Infrastructure is a critical area of emphasis for the Government and ADB to support Indonesias economic growth and poverty reduction strategies. Given increasingly significant infrastructure shortages and bottlenecks, infrastructure investments are critically needed to avoid power outages 
and relieve transportation bottlenecks. Two key issues include a lack of infrastructure project development skills (most notably at the local government level) and a lack of long-term corporate debt to finance infrastructure projects in the private sector. Deficiencies in the regulatory frameworks for public-private partnerships are being addressed under ADBs Infrastructure Reform Sector Development Program (IRSDP) Cluster (20052010). As such, there is a critical need for an institution like IIFF that can be a focal point for infrastructure project development, and particularly at the local government level. While providing long-term debt and equity financing to infrastructure projects in cooperation with local financial institutions, IIFF could, through credit enhancements and other innovative products, also provide comfort to lenders and investors adequate for their participation in infrastructure development. IIFFs exposure to infrastructure projects that are solely developed by the public sector (including state-owned enterprises) will be limited to a maximum 20% of IIFFs overall lending portfolio. ADB is aware of the potential conflict of nterest that may arise with respect to IIFFs joint mandate to both provide development advice to government and financial support to the projects that may be structured based on this advice, and it will ensure that IIFF adopts policies and procedures that resolve and mitigate this potential conflict.