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Coronavirus affects Chinese investment projects in Indonesia

The novel coronavirus outbreak will not only disrupt supplies of raw materials for the manufacturing industry in Indonesia but will also cause a delay in important infrastructure projects, which involve many Chinese companies, a senior minister has predicted

Riska Rahman (The Jakarta Post)
Jakarta
Thu, February 27, 2020

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Coronavirus affects Chinese investment projects in Indonesia

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span>The novel coronavirus outbreak will not only disrupt supplies of raw materials for the manufacturing industry in Indonesia but will also cause a delay in important infrastructure projects, which involve many Chinese companies, a senior minister has predicted.

Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan said in Jakarta on Tuesday that the infrastructure projects that were affected by the COVID-19 outbreak included the Jakarta-Bandung high-speed railway, as many Chinese workers that worked in the projects could not return to Indonesia.

“They can’t return to Indonesia and are currently still being held up in their country after the Lunar New Year holiday,” he said during a press briefing in Jakarta.

Earlier this month, the government imposed a temporary ban on all flights to and from China following the COVID-19 outbreak in an effort to prevent the virus from spreading to Indonesia.

Luhut also expected the supply of raw materials to Indonesian industrial companies would also be disrupted as the Chinese government is still limiting economic activities in the country to prevent the virus from spreading.

However, he declined to comment on whether the hurdles could affect the project’s completion target.

“We still don’t want to speculate on [how long the delay will be], but this project could be delayed longer if the virus outbreak continues,” said Luhut, adding that the government would try to speed up the project to meet the deadline.

Responding to the statement, Indonesia-China consortium PT Kereta Cepat Indonesia China (KCIC) spokesperson Deny Yusdiaana told The Jakarta Post that the company would try its best to complete the project on time despite the delay in the return of the company’s Chinese workers.

“As for the Chinese workers, we can replace them with local workers. So, it won’t have a significant effect on the project’s progress,” he said.

In addition to the high-speed railway project, Luhut also feared that the COVID-19 outbreak could stall production in several stainless steel and carbon steel plants, smelter and lithium battery projects that involve Chinese investments as well.

These projects are mostly located in industrial estates in eastern Indonesia such as Morowali in Central Sulawesi, Konawe in Southeast Sulawesi and Weda Bay in North Maluku.

The outbreak is expected to reduce production capacity in several stainless steel and carbon steel plants located in those regions. As a result, Luhut expects the export of steel products will fall short of the government’s target of US$15 billion, he said.

“We project our steel exports will only reach $11 billion this year,” said Luhut.

He also admitted that the COVID-19 outbreak could affect the schedule of the government’s ambitious lithium battery project, which is targeted to start production by around 2023 to 2024. However, he stressed that the government was still proceeding with the project.

“The [lithium battery] project is not delayed, but workers can’t get into Indonesia, so I worry that it will affect our timetable,” he said.

Luhut further added that his ministry was currently assessing the losses caused by the outbreak to the Indonesian economy, as well as possible solutions to the problem, should the outbreak continue until March.

“We can’t reveal the numbers yet, but everyone should know that the outbreak is my top priority right now,” he said.

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