Three State banks get loans worth $3 billion from China Development Bank

CEOs of Bank Mandiri, BRI, BNI sign loan agreements with CDB (image : SOE Ministry)

Jakarta (TheInsiderStories) - Three state-owned banks — PT Bank Mandiri Tbk (IDX: BMRI), PT Bank Rakyat Indonesia Tbk (IDX: BBRI) and PT Bank Negara Indonesia Tbk (IDX: BBNI), — have secured loans worth a total of $3 billion from the China Development Bank (CDB), which will be used to finance infrastructure projects in the country. The loan agreement was signed on Wednesday (Sept. 16).

The state owned banks will get loans worth $1 billion respectively with a tenor of 10 years. As much as 30% of the loans would be received in Renminbi (RMB).

The term of the loan is in accordance with the infrastructure financing which requires long-term funding. The loans will be used for infrastructure development as well as boosting the trade between the two countries.

The loan agreements were signed by Bank Mandiri President Director Budi G. Sadikin, Bank Rakyat Indonesia President Director Syam Asmawi, BNI President Director Ahmad Baiquni and China Development Bank President Zheng Zhijie, and were witnessed by Minister of State Enterprises Rini Sumarno and Minister/Chairman of National Development and Reform Comittee Xu Shaoshi in Beijing, China on late Wednesday (16/9).

On that occasion, Budi G. Sadikin, and Ahmad Baiquni and Asmawi Syam said, these loans are the first phase of the CDB’s commitments to lend $30 billion to Indonesian state owned companies and in line with the government program that would boost the infrastructure sector. The loans are expected to further spur economic growth in Indonesia.

According to the State Enterprises Minister Rini Soemarno, the loans will be used for developing infrastructure projects in Indonesia, which have become the priority program of President Joko Widodo.

The loans are a follow-up of the Memorandum of Understanding (MoU) signed in February this year by the Indonesian Ministry of State Enterprises and China’s National Development Reformation Commission (NDRC).

In the MoU, a loan commitment was obtained from two Chinese financial institution, the CDB and the Industrial and Commercial Bank of China Limited (ICBC), which agreed to provide $20 billion each or a total of $40 billion.

“CDB and ICBC are ready to provide a standby loan for infrastructure projects in collaboration between the SOE Indonesia and SOE of China,” said Rini Soemarno.

She added, the state-own construction firm PT Adhi Karya Tbk (ADHI) is also exploring loans from CDB worth Rp7 trillion for a Light Rapid Transit (LRT). This year, the government allocates budget of Rp290.3 trillion for infrastructure projects.