TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
BRI prepares schemes for China deal
State lender Bank Rakyat Indonesia (BRI) is preparing several partnership schemes to accommodate Chinese banksâ interest in Indonesiaâs infrastructure projects, its top boss has said
Change Size
S
tate lender Bank Rakyat Indonesia (BRI) is preparing several partnership schemes to accommodate Chinese banks' interest in Indonesia's infrastructure projects, its top boss has said.
According to BRI president director Asmawi Syam, the bank has begun holding bilateral talks with the China Development Bank (CDB) about the possibility of the Beijing-based institution being involved in its clients' projects.
'We have met here in Jakarta and we have proposed one IPP [independent power producer] project belonging to one of our clients,' he said on Thursday.
Asmawi said the client was in the middle of expanding its business and initially approached BRI for financing. 'We took the initiative to offer the project to the CDB. It seems interested in taking part,' he said.
At present, BRI is finalizing several scheme options for the CDB. The first scheme ' which is a 'channeling' scheme ' would see BRI act as a CDB agent and provide business assistance for the project.
BRI would obtain fee-based income from the assistance and would be risk-free because the CDB would bear business risks that stemmed from the project, according to Asmawi.
The second scheme, which is an 'executing scheme', would see BRI obtain financing from the CDB and then disburse the funds to the project.
Under the second scheme, BRI would bear the business risks.
'CDB will get a margin from the financing that it provides us, while we will get interest income from the loan that we give to the client,' he said, adding that the bank hoped to seal the partnership soon.
BRI will also look for other infrastructure projects to propose to the CDB and the Industrial and Commercial Bank of China (ICBC) as part of a larger partnership scheme between Indonesia and China.
As previously reported, Indonesia now stands a chance of obtaining US$50 billion-worth of infrastructure financing provided by the two banks.
They may opt to finance brand new infrastructure projects or provide refinancing for ongoing ones through BRI and its fellow state lenders Bank Negara Indonesia (BNI) and Bank Mandiri.
'If the CDB and ICBC want to be really engaged, they may decide to finance a project from scratch, but if they prefer to see prompt business realization, they may opt to refinance an existing project,' Asmawi said.
Some of the projects to be proposed include those belonging to state electricity company PT Perusahaan Listrik Negara (PLN) and the Bali toll road to be developed by the Bali administration.
Asmawi said that BRI would develop partnerships with BNI and Mandiri to disburse the funds from China for the projects, citing their large scale.
He emphasized the need for BRI to be involved in financing for PLN projects as electricity improvement would benefit its banking clients, most of whom live in rural areas.
BRI, according to Asmawi, also expects to see its own business banking portfolio surge, driven by commitment from China.
By March, the outstanding amount of its corporate banking loans ' involving both state and private firms ' stood at Rp 114.4 trillion ($8.66 billion), equal to 24.2 percent of its total lending.
