The New Toll Road Financing Model Determination

Proceedings of ASEA-SEC-3, 2016 ISBN: 978-0-9960437-3-1

6 Pages Posted: 3 Jun 2019

See all articles by Ayomi Rarasati

Ayomi Rarasati

University of Indonesia (UI) - Civil Engineering Department

Lukas B. Sihombing

University of Indonesia (UI) - Faculty of Economic, University of Indonesia (UI) - Department of Civil Engineering

Andreas Wibowo

Parahyangan Catholic University

Yusuf Latief

University of Indonesia (UI) - Civil Engineering Department

Date Written: November 4, 2016

Abstract

There are three main problems in Indonesia toll road financing model. First, it is the lack of state budget and delayed funding distribution for land acquisition. The second problem is the lack of financial ability of the winning company which leads to financial closing failure. The third problem is related to the land acquisition process that a special purpose company has to obtain for 100% before it can propose a loan from a bank. Therefore, it is essential to develop a new financial modeling to be implemented in Indonesian toll road development. Seven financial models were identified as having been implemented successfully and effectively. These models are earmarked tax revenue, deep discount bonds, take out financing, tax increment financing, land leases, deferred debt, and private donation. However, these models have never been utilized for toll road projects in Indonesia. Therefore, this research aims to explore those seven financial models and determine the most suitable one to be implemented in Indonesia. Literature review and in-depth interview with the key stakeholders were conducted to collect the data. The results subsequently show that there are four models that have never been implemented in Indonesia. However, the combination of deep discount bond and land leases is the most suitable financing model for Indonesian toll road industry.

Keywords: financial modeling, deep discount bonds, land leases, earmarked tax revenue, take out financing, tax increment financing, deferred debt, private donation.

JEL Classification: G23, R42, R51

Suggested Citation

Rarasati, Ayomi and Sihombing, Lukas B. and Wibowo, Andreas and Latief, Yusuf, The New Toll Road Financing Model Determination (November 4, 2016). Proceedings of ASEA-SEC-3, 2016 ISBN: 978-0-9960437-3-1, Available at SSRN: https://ssrn.com/abstract=3386455

Ayomi Rarasati

University of Indonesia (UI) - Civil Engineering Department

Depok, 16424
Indonesia

Lukas B. Sihombing (Contact Author)

University of Indonesia (UI) - Faculty of Economic, University of Indonesia (UI) - Department of Civil Engineering ( email )

Kampus Baru
Depok, West Java 16424
Indonesia

Andreas Wibowo

Parahyangan Catholic University

Bandung
Indonesia

Yusuf Latief

University of Indonesia (UI) - Civil Engineering Department ( email )

Depok, 16424
Indonesia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
12
Abstract Views
170
PlumX Metrics