China Development Bank to Open Jakarta Representatives Office

JAKARTA (TheInsiderStories) – China Development Bank (CDB) has announced that it is going to open a Representative Office in Indonesia, likely in connection with its plan to facilitate loans for the mammoth Jakarta-Bandung high-speed train (HST) project.

Indonesian Minister for Coordination for Maritime Affairs Luhut Binsar Pandjaitan has revealed that he will soon meet with CDB officials in Bali to discuss financing plans for infrastructure projects in Indonesia in more detail.

“Yes, [we intend to have a meeting] with the Financial Services Authority (OJK), regarding CDB’s intention to open an office here,” Luhut said on Tuesday (29/8).

Meanwhile Indonesian Financial Service Agency (FSA) has agreed to process entry permits for a CDB Representative Office in Indonesia under certain conditions, as long as it meets the rules for the domestic financial industry.

“If CDB has activities and customers here, and the scale is large, then certainly it would be a good reason to open a Representative Office,” said the Chairman of FSA Wimboh Santoso.

Separately, Governor of Indonesia Central Bank, Agus D.W. Martowardojo, expressed his support, observing how Indonesia still needs various sources of financing for development.

“We support and we must continue to explore sources of financing for development,” Agus admitted.

In 2015, CDB disbursed a total of US $3 billion to three state-owned lenders, PT Bank Mandiri Tbk (IDX: BMRI), PT Bank Rakyat Indonesia Tbk (IDX: BBRI), and PT Bank Negara Indonesia Tbk (IDX: BBNI).

This year, the train operator, PT Kereta Cepat Indonesia Cina (KCIC) has also made a financing commitment for the Jakarta-Bandung high-speed train project from CDB, worth $4.5 billion.

The HST project will cost up to $5.1 billion (equivalent to IDR67.8 trillion at IDR13,300) of which CDB will disburse a loan of 75 percent of the total. The remaining 25 percent will come from KCIC consortium capital.

China would be the largest investor in Indonesia in the following decade as reflected by the country’s increasing investment realization. President Joko Widodo convinced Chinese business owners that Indonesia would facilitate their investments by delivering the 3-Hour Investment Permit Service, the Green Line Service, the Direct Construction Investment Incentive, and a more transparent investment regulation through the improvement of the Negative Investment List.

Based on data from the BKPM, China was the fourth largest investors in Indonesia after Singapore, Japan, and Hong Kong. China’s investment realization in the third quarter of 2016 stood at $549 million with 499 projects. Meanwhile, Singapore was at the top of the list with a total investment value of $2 billion with 1,927 projects. Japan was at the second place with a total investment value of $1.3 billion, followed by Hong Kong with $597 million.

CDB was founded in 1994 as a policy financial institution under the direct leadership of the State Council. It was incorporated as China Development Bank Corporation in December 2008, and officially defined by the State Council as a development finance institution in March 2015. CDB has a registered capital of RMB421.248 billion. Its shareholders include the Ministry of Finance of the People’s Republic of China (36.54 percent), Central Huijin Investment Ltd. (34.68 percent), Buttonwood Investment Holding Co., Ltd. (27.19 percent) and the National Council for Social Security Fund (1.59 percent).

By the end of 2015, its assets grew to RMB12.62 trillion, a balance of loans of RMB9.21 trillion, and a cumulative recovery rate of 98.78 percent that continued to lead the industry for the sixteenth consecutive year.

CDB currently has 37 primary branches and 3 secondary branches on the Chinese mainland, one offshore branch in Hong Kong and five representative offices in Cairo, Moscow, Rio de Janeiro, Caracas and London, with about 9,000 staff. Its subsidiaries include CDB Capital Co.,Ltd., CDB Securities Co.,Ltd., CDB Leasing Co.,Ltd. and China-Africa Development Fund Co.,Ltd. (EV)