INDONESIA: Establishing a national framework for SOE Asset Recycling

The Indonesian government has shown interest in asset recycling as a means of raising financing for infrastructure assets. Asset recycling monetizes the value from revenue-generating public assets, such as toll roads, bridges, and airports. The proceeds can be invested in infrastructure, either by refurbishing existing assets or building new ones. The country's state-owned enterprises (SOEs) offer the potential for asset recycling, but to do so, the country must make improvements to the regulatory framework. A PPIAF activity supported the preparation of national-level guidelines and implementing regulations for asset recycling, particularly in the energy, port, and airport sectors. These covered prior privatization and SOE reform programs in Indonesia over the past 30 years, an analysis of international examples, a strategy for asset recycling, guidelines for implementing LCS projects, and legal considerations. Advice on accounting and tax issues resulted in a presidential regulation addressing the identified challenges. The activity led to improved capacity and engagement with sector SOEs, and it is expected to positively impact the government's capacity to implement asset recycling. Finally, the activity helped the government integrate climate resilience and environmental sustainability considerations into its asset recycling framework for SOEs).