Hybrid model of deep discount project bonds and land leases for new toll road projects in Indonesia

This paper proposes a new toll road financing model, which is a hybrid model of deep discount project bonds (DDPBs) and land leases for new toll road projects in Indonesia. We used a qualitative method to build the model based on existing literature. This concept was then utilized to conduct in-depth interviews with experts. Subsequently, the model was validated with a focus group discussion. The study revealed significant findings; for instance, the parent company does not need to create a new entity for carrying out such projects. It is sufficient to issue DDPBs; thus, it does not result in expenditures toward creating a consortium, which requires a significant amount of time. Furthermore, the government can add to its revenue by renting land along the toll road and thus reduce the burden of land acquisition costs from state budget allocation limits. This DDPB and land lease hybrid financing model can be used as a public-private partnership concept in funding a new toll road, wherein the privately-owned party uses a DDPB model to fund construction, and simultaneously, the government uses a land lease model to fund land acquisition. Thus, this hybrid financing model has great potential to reduce financial gaps.