FINANCIAL INNOVATION for INFRA STRUCTURE FINANCING
According to PPI World Bank Database that infrastructure investment in East Asia (China, Indonesia, Philippine, Malaysia, and Thailand) from 1998 to 2005 was stagnant, where infrastructure investment in Indonesia slowed down after financial crises, total investment in 1996 was 7,492.6 million US dollar but in 2000 fell down to 642.3 million US dollar and in 2005 raised on 1,445 million US dollar. To create a more efficient and encourage the growth of infrastructure investment market, infrastructure financing needs a financial innovation. The potential of innovation in infrastructure financing which will be researched is a new financial product. What will be a new financial product in infrastructure financing? Therefore, the board aim of this study is to analyze the potential for, and the impact of, innovation in the financing, funding and procurement of infrastructure and to spread knowledge of innovation techniques to relevant parties with interests in Indonesia. The specific objectives arising from that aim were to: critically review existing models of finance, funding and appraisal in the infrastructure in the light of changing business requirements; survey recent innovative financial products, vehicles and funding techniques in infrastructure investment markets; examine case studies of innovative finance and procurement methods to illustrate the potential (and pitfalls) of the new techniques; draw lessons from developments in United State of America, China, Malaysia, and Thailand markets; consider likely future trends in the infrastructure market and assess the interaction between innovation and public policy. A Vector Auto-regressive (VAR) or econometric method will be employed to estimate effect of infrastructure investment on the economy.