Financing City Infrastructure through a Local Enterprise’s Holding Company

Background

Investment in physical capital, especially in public infrastructure is required to expand a city’s capacity. This Investment will help a city to maintain it’s rapidly growing economy and at the same time make it sustainable and livable.

A local government in one of Indonesia’s largest and most densely populated city have been struggling to finance the public infrastructure and tried to explore new source of funds outside their budget (APBD).

One of our solution was to leverage their existing idle assets that available in local government and local government’s enterprises under a new holding company management. By becoming the asset manager, these entities could leverage the idle-assets and use the fund to facilitate the financing of those infrastructure while at the same time attracting more investment to the city.

Solution

Skha conducted multi-years research and planning in partnership with several top universities and research institutions to develop the policy, strategy and implementation guidance for the local enterprise’s holding company

  • a. Analyze local government’s policies and regulations to decide Local Holding advancement in local development planning
  • b. Identify potential market and business alternatives by analyzing market and business environment
  • c. Define future strategic positioning of the local enterprise’s holding company
  • d. Build comprehensive strategy plan and roadmap based on key stakeholder’s aspiration and conducted multiple feasibility studies

Result

  • A projection of over Rp. ~4 Trillion new source of funds potentially generated for financing the city infrastructure projects
  • The draft regulation to establish the holding enterprise is already issued and waiting to be approved by the local people’s representative office (DPRD)