DETERMINATION OF FINANCIAL FEASIBILITY OF INDONESIA'S NEW CAPITAL ROAD CONSTRUCTION PROJECT USING SCENARIO ANALYSIS

The plan to relocate the Indonesian capital from Jakarta to East Kalimantan Province in 2024 requires a significant amount of 442 trillion Rupiah to construct various new capital infrastructure such as roads for transportation. This study aims to analyze the funding scheme for new capital road construction projects in Indonesia using two alternative financing, namely the National Budget and Public-Private Partnership (PPP). This study used quantitative methods with a scenario analysis approach to determine the best funding scheme based on regional economic growth and financial viability. This study did not consider the project management factors during the construction period and the quality factors of the roads built during the concession period. The results showed that road construction projects in the new capital city can be implemented using two financing schemes. The National Budget financing scheme will increase the percentage of the budget deficit to GDP in the first five years of development. The financing scheme through PPP can help the government overcome the budget deficit but requires the resilience of the government's budget during the project concession period.

Analysis on Development Process and General Situation of Modern Chinese Textile Technology

In the early stage of China's modern capitalist industrialization, the national textile industry developed rapidly. The textile industry involved a wide range of industries. China's modern textile industry mainly includes filament, textile machinery manufacturing and wool textile industries in the development project of the textile industry in China's concession period, a number of textile industry central cities such as Shanghai, Tianjin, Qingdao, Wuhan, and Nantong have been formed.

Determining a reasonable concession period for risky transportation BOT projects with government subsidies based on cumulative prospect theory

PurposeThis paper explores the impact of both government subsidies and decision makers' loss-averse behavior on the determination of transportation build-operate-transfer (BOT) concession periods based on cumulative prospect theory (CPT). The prospect value of a transportation project under traffic risk can be formulated according to the value function for gains and losses and the decision weight for gains and losses. As an extra income for investors, government subsidy is designed for highly risky aspects of BOT transportation projects: uncertain initial traffic volumes and fluctuating growth rates.Design/methodology/approachA decision-making model determining the concession period of a transportation BOT project is proposed by using the Monte-Carlo simulation method based on CPT, and the effects of risky behaviors of private investors on concession period decision making are analyzed. A subsidy method related to the internal rate-of-return (IRR) corresponding to a specific initial traffic volume and growth rate is proposed. The case of an actual BOT highway project is examined to illustrate how the method proposed can be used to determine the concession period of a transportation BOT project considering decision makers' loss-averse behavior and government subsidy. Contingency analysis is discussed to cope with possible misestimating of key factors such as initial traffic volume and cost coefficients. Sensitivity analysis is employed to investigate the impact of CPT parameters on the concession period decisions. An actual BOT case which failed to attract private capital is introduced to show the practical application. The results are then interpreted to conclude this paper.FindingsBased on comparisons drawn between a concession period decision-making model considering the psychological behaviors of decision makers and a model not considering them, the authors conclude that the concession period based on CPT is distinctly different from that of the loss-neutral model. The concession period based on CPT is longer than the loss-neutral concession period. That is, loss-averse private investors tend to ask for long concession periods to make up for losses they will face in the future. Government subsidies serve as extra income for investors, allowing appointed profits to be secured sooner. For the benefit side of contingency variables, the normal state of initial traffic volume, average annual traffic growth rate and bias degree and the government subsidy need to be paid close attention during the project life span. For the cost side of contingency variables, the annual operating cost variable has a significant impact on the length of predicted concession period, while the large-scale cost variable has minor impact.Originality/valueWith an actual BOT highway project, the determination of transportation BOT concession periods based on the psychological behaviors of decision makers is analyzed in this paper. As the psychological behaviors of decision makers heavily impact the decision-making process, the authors analyze their impacts on concession period decision making. Government subsidy is specifically designed for various states of initial traffic volume and fluctuating growth rates to cope with corresponding high risks and mitigate private investors' loss-averse behaviors. Contingency analysis and sensitivity analysis are discussed as the estimated values of parameters may not be authentic in actual situations.

Model Penerapan Konsesi Pelabuhan di Indonesia: Studi Kasus Terminal Teluk Lamong

Indonesia merupakan negara kepulauan yang pembanguanan pelabuhan merupakan salah satu cara untuk mendukung pertumbuhan ekonomi di wilayah Indonesia. Selain itu pelabuhan berfungsi sebagai infrastruktur konektivitas logistik yang dapat menunjang arus pergerakan barang. Syarat untuk dapat melakukan kegiatan kepelabuhanan dengan melakukan konsesi telah diatur Undang-Undang. Menurut Badan Pemeriksa Keuangan (BPK) untuk saat ini kinerja pengelolaan konsesi pelabuhan belum efektif. Selain itu, juga terbit Peraturan Menteri tentang hasil pemeriksaan kinerja atas efektivitas pengelolaan konsesi pelabuhan di Terminal Teluk Lamong. Penelitian ini bertujuan untuk memberikan lama dan tarif konsesi yang efektif dan saling menguntungkan antara pihak-pihak yang terlibat. Analisis yang digunakan yaitu dengan menggunakan metode IRR, NPV, BCR kemudian menggunakan analisis sensitivitas. Dari penelitian ini didapatkan hasil IRR sebesar 13,2%, NPV Rp 577.402.711.679,-, nilai BCR diatas 1 ketika pada tahun ke 32. Untuk lama konsesi Terminal Teluk Lamong selama 32 tahun dan tarif konsesi sebesar 3 % dari pendapatan Terminal Teluk Lamong.Model for Port Concession Implementation in Indonesia: Case Study in Teluk Lamong Terminal; Indonesia is an archipelago country where port development is one way to support economic growth in Indonesia's territory. In addition, the port serves as a logistics connectivity infrastructure that can support the flow of goods movement. The requirements to be able to carry out port activities by conducting concessions have been regulated. According to the Supreme Audit Agency (BPK), the performance of port concession management is not yet effective. In addition, a Ministerial Regulation was issued regarding the results of performance checks on the effectiveness of port concession management at the Teluk Lamong Terminal. This study aims to provide effective and mutually beneficial concession rates between the parties involved. The analysis used is by using the IRR, NPV, BCR methods then using sensitivity analysis. From this research, the IRR results were 13.2%, NPV Rp. 577,402,711,679, -, the BCR value was above 1 when in the 32nd year. Then for the duration of the concession period of the Lamong Bay Terminal is 32 years and the concession rate is 3% of Teluk Terminal revenue Lamong.

ANALISIS KELAYAKAN INVESTASI RELOKASI TOL PORONGGEMPOL AKIBAT TAMBAHAN LINGKUP PEKERJAAN

ABSTRACTSurabaya–Gempol Toll Road is a toll that has operated since 1986, but in 2006 the Porong-Gempol route collapsed due to lapindo mud flow. Therefore, the toll road needs a relocation. On the construction of its relocation, additional scope of work was added and affected the feasibility of the investment which must be put into consideration for analyzing purposes in order to regain the initial feasibility value of 14.84% IRR. The forecast of cost and income analyzed with financial approach. The method used are Net Present Value (NPV) and Internal Rate of Return (IRR) with a discount rate of 11.8%. The result of investment feasibility after additional scope of work shows that the NPV during concession period (39 years) is negative Rp459.150.000.000,00 and IRR at NPV = 0 is 9,55%. To return the feasibility value, concession period is must be increase to 50 years with adjustment of the toll fee to Rp1.625 in 2021 and Rp1.980 in 2023. It shows that NPV is Rp1.037.727.000.000,00 and IRR at NPV = 0 return to 14,84%.Keywords: Additional scope of work; Compensation; Feasibility; RelocationABSTRAKJalan Tol Surabaya-Gempol merupakan jalan tol yang sudah beroperasi sejak tahun 1986 akan tetapi pada tahun 2006 ruas tol Porong-Gempol terputus oleh lumpur lapindo sehingga perlu dilakukan relokasi. Dalam pembangunan relokasi ruas tol tersebut, terjadi tambahan lingkup pekerjaan sehingga membuat biaya investasi membengkak sehingga perlu diketahui pengaruhnya terhadap nilai kelayakan investasi proyek tersebut untuk kemudian dilakukan analisis dalam upaya pengembalian nilai kelayakan yaitu IRR sebesar 14,84% seperti kondisi awal. Prakiraan biaya dan pendapatan akan dianalisis dengan pendekatan finansial. Metode yang digunakan adalah Net Present Value (NPV) dan Internal Rate of Return (IRR) dengan discount rate 11,8%. Hasil evaluasi kelayakan investasi akibat tambahan lingkup pekerjaan menunjukkan bahwa NPV selama masa konsesi (39 tahun) adalah negatif Rp459.150.000.000,00 dan IRR pada NPV = 0 adalah 9,55%, nilai IRR ini lebih kecil dari discount rate yaitu 11,8%. Untuk mengembalikan nilai kelayakan, dilakukan skema kompensasi penambahan masa konsesi menjadi 50 tahun dan penyesuaian tarif tol baru menjadi Rp1.625,00 pada tahun 2021 dan Rp1.980,00 pada tahun 2023. Hasil dari skema kompensasi tersebut menunjukkan bahwa NPV sebesar Rp1.037.727.000.000,00 dan IRR pada NPV = 0 kembali ke nilai 14,84%.Kata kunci: Kelayakan; Kompensasi; Relokasi; Tambah Lingkup

Development Trends of Project Finance in Russia

The article discusses the history of the development and establishment of project finance in Russia, existing approaches to the periodization of its development are described. The starting point for the deve­lopment of project finance is the exploration of Siberia and Alaska. The concession period of the Russian Empire and NEP, methods of attracting foreign capital in the development of telecommunications, railways and oil fields are examined. The similarity of long-term finan­cing of capital investments in the USSR and project financing according to the basic principles is revealed. A parallel with the global experience in the application of project finance in the 20th century is drawn. An overview of the volume and structure of the global project finance market and current Russian trends in the application of the project finance mechanism is provided.

Retro or Renewal: An Assessment of PPP Management and Policy in China Since 2014

Since 2014, public–private partnerships (PPPs) in China have experienced an impulsive new boom with a new PPP policy that has drawn wide attention domestically and internationally. In particular, development characteristics and performance assessments of projects in the new PPP boom are a hot topic. By comparing China’s PPP development in the last several years with that in the past thirty years, we explore its rationale and performance through a critical review using the following approach: first, we identify and analyze its seven new characteristics of investment scale, spatial distribution, investment sectors, operational model, concession period, payment mechanism, and tendering period; second, we diagnose the nature and performance of the new PPP boom; third, we systematically scrutinize the rationale behind the characteristics and the possible mechanism; and last, we conclude with the argument that the new PPP boom could be well managed by the Chinese government if some prerequisites are met. We also raise some key issues inviting more comprehensive comparative studies. This study contributes to the existing literature by providing a project-data-analysis lens to better understand PPP development in China and worldwide. The implementation of this study will not only enrich global PPP knowledge, but will also be a good reference for PPP practice and trends in China and other developing countries.