JAKARTA (TheInsiderStories) – Indonesia and China agreed to prepare special funds in the Belt and Road Initiative (BRI) project as a result of bilateral meetings between the two leaders, President Joko Widodo, and Xi Jinping, on the sidelines of the G-20 Summit in Osaka, Japan last week, finance minister Sri Mulyani Indrawati told reporters in Jakarta on Wednesday (07/3).

In the meeting, said Indrawati, Widodo took the initiative to submit a special funding request after offering Chinese projects worth US$ 91 billion. President Xi welcomed and stated that China was ready to help Indonesia in carrying out development.

The former managing director of the World Bank also admitted if the government is currently reviewing special funding if the plan can be realized. Because it will increase investment in Indonesia.

“I am now doing a study of what the form looks like, what the mechanism is, what value is and of course from the consequence of costs, all must be included in the form, whether public to public or private to private or state to private, we are not clear,” the minister said.

Indonesia has not been among the biggest beneficiaries of China’s trillion-dollar push to create a modern-day Silk Road. Southeast Asia’s largest economy says this is because it has insisted any loan within the BRI framework is done on a business-to-business basis to avoid exposing the government in case of default.

Coordinating minister for maritime affairs, Luhut Binsar Pandjaitan, separately told reporters the fund should provide loans “with low interest in regards to investment in Indonesia, in partnership with Indonesian companies”.

Pandjaitan, who overseas Belt and Road projects in Indonesia, previously said the Indonesian government had offered China involvement in about 30 projects, worth $91 billion, during a second Belt and Road Forum (BRF) in April.

The most high-profile BRI venture in Indonesia is a $6 billion high-speed rail project connecting the capital, Jakarta, to the textile hub of Bandung, awarded to a consortium of Chinese and Indonesian state firms in 2015. But, the project has faced land ownership issues.

Another project is a $1.5 billion hydropower plant, funded by Chinese banks and being built by the Chinese state firm Sinohydro, in the heart of the Batang Toru rainforest on the island of Sumatra.

As one of the important players and maritime centers within the framework of BRI, Indonesia has developed relations and cooperation with China. The increase in bilateral relations also helped strengthen China’s partnership with the Association of Southeast Asian Nations (ASEAN).

China is Indonesia’s largest trading partner in the last seven years in a row. In 2018, total trade between the two countries reached $63.3 billion, up 18 percent from a year earlier. These results cannot be separated from a variety of large projects such as the construction of parks and high-speed train Jakarta-Bandung.

In addition, Indonesia and China have signed 23 memoranda of understandings on investment and trade cooperation. The cooperation contract includes the development of four economic corridors, rapid train research and technology cooperation, and the development of research of education.

Indonesia and China have signed 23 memoranda of understandings on investment and trade cooperation. The cooperation contract includes the development of four economic corridors, rapid train research and technology cooperation, and the development of research of education.

According to Vice President Jusuf Kalla, beside signed the agreement, President Xi himself had promised to increase imports of agricultural, fruits, industrial products, and mineral mining products. In the BRF last April, Xi has signed contracts for new projects worth $64 billion.

For Indonesia, the funding will be focused on developing projects in 4 economic corridors, namely North Sumatra, North Kalimantan, North Sulawesi, and Bali. Chairman of Investment Coordinating Board Thomas Lembong added, the economic corridors in Bali have been added from previously only three corridors.

He said the four main corridors are chosen based on the location and potency. North Sumatera is a logistics hub in the Malacca Strait area, North Kalimantan is well-known for its world-class hydropower resources, North Sulawesi and Bali for Chinese tourists.

Lembong realized that the BRI cooperation implementation will face some challenges. But he sees that the infrastructure connection between BRI participants could boost emerging countries’ trade, tourism, and investment.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com