PGII Scheme Launched at G20, Indonesia Ready to Submit Proposal for Infrastructure Fund
Several investment and infrastructure projects have the potential to be financed under the PGII scheme. Indonesia is preparing a proposal to obtain financing from the US$600 billion initiative.
By
agnes theodora
·4 minutes read
AFP/SAUL LOEB
(L to R) Indonesia President Joko Widodo, US President Joe Biden and von European Commission President Ursula von der Leyen hold an event on the Partnership for Global Infrastructure and Investment on the sidelines of the G20 Summit in Nusa Dua on the Indonesian resort island of Bali on November 15, 2022.
NUSA DUA, KOMPAS - This year's Group of 20 Forum presents several financing incentives for developing nations, including Indonesia. Aside from a capital injection for energy transition, funding for investment and infrastructure development was also made available via the PGII scheme. Indonesia has prepared a proposal to obtain financing for its projects through the scheme.
The PGII scheme is a collaborative effort by Group of Seven member nations (the United States, England, Italy, Japan, Germany, Canada and France). The program is allocating US$600 billion worth of investment in the form of loans and grants for sustainable infrastructure projects in developing nations for the next five years.
When announcing the PGII collaboration after the first day of the G20 High-Level Conference at the Apurva Kempinski Hotel in Nusa Dua, Bali, on Tuesday (15/11/2022), President Joko “Jokowi” Widodo stated that support provided by the scheme must be country driven. Infrastructure development, said the President, must empower the people and local economy to cultivate a high sense of ownership.
He gave the example of Indonesia’s ongoing construction project to transfer the nation's capital from Jakarta to East Kalimantan. This project is expected to open up US$20.8 billion worth of investment opportunities in various sectors of infrastructure.
Infrastructure development using financial aid from the PGII scheme must involve more stakeholders, such as the private sector. The scheme is also expected to help garner support for sustainable construction in developing countries, including through green construction and energy transition.
"To make developing countries more resilient when facing global challenges in the future," said the President.
MADINA NUSRAT
The 804-meter-long Balang Island Bridge, as photograph on Saturday (5/11/2022), is one of the pieces of infrastructure built to access the future national capital Nusantara in East Kalimantan. If a road from Balikpapan, East Kalimantan, is connected to the bridge, traveling from Balikpapan to Nusantara by land can be achieved in an hour's time.
US President Joe Biden said the US was ready to support sustainable construction and quality infrastructure development in developing countries. In addition to the PGII scheme, the US is also committed to providing financing for energy transition programs in developing countries through the Just Energy Transition Partnership (JETP) scheme, which mobilizes US$20 billion worth of concession funds from the public and private sectors.
Indonesia Prepares Proposal
Indonesia is included in the list of nations expecting to benefit from the PGII scheme. In a separate communication, the secretary for the Office of the Coordinating Economic Minister, Susiwijono, explained that Indonesia was preparing a proposal to obtain financing from the scheme for several projects.
He was not yet able to verify the value of the proposal to be submitted and what projects would be included in it. However, it is underway.
The PGII initiative is a response by G7 nations to China's Belt and Road Initiative, which finances infrastructure projects in developing countries.
"What is clear is that US$600 billion has been allocated for developing countries. Later, Indonesia will share which projects will have the potential to be financed through the scheme," said Susiwijono.
The PGII initiative is a response by G7 nations to China's Belt and Road Initiative, which finances infrastructure projects in developing countries.
During an interview with Kompas last week before the start of the G20 Summit, the Coordinating Economic Minister Airlangga Hartato, mentioned that there were several projects with the potential to be financed under the PGII scheme and that they are being reviewed by the government.
Currently, the PGII scheme covers 20 new infrastructure projects worth over US$3 billion spread across various countries, such as East Timor, Vietnam, India, Brazil, several African nations and the US, for energy infrastructure development, vaccine production, telecommunications, farming, health and women and children's welfare.
According to Airlangga, Indonesia has discussed several potential projects with the US. These include a carbon capture utilization and storage (CCUS) project, which involves corporate giants like Exxon and Chevron, as well as the construction of a hydro power plant with a capacity of 9,000 megawatts in cooperation with Sumitomo Corporation.
"Of course, there are other projects. The US is encouraging several countries, including itself, to develop investment and infrastructure for vaccine production, telecommunications, farming, health and women and children's welfare,” said Airlangga.
