Proceedings of the 14th Meeting of the
Transport and Communications Working Group
27
Ms. NOVIANINGSIH continued by saying that the increasing demand for infrastructure
development to support Indonesia’s economic growth has led the Government of Indonesia to
provide financial support and a better framework in attracting private investment and
participation of a measurable scale. Within this framework, Indonesia has established the
Indonesia Infrastructure Guarantee Fund (IIGF), as a state-owned enterprise under the Ministry
of Finance which is responsible for providing government guarantees for infrastructure projects
developed under the PPP scheme.
Ms. NOVIANINGSIH highlighted the IIGF’s role in infrastructure project development in terms of
planning, preparation, transaction, and operation of the PPP projects. She also touched upon the
typical rick allocation practices covered by the IIGF. She stressed that risk should be allocated
to the party who has;
 Greater ability to assess the risk,
 Higher capacity to reduce the probability of the occurrence of a risk,
 Better capability to manage the risk and apply to incur lower costs,
 Higher capacity to mitigate the consequences of the risk occurring
With respect to the scope of activities in risk management, Ms. NOVIANINGSIH cited that the
main activities of risk management are; risk identification, risk assessment /evaluation, risk
allocation, and risk mitigation plan. Concerning risk identification, she expressed that project
risk is any event that might occur that could cause project losses and/or project stakeholders.
Every project has project risks, both those that are undertaken by the Government itself or
Cooperated with business entities. The risk identification process is carried out in all aspects:
legal, technical, financial, economic, social-cultural, environmental and political.
With respect to the risk assessment /evaluation activities, she stated that the value or amount
of risk depends on two factors: The frequency or probability or possibility of occurrence of the
risk and the impact or amount of loss if a risk occurs. Assessment can be done in a qualitative or
quantitative way and the results can be plotted into the Risk Impact Matrix being used in
Indonesia.
Regarding the risk allocation practices in her country, Ms. NOVIANINGSIH expressed that the
purpose of risk allocation is to provide incentives for the party (Government or Business Entity)
who is most efficient at managing risk. The result is that project risk costs will fall. Every risk
must be allocated to those who: Have a better ability to control the possibility of risk Have a
better ability to manage the impact of the risk Have the ability to bear the risk with the lowest
risk cost. The result of the risk allocation analysis is the risk allocation matrix. Lastly, she
demonstrated the mitigation and risk management plan used in her country with a concrete
example from a project implemented.