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Crédit Agricole widens expansion in RI
France-based Crédit Agricole CIB is seeking an opportunity to widen its client base in Indonesia as it moves forward with the opening of a new representative office to better serve the local market
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rance-based Crédit Agricole CIB is seeking an opportunity to widen its client base in Indonesia as it moves forward with the opening of a new representative office to better serve the local market.
The bank aims to capture abundant opportunities in Indonesia, a growing economy with a population of approximately 260 million and great number of young people aspiring to be in a global top 10 economy by 2030.
“We work with major corporates in oil and gas, telecommunications sectors, banks, government agencies,” Régis Monfront, deputy chief executive officer of Crédit Agricole, told The Jakarta Post in an interview recently.
“Our goal is to create a bridge between these companies and the rest of the world, to give them access to capital abroad,” he added.
As a bank, Crédit Agricole provides financing for specific sectors, such as energy, telecommunications, transportation, aviation as well as commodity businesses.
It assists clients in their global trade operations, such as corporate banking, cash management, trade finance, commodities financing, FX and hedging products.
On April 12, it inaugurated a new representative office in Jakarta, which will function as part of the Asia-Pacific regional network of Crédit Agricole CIB, with its headquarters based in Hong Kong.
For the past 15 years, despite not yet having a local presence, the bank has been active in servicing clients in Indonesia for projects in oil and gas sectors.
“Our presence in Indonesia strengthens our relationships with Indonesian authorities and companies, as well as our foreign customers established in the country,” said Franck Passillier, chief representative of Crédit Agricole CIB for Indonesia.
At the moment, Crédit Agricole realizes that Indonesia needs a vast amount of funding for major infrastructure projects, for which the government could not fully rely on the state budget.
Under President Joko “Jokowi” Widodo’s program, US$327 billion was needed over five years for infrastructure development.
Only $73 billion was expected to come from the state budget and state-owned enterprises, while substantial funding was required from private investors.
So far, the government has provided alternative programs to finance infrastructure projects through the National Development Planning Board (Bappenas), which is called the non-state budget infrastructure financing (PINA) program.
The program allows private investors to inject funds in the form of equity through an intermediary to finance strategic and commercially viable infrastructure projects across the archipelago. The PINA program is expected to complement existing programs for infrastructure financing with private-public partnerships (PPPs).
Crédit Agricole viewed that private investors will be interested in investing in massive infrastructure projects because the country has a good fundamental economy with about 5 percent economic growth annually, high foreign exchange reserves and low debt-to-gross domestic product (GDP) ratio at about
30 percent.
“Pension funds, particularly in the [United States] and Canada, and asset managers, they are all looking for investment opportunities in the infrastructure sector,” Régis said.
However, he emphasized that for big investors who are willing to invest in the long term, typically for 10 to 20 years, they will always be concerned about regulatory consistencies and good investment returns.
“The challenge of investors everywhere in the world is really to be very confident in regulatory and legal framework,” he added.
President Jokowi earlier said infrastructure projects that could not be completed by 2019 should be scrapped as the government plans to shift a considerable amount of state expenditure to social spending and human capital development.
Responding to this, Régis said such change would not become a big issue, adding that “infrastructure and human capital are not opposites” and the President has to be able to make sure that the balance between those two could work well.
For infrastructure financing, Crédit Agricole will offer clients in Indonesia direct lending, hedging in terms of foreign exchange risks, helping them to identify investors, providing advisory services as well as assisting companies in the issuance of green bonds.
Green bonds have the same financial characteristics as normal bonds, but the difference is that the funds raised from the projects shall be used for environmentally friendly projects.
The bank said green bonds were still a very nascent market in countries compared to the traditional bonds market, but it believes that the market will grow very fast as many companies are increasingly prioritizing environmental issues.
Crédit Agricole CIB is now present in nine countries and territories in the Asia-Pacific region, comprising Australia, China, Hong Kong, India, Indonesia, Japan, Singapore, South Korea and Taiwan.
