Foreign Investors Reluctant To Invest Directly In Toll Projects, INA Reveals 4 Causes

Chairman of the Board of Directors of INA Ridha Wirakusumah. (Photo: Screenshot/YouTube PUPR)

JAKARTA - The Indonesia Investment Authority (INA) said that there are four reasons why global investors are still reluctant to invest directly in toll road projects in the country.

First, global investors tend to be interested in acquiring existing toll roads whose traffic is clearly used as a return on investments rather than building new projects from construction to operation.

Chairman of the Board of Directors of INA Ridha Wirakusumah assessed that investing in the construction process requires greater costs, especially in terms of land acquisition. In addition, there is also no guarantee of traffic to operational problems.

"First of all, they prefer to invest in brownfield assets because if the greenfield likes there are still problems with land freedom or there are operational matters, that's the first time," said Ridha at the Creative Infrastructure Financing Day event at the PUPR Ministry Building, Jakarta, Wednesday, December 13.

Second, global investors tend to be interested in becoming majority and/or joint control shareholders.

"In general, global investors want to have significant control over operational, financial and strategic decisions," said Ridha.

Third, global investors prefer infrastructure projects, for example toll roads that have a traffic risk to be estimated. Investors tend to choose proper sections in terms of economics, aka there is protection in terms of income and can guarantee minimal income.

The fourth is in terms of legal certainty. This means that investors need to have confidence in all rights and obligations in the concession agreement to be carried out in accordance with the agreement with the government.

"There is a risk of traffic, but this is something we can investigate or there is a scheme that we can develop," he added.