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BRI sets plan for CDB loan disbursement
State-owned lender Bank Rakyat Indonesia (BRI) is currently studying several projects that could potentially receive financial support, as the bank has recently received a loan commitment from China Development Bank (CDB)
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tate-owned lender Bank Rakyat Indonesia (BRI) is currently studying several projects that could potentially receive financial support, as the bank has recently received a loan commitment from China Development Bank (CDB).
BRI, along with other two state-owned lenders Bank Mandiri and Bank Negara Indonesia (BNI) signed a loan commitment on Sept. 17 worth US$3 billion from CDB to finance infrastructure development in Indonesia.
Each bank will receive $1 billion.
BRI finance director Haru Koesmahargyo said the lender was planning for some long-term infrastructure and manufacturing projects, considering that the tenure of the Chinese loan was 10 years with a three-year grace period.
The three-year grace period means the bank will only need to pay the loan's interest rate and is exempted from paying the credit's principal in three years.
'We will prepare the loan for projects ready to be financed, not only infrastructure-related ones, but also those that can generate more foreign exchange [forex] supply for the country,' Haru said recently, without disclosing the names of the projects.
Haru said forex-generating projects would include companies whose main businesses is manufacturing imported raw materials and those that export their products in order to avoid 'mismatch' as the loan borrowed was in foreign currency.
Other forex-generating projects are export financing as well as manufacturers operating in the downstream side of some industries, Haru added.
'Perhaps, the project most-ready to be financed is power plant construction,' Haru said, adding that BRI would also seek the opportunity to disburse the loan through a syndicated scheme with the other two state-owned bank partners or private ones.
According to Haru, BRI is convinced that the $1 billion loan, which is equal to Rp 14 trillion, could be fully absorbed and disbursed to the projects in three years as the amount still counts within the bank's average range of annual loan expansion.
'Our average loan expansion is bigger, because our total outstanding loans have reached Rp 500 trillion. If we grow our lending by only 15 percent a year, it means we are able to disburse new loans worth at least Rp 50 trillion annually,' Haru said.
The loan agreement with CDB, signed in Beijing, China, was a result of a negotiation between governments of both countries, with Indonesia represented by State-Owned Enterprises (SOE) Minister Rini Soemarno.
Under the agreement, the three banks will get 30 percent of the loan in Chinese yuan to finance infrastructure projects and trade, especially between the two countries.
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.
Muhammad Irfan, director for business and small and medium enterprise at BRI, said the bank aimed to disburse at least Rp 11 trillion new loans to SOEs this year, including toll road projects and PLN as well as state-owned oil and gas company Pertamina.
As for corporate loans for the private sector, Irfan said the bank would continue financing plantation companies despite a drop in global prices of commodities as it had seen a maintained non-performing loan ratio in that sector.
'We expect that overall corporate loans can reach at least Rp 140 trillion by the end of this year, comprised of lending to SOEs and private firms worth Rp 78 trillion and Rp 63 trillion, respectively,' Irfan said.
