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Govt hypes signings of $13.5b deals
The government showed off the signing of 19 business contracts worth about US$13
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span>The government showed off the signing of 19 business contracts worth about US$13.5 billion on the sidelines of the 2018 Annual Meetings of the International Monetary Fund and the World Bank Group in Nusa Dua, Bali, on Thursday.
The contracts were signed by 14 state-owned companies (SOEs), including state oil and gas company Pertamina, state mining firm PT Aneka Tambang (Antam), state mining holding PT Indonesia Asahan Aluminium (Inalum) and construction company PT Wijaya Karya.
“We are taking advantage of the IMF-WB event to show investment opportunities in infrastructure,” SOEs Minister Rini Soemarno said in her opening speech.
However, six out the 19 partnership agreements are non-binding heads of agreement (HoA).
One of the business deals is a joint venture agreement (JVA) signed by Antam and parent company Inalum with Chinese alumina giant Aluminum Corporation of China Limited (Chalco) on the development of a smelter grade alumina refinery (SGAR) in West Kalimantan.
Inalum president director Budi Gunadi Sadikin said the business deal with the Chinese company was approved two years ago after years of negotiations. “The feasibility study had been carried out in 2006. It aims to reduce alumina imports. Most of the raw materials [bauxite] for the imported alumina came from Indonesia,” he said. “This [signing] is only ceremonial as the project has started, with land procurement having commenced, while the contractor has been chosen,” he added.
Inalum corporate communications head Rendi Witular confirmed with The Jakarta Post on Thursday that the recent JV was similar to the 2016 deal, adding that the latter was not an official one.
Meanwhile, Wijaya Karya and the Indonesia Tourism Development Corporation signed an agreement with property firm Menjangan Group on tourist destination and infrastructure development in northern Bali. Boma Bisma Indra inked a business deal with South Korea-based Doosan Infracore Co. Ltd and Equiti Manajemen Teknologi on the production of heavy equipment.
In total, the signings involved 14 SOEs, with the energy sector becoming the highest contributor with a total value of $7.8 billion. Pertamina alone signed contracts worth $6.5 billion, including a deal with Taiwanese energy firm CPC Corp. on the construction of a naphtha cracking plant and downstream derivative units that will produce propylene, polyethylene and butadiene.
“We need three to six months before we can start construction. The plant will have a capacity [to refine up to 1 million barrels of oil per day,” Pertamina president director Nicke Widyawati said after the signing ceremony.
Pertamina refinery and petrochemical megaproject director Heru Setiawan said the petrochemical project would take four to five years to complete.
Rini hopes the deals will be able to reduce imports by up to $3 billion as Pertamina’s deal with CPC corporation on petrochemical facility as well as the deal between PT Inalum and PT Antam with Chalco could substitute fuel and aluminum imports.
Beside energy-related signings, deals were also signed in seven other sectors, namely transportation, tourism, defense, manufacturing, finance, construction and infrastructure.
In the defense sector, state-owned weapons company Pindad (Persero) and Canada-based Waterbury Farrel signed a business partnership to develop a small caliber ammunition plant in Turen, Malang, with initial investment of about $100 million.
“These investment commitments indicate that the government is able to maintain the investment climate despite uncertainties in the global economy,” Rini said.
