COLLECTIVE INVESTMENT CONTRACT AS AN ALTERNATIVE SOURCE OF INFRASTRUCTURE FINANCING A CASE STUDY OF AIRPORT DEVELOPMENT USING SYSTEM DYNAMIC MODELLING

• Main Author: Adi Shakti, Yegar
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/40494
• Institution: Institut Teknologi Bandung

According to the presidential regulation Perpres No. 58/2017, government of Indonesia is carrying out 248 National Strategic Projects in 17 sectors range from road, railways, ports, airports, energy sectors to electricity and aircraft industry programs until the end of the year 2019. Furthermore, these sectors and programs are believed to be responsible in contributing regional growth and national competitiveness. To finance these projects through the year 2015-2019, government of Indonesia expects sources of fund from various business model that able to raise fund as much as Rp4.796 trillion in total. Nevertheless, the National and Regional Budget combined can only cover 41,25% of the total investment, or equal to Rp1.978,3 trillion, and the remaining investment gap, 58,75%, is expected to be filled by private sectors and state-owned companies. Rapid obsolescence of the airport’s terminals and runways capacity caused by higher demand of air travelling become paradoxical of gaining and securing potential profit as promising investment portfolio in aviation industry. That being said, the research poses three problem statements as follows: 1/ what is the dynamic behavior over time of the airport business operation, so that it can explain common interactions of variables in order to explain the obsolescence of airport capacity? 2/ how securitization or collective investment contract can be the alternative source of fund, and how it differs from conventional project financing in affecting the dynamic of the system? 3/ how is the implementation of the dynamic system complete model in a certain airport development project? Main objective of the research is to understand and to find ready-to-use model of the system dynamic of the airport business operation in order to observe the behavior of alternative financial leverage, such as securitization, for long-term investment in infrastructure industry. It also aims to examine how securitization financing model behave over time compared to conventional debt financing based on its complete model of system dynamics. To achieve its objective and answer the problem statements systematically, the research uses System Dynamics modelling as the main approach since the behavior over time of the system observed will be the key finding in the modelling. Thus, theoretical framework used to strengthen variables in the dynamic system include: 1/ Firm’s performance analysis using accounting profitability and strategic management concept framework, 2/ Business dynamic system thinking using computer software in simulation process, and 3/ Benchmark on existing products on Collective Investment Contract in the market. Further, data collection will be derived from direct observation on airport business operation and secondary sources including published prospectus, financial reports, and other corporate communication channels. The research concludes three findings, as follows: 1/ the behavior over time of the dynamic system in airport operation is S-shape Growth model where its capacity always limits the growth of the traffic served. In this case, improvement rate of the carrying capacity is becoming the most important variable in keeping the dynamic system sustained; 2/ as both financing schemes are simulated in the dynamic system on the baseline ROIC at 6%-7%, it results that the ROIC can be managed at above the baseline dynamic system in the securitization financing scheme as it affects positively on NOPAT. Meanwhile, ROIC in the debt financing scheme started from below the baseline as its positive feedback on Invested Capital. Nevertheless, both financing scheme resulting growing ROIC over time as capacity and sales are increasing; and 3/ the product of securitization financing must be composed of reliable source of revenue, and that being said, the account of Passenger Handling Service (PJP2U) can support the portfolio stronger. In this case, suitable scheme of transaction structure in raising Rp1,0 trillion free cash is that the company need to provide allocation of future revenue as much as 130.75% of the fund needed to set moderate risk of investment which is offered to market at 9.75% p.a fix yield to senior tranche, and approximately 8.85% p.a fix-flat rate to junior tranche with 20% amortization principal payments during the period of financing as long as 5 fiscal years.