INDUSTRY.co.id - Jakarta - President Director of PT Penjaminan Infrastruktur Indonesia Armand Hermawan asked the local government not to hesitate to invite private business entities in infrastructure development.

"Referring to the list of national strategic projects (PSNs), the role of local government is crucial to support infrastructure development, not least for local governments to provide infrastructure," Armand said during a talk show at PPP Day Day in 2017 Dhanala Auditorium, Ministry of Finance, Central Jakarta, Wednesday. (11/29/2017)

According to him, the role of the private sector is very important to increase the fiscal power in the provision of infrastructure for the people.

Armand said the cooperation between the government and business entities (KPBU) or "public private partnership" (PPP) is one of the solutions to meet the infrastructure targets, given the limited budget and state / regional budget (APBN / D).

Private sector involvement in PPP schemes is expected to provide innovation, quality and efficiency in infrastructure provision.

Armand also said the government has provided an opportunity for business entities to enter and become a provider of infrastructure development funds. However, the problem is that business entities are still unsure of local government commitments when investing in infrastructure development.

The government provides an option through the "availability payment" scheme (AP), ie the local government is only left to install a business entity that has built an infrastructure project through a cooperation contract.

"We have a mandate to provide comfort to business entities in investing in infrastructure projects that are usually long projects," he said.

Armand insisted that in order to create a stable economic climate, it required certainty of the rules of the game, such as contracts between local governments and business entities, contracts between PII with business entities and contracts between PII and local government.

The contract between a business entity and a local government explains the cooperation made by both parties for an infrastructure development program.

While the contract between PII and business entities explain the certainty of local government to fulfill its obligations, such as payment. Meanwhile, the contract between the local government and PII explains the mechanism of payment to be made (regres agreement).

"The first PII ensured that the cooperation project was well structured, fair and equitable, we were 'middleman', the regional government could not run away from the contract," he said.

Armand hopes that through this PPP Day 2017, the local government as responsible for cooperation projects (PJPK) is more confident in using the cooperation scheme of the government and business entities to provide infrastructure.

"It also gives an idea to stakeholders that the KPBU scheme has been considered by the local government as a scheme for providing infrastructure that is the responsibility of the region," he added.