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State firms get $20b loan commitment from China bank
Seven state-owned enterprises (SOEs) have secured a loan facility commitment from the China Development Bank (CDB) worth up to US$20 billion to finance a number of infrastructure projects
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even state-owned enterprises (SOEs) have secured a loan facility commitment from the China Development Bank (CDB) worth up to US$20 billion to finance a number of infrastructure projects.
State-run construction firms PT Wijaya Karya and PT Adhi Karya, port operators PT Pelindo I and PT Pelindo II, airport operator PT Angkasa Pura (AP) II and miners PT Bukit Asam and PT Aneka Tambang are all slated to receive the loan facilities, according to a Memorandum of Understanding between the SOEs Ministry and the CDB obtained by The Jakarta Post.
The SOEs Ministry and the CDB estimate that they will partner for 16 cooperative projects worth $23.8 billion, with the ministry expecting that the CDB could help finance $20 billion of that.
'The partnership is aimed at promoting full collaboration between Chinese qualified enterprises and Indonesian state-owned enterprises,' the document has revealed.
President Joko 'Jokowi' Widodo's administration places infrastructure as one of its key priorities, aiming for 7 percent economic growth during his five-year tenure. Growth has shrunk to 4.7 percent in the first quarter this year, the lowest level in six years, and infrastructure bottlenecks are seen as the primary cause.
The CDB will help fund projects that include the high-speed train and a power plant by Wijaya Karya, a light rail and a rail transit by Adhi Karya, a container terminal at Kuala Tanjung port in North Sumatra by Pelindo I and a revitalization of Soekarno-Hatta International Airport by AP II.
The CDB plans to provide a total of $4.06 billion to support Wijaya Karya in developing a high-speed train system for the Greater Jakarta area.
Wijaya Karya corporate secretary Suradi said on Wednesday that the loan facilities would be disbursed only once the project kicks off.
'Also, we are still reviewing possible schemes for making use of the facilities, whether through a government guarantee, business-to-business partnership, direct loans to Wijaya Karya or through global bond issuance,' he said.
Construction firm Adhi Karya, meanwhile, is slated to receive loan a facility commitment worth $1.6 billion from the CDB to support its light train and rail transit for the Greater Jakarta area and Bandung, West Java.
Adhi Karya corporate secretary Ki Syahgolang Permata said previously that his firm would need Rp 12.56 trillion ($940.9 million) for the first development phase of the project.
Adhi Karya has planned to offer rights shares this year to reap around Rp 2.7 trillion in fresh funds, with Rp 1.4 trillion coming from approved state capital injection this year and the other Rp 1.3 trillion from the public.
Besides planning to channel its money into the country's state-controlled construction firms, the CDB also expressed its commitment of $3.76 billion to Pelindo I's project, $1.6 billion for Pelindo II's project, $477 million for Angkasa Pura II's projects, $1.6 billion for Bukit Asam's projects and $5.92 billion for Aneka Tambang's projects.
The loan facility commitment from the CDB is part of a larger combined commitment worth $50 billion from the CDB and the Industrial and Commercial Bank of China (ICBC) in support of the government's huge infrastructure projects in the next five years.
