JAKARTA (TheInsiderStories) - Indonesia government offers nine infrastructure projects worth US$2.5 billion to the China investors, said Secretary of the Coordinating Minister of Economic Affairs Lukita Dinarsyah Tuwo.
Deputy for International Cooperation at the Ministry Rizal Affandi Lukman, added the nine projects are toll road development of Cileunyi-Sumedang-Dawuan Section I, Balinka-Matur-Ngarai Sianok Tunnel Construction, Material procurement for construction and bridge rehabilitation, Pelosika Multipurpose dam construction, Jenelata dam construction, Rokan Hilir/Lompatan Harimau Dam construction, Jambo Aye Multipurpose Dam, Bonehulu Dam Construction and Procurement of Track Material and Turnout phase III and IV.
Ninth financing projects that are offered to China investors will use loans with preferential buyer’s credit scheme (PBC) provided by the China Export-Import Bank (China Exim Bank). China has set up PBC scheme which is not only to provide loans to developing countries but also to encourage economic growth in the country.
The projects financed by the PBC scheme should use products, technologies, and services imported from China. The loan interest of PBC scheme is lower than commercial loans, but the interest is not as low as a soft loan. “Between the software and commercial loans,” said Rizal.
The tenor of the loans are also longer than commercial loans. Long duration is based on the outcome of negotiations. China has offered loans worth $10 billion through this scheme to the Southeast Asian Region and he expects Indonesia could get around $4 billion.
In addition, the Chinese government will provide a grant of ¥ 30 million to finance the feasibility study of infrastructure projects. The signing of the grant will be made in the near future.
Outside the infrastructure project financing cooperation, Coordinating Minister for Economic Affairs Darmin Nasution added Indonesia and China have also agreed on an extension of Bilateral Cooperation Currency Exchange(Bilateral Currency Swap Agreement / BSA). The extension of BSCA in 2013 is scheduled to expire in October 2016. The extension of this cooperation include the increase in value of the cooperation from 100 billion renmimbi to 130 billion renmimbi. (*)