Officials have announced a number of plans to give effect to the government's role in ensuring the availability of financing for essential infrastructure projects, including the setting up of an infrastructure fund management board by mid-year.

"We are currently working on the policy papers for the establishment of a special infrastructure fund management board, as well as a revolving fund to facilitate land acquisition, and hope that these will be completed in June," said the chairman of the National Committee for Accelerated Infrastructure Provision (KKPPI), Suyono Dikun, on Tuesday.

Speaking on the sidelines of a workshop held to discuss issues connected with the planned second national infrastructure summit, Suyono explained that the infrastructure fund management body, which would obtain its investment funds from the domestic capital market and other non-bank financial institutions, would extend funding support to commercially viable projects.

A fiscal assessment of the projects would be conducted by the Ministry of Finance before approval would be granted.

Coordinating Minister for the Economy Boediono said separately that the government planned to encourage more domestic investment in the infrastructure sector, especially by pension funds and the insurance industry.

It is estimated that Indonesia will need Rp 1.3 quadrillion (about US$139 billion) up to 2009 to bring its infrastructure up to some semblance of scratch, of which the government is only capable of providing 17 percent.

It is believed that the country's pension funds alone have the potential to invest some Rp 57 trillion in the infrastructure sector.

Local pension funds and insurance companies manage long-term funds denominated in local currency, which fits in very well with the nature of infrastructure investment, Boediono said.

Aside from the infrastructure fund, the government would also establish a guarantee fund, which would be closely supervised by the Finance Ministry.

A guarantee fund is a government deposit fund that is used to cover losses arising in cases where investors experience lower-than-expected returns due to policy, political or social changes.

Finance Minister Sri Mulyani Indrawati said that the size of the guarantees afforded to investors would depend on an assessment of individual projects by her ministry.

"They will be treated on a case-by-case basis, and not all projects will be guaranteed. We will also see what the maximum levels of guarantee are that we can afford," she said, adding that the necessary funds could be derived from the state budget or bonds.

She explained that the government would most likely guarantee projects that were of exceptional social or economical importance.

"For example, if we have to keep the charges to the public lower than would be commercially feasible, the government will use the guarantee fund to subsidize these charges," she said.

Besides the two new funds, the government would also set up a body to manage a revolving fund to facilitate land acquisition.

The new body, in the form of either an independent body or one under the auspices of the National Land Agency, would provide funding to ensure that the land needed for essential projects could be immediately acquired.

The government plans to set aside Rp 600 billion as initial capital for the revolving fund, KKPPI chairman Suyono Dikun said.

It is hoped that final version of the new infrastructure policy package will include a government commitment to reducing the risks and costs of turnpike construction by ensuring the availability of land.