Investment Risk Analysis of Jakarta - Cikampek II Selatan Toll Road

Abstract

The availability of infrastructure is important in supporting economic activities. The toll road is one of the infrastructures that have undergone extensive development over the past five years. It benefits the Indonesian community by shortening travel time and increasing economic growth. Toll road development is a long-term investment that requires very large costs and a long payback period. Potential risks could hinder the development of toll roads and would delay the payback period further. Due to the delay in the construction schedule, there is an estimation difference between the beginning financial feasibility in 2017 and the adjustment in 2022, when the toll road is currently under construction. Financial feasibility analysis is not complete without risk analysis. Thus, investment risk analysis has to be done. The results showed a payback period of 9.65 years, a discounted payback period of 19.41 years, an NPV of IDR 4,759,916 Trillion, and an IRR of 11.63% is greater than 10.65%, the cost of capital. Since all the results exceed the acceptance criteria, this toll road project is feasible, although it is calculated using the latest adjustment assumptions. However, from the comparison result, the adjusted has a lower IRR and discounted payback period compared to the beginning (12.32% and 18 years). Using sensitivity analysis, 3 sensitive variables are identified to impact NPV results greatly. According to the scenario analysis result, each of the scenario’s payback period, discounted payback period, NPV, and IRR is considered to be accepted. It showed that the toll road project is feasible in pessimistic, most likely, and optimistic scenarios. Based on the risk management result, there are 1 extreme risk, 2 high risks, 5 moderate risks, and 1 low risk. A risk mitigation plan helps reduce each potential risk's probability or impact.