Success and Failure Factors in Refinancing Toll Road with Project-based Sukuk Scheme in Indonesia

This paper identifies and analyses success and failure factors in refinancing toll road projects in Indonesia with project-based Sukuk, based on a survey to select respondents from experts and practitioners. A questionnaire survey to obtain perceptions of toll road project finance by issuing project-based Sukuk, particularly its critical success and failure factors. The results show that variables of: (i) business entity has a good reputation in the pre-construction phase, (ii) completion of the project on time in the construction phase, (iii) revenue target achieved in the operational phase and (iv) commitment and responsibility of the parties (government and business entities) in the transition phase are the top critical success factors. Meanwhile, the top critical failure factors are: (i) behaviour and characteristics of profit-oriented investors in the pre-construction phase, (ii) cost over-run occurs in the construction phase, (iii) failure to make payments to investors in the operational phase and (iv) failure to achieve the target estimated break-even point in the transition phase. Some impacts and consequences are identified and proposed to ease the toll road refinancing with project-based Sukuk. Critical and failure factors provide valuable references for a toll road project-based Sukuk refinancing scheme.