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Decoding Changes in the PPP Regulatory Regime.pdf

Recently, the Minister of National Development Planning revoked the longstanding Minister of National Development Planning Regulation Number 4 of 2015 on the Mechanism for the Implementation of PPP Scheme for Infrastructure Procurement, as amended by Minister of National Development Planning Regulation Number 2 of 2020. This change stems from the issuance of Minister of National Development Planning Regulation Number 7 of 2023 on the Mechanism for the Implementation of PPP Scheme. Notable changes include: (i) an amendment to the scope of infrastructure that could be procured through PPP; (ii) simplification of PPP stages; (iii) introduction of requirements for the conversion of PPP initiatives; (iv) simplification of the institutional aspect of PPP; and (v) the introduction of a small-scale PPP scheme

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Legal Brief
Decoding Changes in the PPP Regulatory Regime:
Analyzing Minister of National Development
Planning Regulation Number 7 of 2023
BACKGROUND AND GENERAL DIRECTION
Recently, the Minister of National Development Planning revoked the longstanding Minister of National Development Planning
Regulation Number 4 of 2015 on the Mechanism for the Implementation of Public-Private Partnership (“PPP”) Scheme for
Infrastructure Procurement as amended by Minister of National Development Planning Regulation Number 2 of 2020 (“MoNDP Reg. 4/2015”).
This change stems from the issuance of Minister of National Development Planning Regulation Number 7 of 2023 on the Mechanism for the
Implementation of PPP Scheme (“MoNDP Reg. 7/2023”)
General Direction of PPP Regulatory Regime under MoNDP Reg. No.
7/2023
Background of the Issuance of MonDP Reg. 7/2023
Sociological Background
MoNDP, Socialization of MoNDP Reg. 7/2023, pg. 3
❖ The role of private participation through PPP schemes in
encouraging infrastructure development
❖ Encourage optimization of the use of PPP Schemes for the
wider society
Philosophical Background
❖ Efforts to optimize funding utilization in accordance with the
mandate of the 2020-2024 National Medium-Term
Development Plan
❖ In line with the presidential directives to achieve Indonesia’s
goals
Legal Reasoning
❖ Provide certainty of the PPP process
❖ Improvement of regulations aimed at simplification of the PPP
process
Simplification of PPP Procedure
Solicited PPP
Procedure
Unsolicited PPP
Procedure
Institutional
Aspect of PPP
Introducing New Regulatory Regime for Infrastructure
Procurement via PPP
New Institutions General Changes
❖ Involvement of Probity Advisor
❖ Preparatory Body Panel
❖ Small-scale PPP
❖ Addition to infrastructure categories
which could be procured through PPP
scheme
Time
Limitations on the time period
for financial close period
extension
Implementing Business
Entity (“IBE”) Procurement
Introducing the conditions for the
utilization of existing entities as IBE
PPP Agreement
Terms and conditions for the
amendment of the PPP
Agreement
PPP Initiative
Introducing the terms for converting: (i)
an unsolicited PPP project into a solicited
PPP project; and (ii) a solicited PPP
project into an unsolicited PPP project.
MoNDP, Socialization of MoNDP Reg. 7/2023, pg. 5
PPP Regulations
PPP Regulations for the New Capital City
Indonesia’s PPP Regulatory Regime Post-MoNDP Reg. 7/2023: Selected Regulations
Presidential Regulation Number 38 of 2015 on Public-
Private Partnership in Infrastructure Provisions
Presidential Regulation Number 78 of 2010
on Infrastructure Guarantee in PPP through Infrastructure Guarantee
Business Entities
MoNDP Reg. 7/2023
National Public Procurement Agency Regulation Number 29 of
2018 on the Mechanism for the Procurement of Implementing
Business Entity for Infrastructure Procurement through Solicited PPP
Law Number 3 of 2022 on the Nusantara Capital City
Government Regulation Number 17 of 2022 on the Funding and Budget
Management in the Framework of Preparation, Development, and
Relocation of the Capital City and Implementation of the Regional
Government of Special Capital Region of Nusantara
Minister of National Development Planning Regulation Number 6 of 2022
on the Procedure for PPP in Nusantara Capital City
National Public Procurement Agency Regulation Number 1 of 2023 on
the Procedure of Business Entity Procurement through PPP in Nusantara
Capital City
A H R P L e g a l B r i e f
Education, Research, and
Development Facilities
Social Facilities
AMENDMENT TO THE SCOPE OF INFRASTRUCTURE ELIGIBLE TO BE
PROCURED THROUGH THE PPP SCHEME
Sports, Arts, and
Culture Facilities
Penal Facilities
Medical Facilities
Tourism
Areas and Districts
Urban Facility Economy
Urban Facilities
Industrial Ecosystem
Drinking Water
Water and Irrigation System
Civil Housing
Local Wastewater System
Centralized Wastewater System
Waste and Hazardous Waste
Treatment System
Electric Vehicle (EV)
Infrastructure
Connectivity
Electricity Infrastructure
Road Infrastructure
Oil & Gas and
Renewable Energy
Telecommunication
and Information
Energy Conservation
Infrastructure
Transportation
▪ Crossing facilities and/or infrastructure;
▪ Railway maintenance facilities and location;
▪ Maritime shipping routes; and
▪ Motor vehicle facilities and/or infrastructure.
▪ Residential areas;
▪ Central business districts; and/or
▪ Warehousing and/or logistic
areas.
▪ Tourist attractions;
▪ Infrastructure supporting tourist
attractions;
▪ Nature reserves;
▪ Wildlife sanctuaries;
▪ National parks;
▪ Natural recreational parks;
▪ Agro-tourism; and/or
▪ Forest parks.
▪ Waste sorting;
▪ Waste collection;
▪ Hazardous waste utilization; and
▪ Hazardous waste disposal.
Water resources infrastructure area.
Simple rental apartments, which
includes:
▪ Limited ownership apartment
buildings; and/or
▪ Public apartment buildings with mixed
functions.
Safety and security infrastructure
Cultural facilities such as:
▪ Cultural heritage sites;
▪ Cultural heritage site locations;
▪ Cultural heritage areas;
▪ Museums;
▪ Galleries; and/or
▪ Cultural parks.
▪ Industrial areas;
▪ Small and medium industry centers;
▪ Testing and development laboratories;
▪ Packaging service units; and/or
▪ Industrial workforce training units.
22 Infrastructure Categories
In accordance with Art. 3 MoNDP Reg. 7/2023, there are modifications and/or additions to the
types of infrastructure which may be collaborated on by the Government of Indonesia with
business entities through the PPP scheme. This applies to both economic and social
infrastructure sectors.
Government Buildings
Existing infrastructure with expanded collaborative scope
of infrastructure.
New categories of infrastructure regulated under MoNDP
Reg. 7/2023.
Highlights:
A H R P L e g a l B r i e f
SIMPLIFICATION OF PROCESSES & CONVERSION OF INITIATIVE
Solicited PPP Scheme
Project
Identification
Preliminary
Studies
Planning Preparation
Market
Sounding
Pre-Feasibility
Studies
Transaction
PQ
Request for
Proposal
Bid Award
Signing of
Agreement
Financial
Close
Management
Construction
Operation
Transfer of
Assets
End of PPP
Period
Things to Note
Previously, it comprises of 5 (five) studies:
1. Needs Analysis;
2. Compliance Criteria;
3. Value for Money;
4. Potential Revenue Analysis; and
5. Recommendations and follow-up plans.
Appendix of MoNDP Reg. No.
4/2015
Project Identification
Previously, it comprises of 8 (eight)
studies:
1. Legal and Institutional;
2. Technical;
3. Economic and Commercial;
4. Environmental and Social;
5. Form of PPP;
6. Government Support and Guarantees;
7. Risk; and
8. Outstanding Issues.
Pre-Feasibility Studies
Appendix of MoNDP Reg. No.
4/2015
Now, it comprises of 2
(two) studies:
1. Strategy; and
2. Infrastructure
Preparation Initiative.
Now, it comprises of
5 (five) studies:
1. Strategy;
2. Economics;
3. Commercial;
4. Financial; and
5. Management.
LOI and Supporting
Documents
Evaluation
Preparation
Submission of FS
and Supporting
Docs
FS Evaluation
Transaction
PQ
Request for
Proposal
Bid Award
Signing of
Agreement
Financial
Close
Management
Construction
Operation
Transfer of
Assets
End of PPP
Period
Issuance of Letter
of Approval
Things to Note
At the beginning of the
unsolicited process, it is not
necessary to prepare a pre-
feasibility study.
However, it is necessary to
submit the LOI accompanied
by supporting documents.
After the approval, the initiating
business entity must submit a
feasibility study
Unsolicited PPP Scheme
❖ MoNDP Reg. 7/2023 becomes the first PPP regulation to allow the conversion of: (i) solicited PPP into unsolicited PPP;
or (ii) unsolicited PPP into solicited PPP.
❖ The conversion of solicited PPP into unsolicited PPP may be conducted during the planning, preparation, and
transaction stage, while the conversion from unsolicited PPP into solicited PPP may be conducted during the
preparation and transaction stage.
Conversion of
Project Initiative
Art. 86 jo. 87 MoNDP Reg. 7/2023
A H R P L e g a l B r i e f
Appendix I of MoNDP Reg. No.
7/2023
Appendix I of MoNDP Reg. No.
7/2023
Appendix I of MoNDP Reg. No. 7/2023
SIMPLIFICATION OF THE PPP ORGANIZATIONAL STRUCTURE
Appointing existing work
units/organizations
Establishing new work
units/organizations
The Leader of Legal Entity State
Universities and Public Broadcasting
Institution
Government Contracting Agency (“GCA”)
PPP Node
Preparatory Body Panel
Business Entities Consultant
Individual Consultant
Academics
Government’s Internal
Oversight Apparatus
Government’s Internal Audit
Institution
Working Group
(Kelompok Kerja)
Procurement Committee
Supporting Monitoring
Forming
Coordination
Minister
Head of Institution
Regional Head
Board of Directors of
State-Owned Enterprises
1. Responsible for providing recommendations
to the GCA regarding the compliance of the
PPP project process from the procurement of
the IBE to the financial close stage. If needed,
the Probity Advisor can be involved in the
initial stages of PPP project preparation.
2. Can be sourced from business entities,
individuals, and/or the Government’s Internal
Oversight Apparatus.
Duties and Responsibilities of Probity Advisor
Art. 15 (2) MoNDP Reg. 7/2023.
The depiction of the institutional facets of the PPP scheme, as outlined in accordance with MoNDP Reg. 7/2023, is as follows:
Preparatory Body Panel
Probity Advisor
Can be engaged by the GCA in the PPP
preparation stage to assist in:
a. Drafting the IBE procurement documents;
b. Drafting the PPP Agreement;
c. Market sounding; and/or
d. Other activities related to the procurement of
IBE and the financial close fulfilment which
conducted in the preparation stage.
Preparation Stage
Section B (9) (b) Appendix 1 of MoNDP Reg. 7/2023.
Sourced from the state
budget, regional government
budget, and/or other
legitimate sources.
Funding Allocation for
Probity Advisor
Art. 15 (5) MoNDP Reg. 7/2023.
Can be engaged by the GCA
in the PPP transaction stage
to assist in:
a. Appointing the IBE;
b. Signing the PPP
Agreement; and
c. Financial close.
Transaction Stage
Section C (9) (b) Appendix 1 of MoNDP
Reg. 7/2023.
Preparatory Body Panel of IBE
Its establishment will be governed by the regulations of the
National Public Procurement Agency, currently undergoing
drafting.
Active
The establishment of Preparatory Body Panel is conducted by the
MoNDP based on the following criterion:
• Competency, intensity, and adequate capacity to work on PPP
projects;
• Experience in working on and/or supporting projects within a
similar sector;
• Offering the best risk management to the GCA; and/or
• Any other criteria as established by the Minister of National
Development and Planning.
Art. 19 (3) MoNDP Reg. 7/2023.
Preparatory Body Panel of Institution/Agency/
International Organization
Its establishment is regulated in Art. 19 (1) MoNDP Reg. 7/2023.
Passive
A H R P L e g a l B r i e f
Financing
Designing
Construction of
Facility Buildings
Operation
Development
Revitalization
Maintenance
Infrastructure Asset
Handover
Asset Management
Handover
Art. 24 (1) MoNDP Reg. 7/2023.
PPP STRUCTURE
Things to Note
The GCA, when determining the PPP
project structure, shall consider project
needs throughout the entire project
lifecycle and ensure appropriate risk
allocation.
For Solicited PPPs, the PPP structure is
determined during the Pre-Feasibility
Study preparation.
For Unsolicited PPPs, the PPP structure is
determined during the Feasibility Study
preparation.
Art. 24 (3) MoNDP Reg. 7/2023.
Art. 24 (2) MoNDP Reg. 7/2023.
A H R P L e g a l B r i e f
Ad

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Decoding Changes in the PPP Regulatory Regime.pdf

  • 1. Legal Brief Decoding Changes in the PPP Regulatory Regime: Analyzing Minister of National Development Planning Regulation Number 7 of 2023
  • 2. BACKGROUND AND GENERAL DIRECTION Recently, the Minister of National Development Planning revoked the longstanding Minister of National Development Planning Regulation Number 4 of 2015 on the Mechanism for the Implementation of Public-Private Partnership (“PPP”) Scheme for Infrastructure Procurement as amended by Minister of National Development Planning Regulation Number 2 of 2020 (“MoNDP Reg. 4/2015”). This change stems from the issuance of Minister of National Development Planning Regulation Number 7 of 2023 on the Mechanism for the Implementation of PPP Scheme (“MoNDP Reg. 7/2023”) General Direction of PPP Regulatory Regime under MoNDP Reg. No. 7/2023 Background of the Issuance of MonDP Reg. 7/2023 Sociological Background MoNDP, Socialization of MoNDP Reg. 7/2023, pg. 3 ❖ The role of private participation through PPP schemes in encouraging infrastructure development ❖ Encourage optimization of the use of PPP Schemes for the wider society Philosophical Background ❖ Efforts to optimize funding utilization in accordance with the mandate of the 2020-2024 National Medium-Term Development Plan ❖ In line with the presidential directives to achieve Indonesia’s goals Legal Reasoning ❖ Provide certainty of the PPP process ❖ Improvement of regulations aimed at simplification of the PPP process Simplification of PPP Procedure Solicited PPP Procedure Unsolicited PPP Procedure Institutional Aspect of PPP Introducing New Regulatory Regime for Infrastructure Procurement via PPP New Institutions General Changes ❖ Involvement of Probity Advisor ❖ Preparatory Body Panel ❖ Small-scale PPP ❖ Addition to infrastructure categories which could be procured through PPP scheme Time Limitations on the time period for financial close period extension Implementing Business Entity (“IBE”) Procurement Introducing the conditions for the utilization of existing entities as IBE PPP Agreement Terms and conditions for the amendment of the PPP Agreement PPP Initiative Introducing the terms for converting: (i) an unsolicited PPP project into a solicited PPP project; and (ii) a solicited PPP project into an unsolicited PPP project. MoNDP, Socialization of MoNDP Reg. 7/2023, pg. 5 PPP Regulations PPP Regulations for the New Capital City Indonesia’s PPP Regulatory Regime Post-MoNDP Reg. 7/2023: Selected Regulations Presidential Regulation Number 38 of 2015 on Public- Private Partnership in Infrastructure Provisions Presidential Regulation Number 78 of 2010 on Infrastructure Guarantee in PPP through Infrastructure Guarantee Business Entities MoNDP Reg. 7/2023 National Public Procurement Agency Regulation Number 29 of 2018 on the Mechanism for the Procurement of Implementing Business Entity for Infrastructure Procurement through Solicited PPP Law Number 3 of 2022 on the Nusantara Capital City Government Regulation Number 17 of 2022 on the Funding and Budget Management in the Framework of Preparation, Development, and Relocation of the Capital City and Implementation of the Regional Government of Special Capital Region of Nusantara Minister of National Development Planning Regulation Number 6 of 2022 on the Procedure for PPP in Nusantara Capital City National Public Procurement Agency Regulation Number 1 of 2023 on the Procedure of Business Entity Procurement through PPP in Nusantara Capital City A H R P L e g a l B r i e f
  • 3. Education, Research, and Development Facilities Social Facilities AMENDMENT TO THE SCOPE OF INFRASTRUCTURE ELIGIBLE TO BE PROCURED THROUGH THE PPP SCHEME Sports, Arts, and Culture Facilities Penal Facilities Medical Facilities Tourism Areas and Districts Urban Facility Economy Urban Facilities Industrial Ecosystem Drinking Water Water and Irrigation System Civil Housing Local Wastewater System Centralized Wastewater System Waste and Hazardous Waste Treatment System Electric Vehicle (EV) Infrastructure Connectivity Electricity Infrastructure Road Infrastructure Oil & Gas and Renewable Energy Telecommunication and Information Energy Conservation Infrastructure Transportation ▪ Crossing facilities and/or infrastructure; ▪ Railway maintenance facilities and location; ▪ Maritime shipping routes; and ▪ Motor vehicle facilities and/or infrastructure. ▪ Residential areas; ▪ Central business districts; and/or ▪ Warehousing and/or logistic areas. ▪ Tourist attractions; ▪ Infrastructure supporting tourist attractions; ▪ Nature reserves; ▪ Wildlife sanctuaries; ▪ National parks; ▪ Natural recreational parks; ▪ Agro-tourism; and/or ▪ Forest parks. ▪ Waste sorting; ▪ Waste collection; ▪ Hazardous waste utilization; and ▪ Hazardous waste disposal. Water resources infrastructure area. Simple rental apartments, which includes: ▪ Limited ownership apartment buildings; and/or ▪ Public apartment buildings with mixed functions. Safety and security infrastructure Cultural facilities such as: ▪ Cultural heritage sites; ▪ Cultural heritage site locations; ▪ Cultural heritage areas; ▪ Museums; ▪ Galleries; and/or ▪ Cultural parks. ▪ Industrial areas; ▪ Small and medium industry centers; ▪ Testing and development laboratories; ▪ Packaging service units; and/or ▪ Industrial workforce training units. 22 Infrastructure Categories In accordance with Art. 3 MoNDP Reg. 7/2023, there are modifications and/or additions to the types of infrastructure which may be collaborated on by the Government of Indonesia with business entities through the PPP scheme. This applies to both economic and social infrastructure sectors. Government Buildings Existing infrastructure with expanded collaborative scope of infrastructure. New categories of infrastructure regulated under MoNDP Reg. 7/2023. Highlights: A H R P L e g a l B r i e f
  • 4. SIMPLIFICATION OF PROCESSES & CONVERSION OF INITIATIVE Solicited PPP Scheme Project Identification Preliminary Studies Planning Preparation Market Sounding Pre-Feasibility Studies Transaction PQ Request for Proposal Bid Award Signing of Agreement Financial Close Management Construction Operation Transfer of Assets End of PPP Period Things to Note Previously, it comprises of 5 (five) studies: 1. Needs Analysis; 2. Compliance Criteria; 3. Value for Money; 4. Potential Revenue Analysis; and 5. Recommendations and follow-up plans. Appendix of MoNDP Reg. No. 4/2015 Project Identification Previously, it comprises of 8 (eight) studies: 1. Legal and Institutional; 2. Technical; 3. Economic and Commercial; 4. Environmental and Social; 5. Form of PPP; 6. Government Support and Guarantees; 7. Risk; and 8. Outstanding Issues. Pre-Feasibility Studies Appendix of MoNDP Reg. No. 4/2015 Now, it comprises of 2 (two) studies: 1. Strategy; and 2. Infrastructure Preparation Initiative. Now, it comprises of 5 (five) studies: 1. Strategy; 2. Economics; 3. Commercial; 4. Financial; and 5. Management. LOI and Supporting Documents Evaluation Preparation Submission of FS and Supporting Docs FS Evaluation Transaction PQ Request for Proposal Bid Award Signing of Agreement Financial Close Management Construction Operation Transfer of Assets End of PPP Period Issuance of Letter of Approval Things to Note At the beginning of the unsolicited process, it is not necessary to prepare a pre- feasibility study. However, it is necessary to submit the LOI accompanied by supporting documents. After the approval, the initiating business entity must submit a feasibility study Unsolicited PPP Scheme ❖ MoNDP Reg. 7/2023 becomes the first PPP regulation to allow the conversion of: (i) solicited PPP into unsolicited PPP; or (ii) unsolicited PPP into solicited PPP. ❖ The conversion of solicited PPP into unsolicited PPP may be conducted during the planning, preparation, and transaction stage, while the conversion from unsolicited PPP into solicited PPP may be conducted during the preparation and transaction stage. Conversion of Project Initiative Art. 86 jo. 87 MoNDP Reg. 7/2023 A H R P L e g a l B r i e f Appendix I of MoNDP Reg. No. 7/2023 Appendix I of MoNDP Reg. No. 7/2023 Appendix I of MoNDP Reg. No. 7/2023
  • 5. SIMPLIFICATION OF THE PPP ORGANIZATIONAL STRUCTURE Appointing existing work units/organizations Establishing new work units/organizations The Leader of Legal Entity State Universities and Public Broadcasting Institution Government Contracting Agency (“GCA”) PPP Node Preparatory Body Panel Business Entities Consultant Individual Consultant Academics Government’s Internal Oversight Apparatus Government’s Internal Audit Institution Working Group (Kelompok Kerja) Procurement Committee Supporting Monitoring Forming Coordination Minister Head of Institution Regional Head Board of Directors of State-Owned Enterprises 1. Responsible for providing recommendations to the GCA regarding the compliance of the PPP project process from the procurement of the IBE to the financial close stage. If needed, the Probity Advisor can be involved in the initial stages of PPP project preparation. 2. Can be sourced from business entities, individuals, and/or the Government’s Internal Oversight Apparatus. Duties and Responsibilities of Probity Advisor Art. 15 (2) MoNDP Reg. 7/2023. The depiction of the institutional facets of the PPP scheme, as outlined in accordance with MoNDP Reg. 7/2023, is as follows: Preparatory Body Panel Probity Advisor Can be engaged by the GCA in the PPP preparation stage to assist in: a. Drafting the IBE procurement documents; b. Drafting the PPP Agreement; c. Market sounding; and/or d. Other activities related to the procurement of IBE and the financial close fulfilment which conducted in the preparation stage. Preparation Stage Section B (9) (b) Appendix 1 of MoNDP Reg. 7/2023. Sourced from the state budget, regional government budget, and/or other legitimate sources. Funding Allocation for Probity Advisor Art. 15 (5) MoNDP Reg. 7/2023. Can be engaged by the GCA in the PPP transaction stage to assist in: a. Appointing the IBE; b. Signing the PPP Agreement; and c. Financial close. Transaction Stage Section C (9) (b) Appendix 1 of MoNDP Reg. 7/2023. Preparatory Body Panel of IBE Its establishment will be governed by the regulations of the National Public Procurement Agency, currently undergoing drafting. Active The establishment of Preparatory Body Panel is conducted by the MoNDP based on the following criterion: • Competency, intensity, and adequate capacity to work on PPP projects; • Experience in working on and/or supporting projects within a similar sector; • Offering the best risk management to the GCA; and/or • Any other criteria as established by the Minister of National Development and Planning. Art. 19 (3) MoNDP Reg. 7/2023. Preparatory Body Panel of Institution/Agency/ International Organization Its establishment is regulated in Art. 19 (1) MoNDP Reg. 7/2023. Passive A H R P L e g a l B r i e f
  • 6. Financing Designing Construction of Facility Buildings Operation Development Revitalization Maintenance Infrastructure Asset Handover Asset Management Handover Art. 24 (1) MoNDP Reg. 7/2023. PPP STRUCTURE Things to Note The GCA, when determining the PPP project structure, shall consider project needs throughout the entire project lifecycle and ensure appropriate risk allocation. For Solicited PPPs, the PPP structure is determined during the Pre-Feasibility Study preparation. For Unsolicited PPPs, the PPP structure is determined during the Feasibility Study preparation. Art. 24 (3) MoNDP Reg. 7/2023. Art. 24 (2) MoNDP Reg. 7/2023. A H R P L e g a l B r i e f
  • 7. GCA AUTHORITY A H R P L e g a l B r i e f The granting of power does not diminish the responsibility of the minister/head of institution/head of region as the GCA. Granting of Power (Pelimpahan Kewenangan) Minister or Head of Institutions The minister/head of institutions as the GCA may grant their power to the chief of the relevant organizational unit within the ministry/institution in accordance with the provisions of laws and regulations. a. The granting of power may not include the authority to sign recourse agreements. b. The granting of power is determined by the minister/head of the institution. Head of Region The regional head, acting as the GCA, may grant power to the regional secretary or the head of the regional apparatus whose scope, duties, and responsibilities encompass the infrastructure sector in accordance with the provisions of laws and regulations a. The power granted may not include signing PPP Agreements, recourse agreements, and/or other agreements that fall under the responsibility of the regional head in the implementation of PPP projects. b. The granting of power is determined by the regional head. Art. 5 MoNDP Reg. 7/2023 Art. 6 MoNDP Reg. 7/2023 Art. 7 MoNDP Reg. 7/2023 Delegation of Power (Pendelegasian Kewenangan) Minister The Minister of Education, Culture, Research, and Technology or the Minister of Religious Affairs may delegate their authority to Leadership of Legal Entity State Universities. Art. 8 (1) MoNDP Reg. 7/2023 The Minister of Communication and Informatics may delegate their authority to Leadership of Public Broadcasting Institution. Art. 8 (2) MoNDP Reg. 7/2023 The delegation involves the transfer of responsibilities Art. 8 (3) MoNDP Reg. 7/2023
  • 8. INTRODUCTION SMALL-SCALE PPP Small-scale PPPs refer to projects that yield economic advantages for the community and have a relatively straightforward structure or scope. Prioritization for Projects Utilizing User Charge Preferential consideration is given to small-scale PPPs when the projects rely on investment returns generated through user charge models. Simplification of Processes a. Simpler study documents; b. Ability to establish the IBE or use an existing LLC that existed before the procurement of the IBE for the PPP; c. For Local Governments, the collaboration period is limited to a maximum of 10 years. Art. 85 (1) MoNDP Reg. 7/2023. Return on Investment a. Project with simple structures/scopes; b. Planned technical solutions involve the utilization of proven or previously employed technology in comparable projects.; c. Preferably do not require the Viability Gap Fund, proven by the fiscal capability of the GCA to execute the project. Art. 85 (1) MoNDP Reg. 7/2023. Art. 85 (2) MoNDP Reg. 7/2023. IBE Procurement The IBE procurement for small-scale PPPs can be done through: 1. The tender process may occur through: (i) single-stage tendering, (ii) a combination of pre-qualification (PQ) and single-stage tendering; or 2. Direct appointment. Art. 85 (6) MoNDP Reg. 7/2023. Preliminary Studies Under Preparation Planning Preparation Market Sounding Pre-Feasibility Studies Transaction IBE Procurement Bid Award Signing of Agreement Financial Close Management Construction Operation Transfer of Assets End of PPP Period PPP BOOK PPP BOOK Ready to Offer Construction and Land Acquisition In the preparation of the Preliminary Study, there will be an assessment of the potential for small- scale PPP projects. Overview on Small-Scale PPP Small-Scale PPP Scheme It is advisable to opt for either a single-stage tendering process or a combination of Prequalification and Request for Proposal. Things to Note Strategic: 1. Policy review and strategic sector plans; 2. Institutional aspects review. Preliminary Studies Infrastructure Provision Initiatives: 1. Determining infrastructure provision needs; 2. Initial project plan review. Strategic: Compliance on (i) sector plans regulatory and (ii) legislative aspect review; Pre-Feasibility Studies Economic: Quantitative Value for Money assessment. Commercial: Land procurement planning and environmental analysis and IBE investment return. Financial: Project financial feasibility analysis. Management: Project structure, implementation schedule plan from preparation to monitoring and evaluation. A H R P L e g a l B r i e f
  • 9. TRANSITIONAL PROVISION A H R P L e g a l B r i e f Transitional provisions for the applicability of the MoNDP Reg. 7/2023 are as follows: If a GCA has been involved in a stage of a PPP project before the enforcement of MoNDP Reg. 7/2023, it should proceed with that stage following the guidelines of MoNDP Reg. 4/2015. Nevertheless, if situations arise that necessitate the application of MoNDP Reg. 7/2023, they should be addressed in accordance with the provisions of MoNDP Reg. 7/2023. After the stage is completed, MoNDP Reg. 7/2023 shall apply towards the subsequent stages of the project. Art. 93 MoNDP Reg. 7/2023 Planning Preparation Transaction Management Issuance of MoNDP Reg. 7/2023 MoNDP Reg. 4/2015 applies MoNDP Reg. 7/2023 applies As an illustration, if a GCA had been carrying out the preparation stage of PPP at the time MoNDP Reg. 7/2023 was issued, the GCA shall carry out the preparation stage in accordance with MoNDP Reg. 4/2015. However, for subsequent stages of the project, it shall comply with MoNDP Reg. 7/2023. Illustration of the Transition:
  • 10. We will continue to follow the developments on this topic and provide additional information as it becomes available. If you have any questions on this topic, please contact: Yohanes Partogi Napitupulu partogi@ahrplaw.com Thea Mutiara Khalifa thea@ahrplaw.com This publication has been prepared by AHRP for educational and informational purposes only. The information contained in this publication is not intended and should not be construed as legal advice. Due to the rapidly changing nature of law, AHRP makes no warranty or guarantee concerning the accuracy or completeness of this content. You should consult with an attorney to review the current status of the law and how it applies to your circumstances before deciding to take any action. World Capital Tower 19th floor Jl. Mega Kuningan Barat No.3, Kuningan Jakarta 12950 Indonesia P: +6221 50917915 +6221 50917916 E: office@ahrplaw.com www.ahrplaw.com Cut Hasri Nabila nabila@ahrplaw.com