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24 December, 2018
Indonesia is offering a series of new projects worth up to $60 billion for Chinese investment to boost its participation in China's belt and road programme, according to a report in the Straits Times.
New projects will include power plants and industrial parks, ports and other infrastructure in provinces of central Kalimantan, North Sumatra, North Sulawesi and Bali.
Indonesia's coordinating ministry maritime affairs infrastructure deputy Ridwan Djamaluddin said that Jakarta has been in "structural communication" with China since 2017 on possible infrastructure projects in a total worth $50bn to $60bn.
Indonesia's best known belt and road project is a $6bn Jakarta to Bandung high-speed railway project which was started in 2016 and is supposed to be finished by 2019. However, Reuters has reported that Indonesia sought ways to speed up this project in May, and that coordinating maritime minister Luhut Pandjaitan mentioned said that the project could take until 2024 to complete.
Ridwan said that securing agreement has taken longer than planned. Indonesia insisted that all deals would follow a business-to-business structure rather than taking any government-to-government loans. "Other countries have been forced to pay back loans and some have let go of their assets. We don't want that," Ridwan is reported to have said.
There are three conditions for Chinese investment in Indonesia: they must employ Indonesian workers; they should use environmentally friendly technology, and the technology is allowed to transfer.
In September the Indonesian government offered a $13.2 billion worth of infrastructure projects to Chinese companies, and in November China and Indonesia agreed to promote bilateral cooperation in a wide range of fields and reached consensus on deepening ties.
China has increased its direct investments in Indonesia in recent years. Investment data service BKPM said that Chinese foreign direct investment in Indonesia in the first six months of 2018 was $1.3bn, covering 1,202 projects. Investment from China was $3.4bn in 2017 and $2.7bn in 2016.
This article was published in Out-law here.
For further information, please contact:
Richard Laudy, Partner, Pinsent Masons
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