The incoming chairman of
Indonesia’s Financial Services Authority (OJK) wants the agency to work on improving infrastructure investment in the country through widened financing options, particularly through the insurance sector.
Wimboh Santoso, who was appointed by Parliament on Thursday, said bank loans, government bonds, and other basic options are insufficient in addressing the funding gap for Indonesian infrastructure.
“OJK will create instruments for infrastructure financing to draw both foreign and domestic investors,” Santoso was quoted by Nikkei. “We need investment from every direction.”
These instruments will particularly target the insurance sector, as well as the stock market. Many insurers, especially in mature markets, are turning to infrastructure investments to fuel their growth due to the prevailing low-interest environment making government bonds unattractive.
The OJK will also work to expedite bond issuances and asset securitization processes for entities involved in financing major projects. Most of the planned projects are in the energy and transportation sectors.
Indonesian President Joko Widodo has embarked on an ambitious infrastructure program worth US$412.5 billion, encompassing his five-year term. Only a third of the required money can be sourced from the state treasury, leaving a huge funding gap that must be filled by private investors.
Santoso succeeds Muliaman Hadad, the OJK’s first chairman since its establishment in 2012. He will serve a five-year term, beginning next month when he and eight new OJK commissioners are sworn in at
Jakarta’s presidential palace.
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