Summary of Proposed Investment
Project Number
24598
Company Name
Structured Student Financing Risk Sharing Facility
Date SPI Disclosed
Jun 28, 2006
Country
Indonesia
Industry
Health, Education and Life Sciences
Projected Board Date
Jul 28, 2006
Status
Completed
Sector
Colleges, Universities, and Professional Schools
Date Revised SPI Disclosed
Jun 29, 2006
Department
Regional Industry - MAS Asia & Pac
Environmental Category
C - No Impact
Previous Events
Approved : Sep 14, 2006
Signed : Sep 15, 2006
Project Description
The proposed project is a risk-sharing facility in Indonesia between Sampoerna Foundation, Bank Internasional Indonesia (BII), and IFC that will extend loans to parents and students who have difficulty affording tuition and/or University entrance fees. The project will be the first private student loan financing facility in Indonesia and the first facility in the world using a risk sharing mechanism to leverage contributions from an education foundation into a portfolio of student loans. The total amount of student loans disbursed could reach approximately $20 million, with IFC’s total risk up to $10 million. Sampoerna, to the extent permitted by the prevailing law, will be providing funds to cover set up costs and the first losses on the portfolio of loans. The remaining losses will be shared equally between IFC and BII. BII will also administer and fund the portfolio. Loans will be available for all educational purposes, but initially will target undergraduate and graduate university students.
The project will make a contribution towards expanding access to tertiary education for low-income students. According to World Bank data, the higher education enrollment rate in Indonesia is only 16.4%, compared with 29.3% in Malaysia and 30% in the Philippines. The country’s comparatively low enrollment is due in part to the financial difficulty that many students have in paying tuition for tertiary education. Entrance fees and up-front costs are significant in Indonesia (sometimes more than 1.5 times annual tuition for undergraduates). In addition, access to credit is constrained in Indonesia, and consumer loans are prohibitively expensive for most families. In contrast, the Facility will price loans to students and parents at an attractive rate. By leveraging Sampoerna’s funds, the Facility will help economically disadvantaged students to attend university.
The project will make a contribution towards expanding access to tertiary education for low-income students. According to World Bank data, the higher education enrollment rate in Indonesia is only 16.4%, compared with 29.3% in Malaysia and 30% in the Philippines. The country’s comparatively low enrollment is due in part to the financial difficulty that many students have in paying tuition for tertiary education. Entrance fees and up-front costs are significant in Indonesia (sometimes more than 1.5 times annual tuition for undergraduates). In addition, access to credit is constrained in Indonesia, and consumer loans are prohibitively expensive for most families. In contrast, the Facility will price loans to students and parents at an attractive rate. By leveraging Sampoerna’s funds, the Facility will help economically disadvantaged students to attend university.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
Stefanus Aryawan
Sampoerna Foundation
Sampoerna Strategic Square Tower B, 3rd Floor Jl. Jend. Sudirman Kav. 45 Jakarta 12930 Phone. (+62 21) 577 2340 Fax (+62 21) 577 2341
Sampoerna Foundation
Sampoerna Strategic Square Tower B, 3rd Floor Jl. Jend. Sudirman Kav. 45 Jakarta 12930 Phone. (+62 21) 577 2340 Fax (+62 21) 577 2341
For Inquiries and Comments About IFC, Contact
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster