the environmental and social perspectives as a basis for a recommended energy transition scenario. “We are taking this step to meet the objective of energy transition in Indonesia, so the transition can be both equitable and affordable,” Edwin continued.

PT SMI is recently being engaged by the Indonesian Government through the Ministry of Finance to provide support in the new Capital City project. PT SMI will have a strategic role in innovating the financing for providing infrastructures to the Nusantara Capital City Authority. The faith that government put in PT SMI is an affirmation of the Company’s performance of its mandates to prepare 20 infrastructure projects in various sectors such as Hospitals, Hazardous and Toxic Waste Management, Waste Management, Broadband Access, Transportation, and Water Supply Systems.

Integrity, accountability, and transparency are always at the heart of PT SMI’s performance of mandates and conduct of business activities. Today, PT SMI has been certified with ISO 37001 Anti-Bribery Management Systems, and continues to tighten supervision by cooperating with law enforcement such as the Corruption Eradication Commission (KPK) and the Deputy Attorney General for Civil and Administrative Affairs (JAMDATUN), as well as other government agencies such as the Audit Board of the Republic of Indonesia (BPK), the Finance and Development Supervisory Agency (BPKP), and the Inspectorate General of the Ministry of Finance.

Minister of Finance added that reputation and public trust that PT SMI has earned, as evidenced by the Company’s being named the most reputable institution on national media, are something to be grateful for. “Please continue to be an institution that makes all of us proud,” Sri Mulyani encouraged.

“These performance and achievements are certainly founded on the principle of good corporate governance and improved risk management framework that is always adapted to the challenges on hand. They have positioned PT SMI as an enabler in meeting global, national, and local economic challenges. We are committed to continued innovation, synergy, and collaboration with others in order to develop the country and promote the welfare of Indonesian people, today and tomorrow. We believe that, through a sustainable transition in the various aspects of development, we will continue contributing to building the nation,” Edwin concluded.

About PT Sarana Multi Infrastruktur (Persero)

PT Sarana Multi Infrastruktur (Persero) was established on February 26th, 2009 as a State-Owned Enterprise under the coordination of the Ministry of Finance in the form of a Non-Bank Financial Institution (LKBB), with a role and mandate as a catalyst for the acceleration of national development.

PT SMI has various functions and unique products/features to support the acceleration of infrastructure development which not only functions as an infrastructure financing but also as an enabler through the implementation of a Public Private Partnership (PPP) scheme which includes various financial institutions, both private and multilateral. PT SMI actively supports the PPP implementation and encourages the acceleration of infrastructure development in the regions through regional loan products.

PT SMI has three business pillars, namely (1) Funding and Investment, financing for infrastructure projects, (2) Consultancy Services, solutions to the needs of professionals and experts in the infrastructure sector, and (3) Project Development, assistance for the Person in Charge of Cooperation Projects (PJPK) in preparing infrastructure projects.

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