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Innovative Financing for Development and Growth: Infrastructure Asset Securitization of Airport, Seaports, and Electricity in Focus

Andriansyah, Andriansyah and Pratiwi, Adelia Surya and Hapsari, Faiza Tiara (2017): Innovative Financing for Development and Growth: Infrastructure Asset Securitization of Airport, Seaports, and Electricity in Focus.

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Abstract

Infrastructure development in electricity, energy, and connectivity sectors is one of the strategic initiatives that became the main priority of President Joko Widodo’s Government in 2015-2019. One of the innovative financings for infrastructure development is through asset securitization. The basic objective of asset securitization is to transform fixed cash flows generated by physical assets of the infrastructure SOEs to a financial instrument that investors can trade in the capital market. This paper has been developed as the first step to build a framework and reference analysis for the Government to consider asset securitization as a strategic initiative in infrastructure financing. The paper reviews governance structure, selection of a more suitable investment model, gradual and monitored improvement, and better investment-related policies, including regulatory neutrality, better benchmark pricing, broad base investors, and a more liquid secondary market.

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