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Get to know the Government and Business Entity Cooperation or KPBU and its ins and outs!

What are the ins and outs of cooperation between the government and business entities or KPBU? Let's find out the complete information in this article! The limitation of the APBN in financing infrastructure development causes a funding gap that needs to be met. For that reason, the government finally looked for other alternative sources of funding. One of the sources of funding involves a private party called a KPBU or Public-Private Partnership. To understand the cooperation between government and business entities in more detail, please refer to some important information below!

Understanding Government and Business Entity Cooperation

Before you know other information about KPBU, it's a good idea to know the meaning of KPBU first. Then what is meant by the KBU? Now, what is meant by KPBU is a cooperation between the Government and Business Entities in providing infrastructure or public interest services. The reference is the specifications previously set by the government. In addition, the resources of a business entity that are used partially or wholly must pay attention to the sharing of risks for several parties.

KPBU Policy Base and Objectives

The basis for the first KPBU legal policy is Presidential Regulation or PERPRES. The regulation is Number 38 of 2015. There is also a Regulation by the Minister of VAT. The regulation is Number 2 of 2020, which discusses changes to the Regulation of the Minister of National Development Planning.

Finally, the Regulation of the Head of the Government Goods or Services Procurement Policy Agency. Regulation Number 29 of 2018, contains the procedures for the implementation of the procurement of business entities implementing the provision of infrastructure. The procurement is through the KPBU and on the initiative of the Minister, Regional Head, and Head of Institution.

The Goals

There are several KPBU objectives that you must know, as follows:

  • Sufficient funding needs in a sustainable manner. Especially in the provision of infrastructure.

  • Helping to realize the provision of quality, effective and efficient infrastructure. In addition, realizing the right infrastructure and on time.

  • KPBUs are expected to be able to create an investment climate that encourages and participates in business entities. In addition, it provides infrastructure according to sound business principles.

  • Encourage the accepted server payment principle and also consider the user's ability to pay.

  • Ensure a return on investment. Infrastructure providers and business entities make periodic payments.

KPBU Schemes

There are several schemes in KPBU that are important for you to know, as follows:

  1. O&M Operation and Maintenance Contract

    Private operators and business entities on a contract basis, operate government-owned assets. For example, a water or wastewater treatment plant for a certain period of time. Ownership of fixed assets with the government.

  2. Build Finance

    Private and business entities are able to build assets to finance capital only during the construction period.

  3. Design, Build, Finance, and Maintain

    The business entity is able to design, construct, finance, and provide maintenance and operation services under a long-term agreement. The operation of assets is also included in the project, for example, the operation of bridges, roads, and water treatment plants.

  4. Concessions

    A private concession holder or business entity is able to invest and operate the facility for a certain period of time. After that period, ownership will return to the government.

KPBU Infrastructure Sector

The infrastructure itself is a basic facility, both physical and social. For example, buildings, roads, and electricity supply are needed for the operation of community or company activities. There are several KPBU infrastructure sectors such as drinking water, wastewater treatment systems, waste management systems, and telkominfo. Apart from that, there are also sectors in the fields of energy and electricity, energy conservation, economy, urban facilities, and so on.

Not only that, the KPBU infrastructure sector is also in the social sector. Sectors included in social infrastructure are tourism, educational facilities, research, and development. There is also the public housing sector, health, sports facilities, arts, and culture. In addition, there is also social infrastructure in the fields of educational facilities, research, and development.

Government Support for KPBU

To implement an effective and maximum KPBU in Indonesia, the Ministry of Finance carries out various innovations. The form of this innovation is infrastructure financing by providing facilities and support such as the following:

  1. Project Setup Facility

    Government and Business Entity Cooperation or KPBU is realized by the government by providing several supports, one of which is project preparation facilities. Through this facility, the government provides facilities that can assist PPJK in compiling a final study to a pre-feasibility study. There are also tender documents and accompanying PJPKs in KPBU transactions. In addition, it provides financing, from financial institutions to financial close.

  2. Eligibility Support

    Support is provided by the government in the form of a partial contribution to construction costs provided in cash in KPBU projects that are considered economically feasible but not yet financially feasible. Feasibility support will be provided if there is no other alternative when creating a collaborative project. Local governments can contribute to providing support after obtaining DPRD approval for infrastructure guarantees.

  3. Infrastructure Guarantee

    It is a form of guarantee for the PJPK's financial obligations. The guarantee is used as a compensation payer to business entities when infrastructure risks occur. In accordance with the allocation that has been agreed upon by the KPBU which is the responsibility of the PJPK. The infrastructure guarantee will be implemented by PT Penjaminan Infrastruktur Indonesia and become a single-window policy. If there is a guarantee coverage that has exceeded the capacity of PT PII, a joint guarantee will be carried out between PT PII and the Ministry of Finance.

Example of PT SMI's (Sarana Multi-Infrastructure) KPBU Project Plan for 2022

PT SMI is the best and most trusted infrastructure financing institution in Indonesia. PT SMI is the government's right hand which has the function of handling the financing of various infrastructure projects. This infrastructure financing institution has handled various projects with great and fantastic value.

In 2022, PT SMI also has a KPBU project plan to be carried out. It is not unmitigated that the funds that will be disbursed by PT SMI are very large, up to 27 trillion in the first quarter. In 2022 PT Sarana Multi Infrastruktur or PT SMI plans to disburse financing for 6 infrastructure projects under the KPBU scheme. The project that is currently being considered by PT SMI is water resources, in fact, the project will dominate the list of projects to be financed by the company

The water source KPBU projects that have been held by PTS SMI are Jati Gede, and Kali Jorong and there are several sectors that are included in public street lighting in Surakarta. There is also the Bintuni industrial area, Jatibarang waste processing, Merangin Dam, and so on.

That is information about the ins and outs of government and business entity cooperation or KPBU which is interesting to listen to, in this KPBU project PT SMI (Sarana Multi Infrastruktur) has a very important role as an alternative source of funds, so if you need financing for infrastructure, don't hesitate to apply for financing. to PT SMI because there are many financing and investment products, consulting services, and project development that can be tailored to your needs, to get more detailed information about PT SMI products, please click this link!                                                                                                                                                                                    

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