Using Sharia System, Islamic Development Bank Funds IDR 2.1 Trillion For South Transjawa Toll Road

Illustration (Photo: Doc. Antara)

JAKARTA - The government through the Ministry of Finance (Kemenkeu) informs that the Islamic Development Bank (IsDB) has officially supported the financing of the Trans South-South road infrastructure development phase 2 (TRSS-2) worth 150 million US dollars or approximately IDR 2.1 trillion. (State Budget rate of IDR 14.350).

The Head of the Communications and Information Services Bureau at the Ministry of Finance, Rahayu Puspasari, said that this commitment completes the total project financing of USD 450 million.

“The roads to be built are located in the provinces of East Java and DI Yogyakarta. The toll road with an estimated length of about 67.7 km, including a bridge of 443 meters, will cover the districts of Tulungagung, Blitar, Malang, and Bantul," she said in an official statement quoted on Tuesday, June 7.

According to Rahayu, the financing support from the IsDB will use a financial scheme that is in accordance with sharia principles.

“The objective of TRSS-2 road infrastructure development is to promote sustainable economic growth and poverty alleviation throughout Southern Java. In addition, the existence of the TRSS-2 road is expected to increase the efficiency and safety of road transportation," she said.

Rahayu added that the IsDB previously also participated in financing the TRSS-1 project amounting to US$250 million, including Service Ijarah USD 15 million and Istisna USD 235 million.

This previous financing agreement was signed on May 16, 2017, and will be closed in 2023. The construction of the 100 km long TRSS-1 infrastructure is carried out as an effort by the government to connect the 1,400 km south corridor of Java.

"Hopefully, when the entire infrastructure development is completed, the travel time can be cut by half. Through increasingly smooth and shorter transportation conditions, economic growth in the region is expected to increase and can encourage an increase in people's incomes," she explained.

Meanwhile, the signing of the latest collaboration was carried out by the Director-General of Financing and Risk Management at the Ministry of Finance, Luky Alfirman, with the Vice President (Operations) of IsDB Mr. Mansur Muhtar, and witnessed by the Minister of Finance Sri Mulyani Indrawati and IsDB President Dr. Muhammad Sulaiman Al Jaseer.

"This TRSS financing is part of the overall commitment of the Indonesian government and the IsDB to continue to develop development partnerships in order to support economic development in Indonesia, as well as strengthen Indonesia's position as one of the member countries and the largest economy of the IsDB," Rahayu concluded.