JAKARTA (TheInsiderStories) – Indonesia has the potential to get more funds from a number of agreements and economic cooperation with the United States (US), China and the United Arab Emirates (UAE), said senior official on Sunday (10/06). The realization of cooperation is targeted to be completed until the end of this year.
Coordinating minister for maritime affairs Luhut Binsar Pandjaitan, said the cooperation with the US would be realized through the International Development Finance Corporation (IDFC), an executive agency of the US government responsible for providing foreign aid through the financing of private development projects, which plans to allocate investment funds of US$60 billion into Indonesia.
“Adam Boehler as CEO of IDFC will meet me and Finance Minister Sri Mulyani Indrawati in Indonesia in mid-October. We will discuss technical matters regarding the allocation of part of the $60 billion investment fund managed by IDFC to enter Indonesia,” Pandjaitan said in a written statement.
In a meeting with a number of officials from the US Chamber of Commerce in Indonesia last month, Pandjaitan also openly invited US companies to relocate their factories from China to Indonesia. US commerce data showed, 30 percent of American companies plan to move their plant outside China.
Southeast Asia’ largest economy targets at least 10 percent of the companies choosing Indonesia as a new place. Pandjaitan told reporters, about a fifth of US companies in China are considering moving some or all of their production abroad to overcome trade tensions
About 40 percent of companies say a rise in US tariffs will have a strong negative impact on their business and others say an increase in levies from China will cause the same thing, the survey said.
It also reported their main strategy to deal with tensions is to restructure operations. One of them by relocating the factory to emerging markets, especially in developing Southeast Asian and Latin American countries. So far, the effects of trade disputes have been largely financial, with companies seeing a decline in demand, an increase in costs and a decrease in profits and revenues, the survey reported.
The retired general also announced that cooperation with China regarding the development of the lithium battery industry which also involved South Korean LG International Corp. was in the stage of being finalized.
Reportedly, Chinese stainless steel-maker Tsingshan Holding Group and chemicals firm Huafon Group Co., Ltd. plans to set up a $3 billion metallurgy and chemical production base in Indonesia. The two companies, both based in eastern China’s Zhejiang province, have signed a deal to jointly build the base, which will include a 12 million tonnes per year capacity coke plant, on the island of Sulawesi.
Previously, Tsingshan has led a group of investors to build a nickel sulfate plant to produce electric vehicle batteries in a $10 billion industrial park linked to its Weda Bay Industrial Park, in Maluku. The group includes China’s Huayou Cobalt Co., Ltd., and Zhenshi Holding Group.
Furthermore, the minister also announced that the Indonesian and the UAE’s plans to establish a sovereign wealth fund (SWF) which will be a pooling of investment from various countries of up to US$10 billion will be discussed next month. The fund can be used to finance infrastructure projects, education, agriculture, energy, and the construction of mosques in Solo, Central Java.
“The UAE will visit Indonesia next month, meeting with the Ministry of Finance and state firm, PT Sarana Multi Infrastruktur to discuss the schemes, regulations, and legislation needed for the establishment of the SWF. They will also share their experiences in forming wealth funds with India and Egypt,” Pandjaitan said, adding that the UAE wanted the realization of this cooperation to be completed by the end of this year.
According to him, with the SWF concept, state assets managed by state-owned enterprises (SOEs) can be increased their efficiency, to increase the impact on people’s prosperity. Even though the government’s share ownership is below 50 percent, with a good contract, the government can still control the SOEs. While the management is expected to be more efficient because it is managed by SWF.
Besides, other investment cooperation between the two countries was also discussed, such as expanding investment in the energy sector. The Indonesian energy company, PT Pertamina and Abu Dhabi National Oil Company (ADNOC) agreed to develop cooperation in the downstream sector.
Discussions include ADNOC’s participation in Refinery Development Master Plan Balikpapan, Balangan, and Dumai. Pertamina also met with Mubadala to expand the firm’s investment in the upstream sector including Mubadala’s participation in the Rokkan block.
In the agricultural sector, the UAE agreed to invest in Central Kalimantan with an area of 100,000 hectares of land to be planted with tropical fruits including dragon fruit. Regarding the matter, the UAE said that if the land rental price, contract, permits, correspondence, and composition of regional shares can be agreed upon, the UAE can immediately invest within a period of two months.
Two months ago, three mega projects worth $9.7 billion has been signed by both countries companies during the meeting between President Joko Widodo and Sheikh Mohammed bin Zayed Al Nahyan, Prince of Abu Dhabi of the UAE at the Bogor Palace. Besides business to business deals, the two countries also signed government to government agreement at investment, defense, tax treaty, industry, tourism, maritime and fisheries, also education and cultural.
Written by Lexy Nantu, Email: email@example.com