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span class="inline inline-center">Multibillion dollar deal: State-Owned Enterprises Minister Rini Soemarno (back, second left) witnesses the signing of a loan partnership between China Development Bank vice chairman Zheng Zhijie (front, second right) and Indonesian state-owned banks represented by BRI president director Asmawi Syam (front left), Bank Mandiri president director Budi Gunadi Sadikin (front, second left) and BNI president director Achmad Baiquni (front right) in Beijing on Wednesday. The US$3 billion loan will be used to build infrastructure in Indonesia.(Antara/Rini Utami)

State-owned lenders Bank Mandiri, Bank Rakyat Indonesia (BRI) and Bank Negara Indonesia (BNI) have secured a loan commitment worth US$3 billion from the China Development Bank (CDB) to finance infrastructure development in Indonesia.

The loan agreement was signed in Beijing on Wednesday evening by the president directors of the three banks and CDB vice chairman Zheng Zhijie, witnessed by State-Owned Enterprises Minister Rini Soemarno and the chairman of the Chinese National Development and Reform Committee, Xu Shaoshi.

The agreement allows the three banks to obtain $1 billion each for 10 years'€™ tenure, with 30 percent of the amount drawn down in Chinese yuan to finance infrastructure projects and trade, especially between the two countries.

'€œThe 10-year tenure is suitable for infrastructure projects, which need long-term financing,'€ Bank Mandiri president director Budi Gunadi Sadikin said in a statement.

BRI president director Asmawi Syam, meanwhile, said the agreement, which is expected to strengthen the partnership between Indonesia and China, was part of a long-term loan commitment worth $30 billion from the CDB.

The long-term commitment is believed to be in line with the Indonesian government'€™s program to develop infrastructure to accelerate the country'€™s economic growth in the future, according to BNI president director Achmad Baiquni.

Previously, Rini said the credit, which would not involve any state guarantee, would be used to finance the lenders'€™ activities, many of which involve clients in China.

Mandiri, for example, currently has a number of branch offices overseas, including in Shanghai, Hong Kong, Singapore and the UK.

BNI, which is also among Indonesia'€™s largest banks by assets, is currently expanding its presence overseas, including in mainland China. BNI currently has overseas offices in London, Tokyo, New York, Singapore and Hong Kong.

In July, BRI opened a new Rp 30 billion (US$2 million) Singapore offshore branch, which adds to BRI'€™s four existing overseas offices '€” the BRI New York Agency, BRI Cayman Island Branch, BRI Hong Kong Representative Office and BRI Remittance Office.

Aside from partnership plans with the country'€™s state lenders, the CDB has also inked a commitment deal with the government to provide up to $20 billion to support 16 infrastructure projects nationwide.

Among infrastructure projects to be partly funded through loans from CDB are the development of two 600 megawatt (MW) mine-mouth power plants in South Sumatra, the development of high-speed rail and light rail transit lines by PT Adhi Karya and the renovation of Terminal 1 at Soekarno-Hatta International Airport by PT Angkasa Pura II (AP II).

The materialization of the facility commitment will be followed up with a number of bilateral agreements between the CDB and the respective state-owned companies under the condition that the Indonesian state companies partner with Chinese state enterprises.

The CDB has also stated its commitment to providing loan facilities worth $10 billion to state electricity firm PLN to support the government'€™s 35,000 megawatt power-plant project over the next five years.

At the same time as the CDB, another Chinese financing giant, the Industrial and Commercial Bank of China (ICBC), has signed a memorandum of understanding (MoU) with the Indonesian government to provide $20 billion in loan commitments to a number of state enterprises.