Indonesia: EIB Global agrees to support PT SMI on sustainable infrastructure development

• Memorandum of understanding in the context of sustainable infrastructure development in Indonesia.
• Joint commitment to work towards finalising a dedicated EIB credit line to spur sustainable investments.
• Demonstrates EIB Global’s commitment to promoting investment in climate change mitigation and resilience, part of the European Union’s Global Gateway initiative.

The development finance arm of the European Investment Bank – EIB Global – signed today a memorandum of understanding (MoU) with PT Sarana Multi Infrastruktur (Persero) (PT SMI), an Indonesian state-owned enterprise acting as a catalyst for sustainable development. The memorandum of understanding advances their joint commitment to accelerating sustainable infrastructure development in Indonesia, including to facilitate a sustainable energy shift in the country in line with the Just Energy Transition Partnership (JETP).

More specifically, the memorandum of understanding solidifies the commitment of EIB Global and PT SMI to working together more closely, with the goal of finalising a framework loan of up to €500 million that is subject to a suitable range of eligible investments. This credit line, to be intermediated by PT SMI, will target private and public entities involved in sustainable infrastructure sectors, including renewable energy initiatives and climate-focused projects across Indonesia. 

President Director of PT SMI Edwin Syahruzad said: “This is a crucial decade for action on climate change. The EIB’s focus on green and sustainable projects is in line with PT SMI’s priorities. We are delighted by the EIB’s intention to work with PT SMI on this matter. We believe that with the EIB’s support, PT SMI can grow further and continue to become the leader not only in the energy transition sector, but also in the bigger scope of sustainable infrastructure development in Indonesia.”

EIB Vice-President responsible for Bank operations in South-East Asia Robert de Groot said: “Indonesia’s push for sustainable and greener growth is gaining momentum. Working closely with PT SMI, EIB Global is committed to supporting and accelerating Indonesia’s ambitious energy transition. Today’s MoU signing therefore marks a significant step towards achieving this goal, as it brings together our efforts and enables us to accomplish more.”

Ambassador of the European Union to Indonesia Denis Chaibi said: “This memorandum of understanding between PT SMI and the EIB is a vivid illustration of EU efforts to promote sustainable investments in Indonesia. It also demonstrates the European Union’s continued commitment to delivering on its pledges for the Just Energy Transition Partnership. This Partnership requires coordinated efforts to build a pipeline of energy infrastructure projects and mobilise finance. The proposed framework loan will be a key contribution to the Team Europe’s support for the energy transition in Indonesia.”

Background information:

The European Investment Bank (EIB) is the long-term financing institution of the European Union owned by its Member States. EIB Global is the EIB’s specialised arm devoted to increasing the impact of international partnerships and development finance outside the European Union. EIB Global is a key partner of the EU Global Gateway strategy, and is designed to foster strong, focused partnerships within Team Europe, alongside fellow development finance institutions and civil society. EIB Global brings the EIB closer to local people, companies and institutions through our offices across the world.

Global Gateway is the European Union’s strategy to reduce the worldwide investment gap, boost smart, clean and secure connections in the digital, energy and transport sectors, and strengthen health, education and research systems. The Global Gateway strategy embodies a Team Europe approach that brings together the European Union, EU Member States and European development finance institutions. It aims to mobilise up to €300 billion in public and private investments between 2021 and 2027, creating essential links rather than dependencies, and closing the global investment gap.

EIB Global’s support for JETP Indonesia

As part of Team Europe, EIB Global is committed to supporting the Just Energy Transition Partnership (JETP) with Indonesia by providing up to €1 billion in loans. This commitment is subject to agreement on key policy aspects and the identification of a suitable range of eligible investments. These investments could span a range of sectors including renewable energy, infrastructure, transport, housing, and waste and water management, alongside initiatives aimed at reducing marine litter and plastics. EIB Global is specifically looking into supporting Indonesia's renewable energy sector through four key areas of the Energy Transition Mechanism (ETM), which is expected to play a fundamental role in Indonesia's JETP. These areas are 1) enhancing renewable baseload capacity, 2) constructing transmission and distribution lines for green energy, 3) progressing towards de-dieselisation, and 4) increasing the use of variable renewable energy. Team Europe’s contribution to the JETP also includes interest-free loans and grants of up to $29.6 million from the European Union, as well as initiatives from Denmark, France, Germany and Italy.

PT Sarana Multi Infrastruktur (PT SMI) was established in 2009 as an Indonesian state-owned enterprise, 100%-owned and under the direct oversight of the Ministry of Finance of the Republic of Indonesia, and aims to serve as a catalyst for accelerating national infrastructure development in Indonesia. PT SMI supports the fulfilment of its government’s infrastructure development objectives. PT SMI has extensive experience and a proven track record in financing infrastructure project investments across the country, and effectively acts as the infrastructure finance and development arm of the Ministry of Finance.