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China promises Indonesia $2b in loans for infrastructure projects as part of ACFTA

Reuters & Jakarta Globe | 4 April 2010

China Promises Indonesia $2b in Loans for Infrastructure Projects as Part of ACFTA

China has pledged to provide more than $2 billion in loans to Indonesia to help finance infrastructure development as part of the implementation of the Asean-China Free Trade Agreement.

Following a meeting with Chinese Minister of Commerce Chen Deming on Saturday, Trade Minister Mari Elka Pangestu told reporters that China would provide $1.8 billion in export credits to finance the import of Chinese goods for infrastructure projects such as toll roads, bridges and coal-fired power plants.

A separate 1.8 billion yuan ($263.7 million) loan will be provided for infrastructure-related projects. The two loan agreements will be signed during a visit by Chinese Premier Wen Jiabao this month.

Mari and Chen met at the 10th joint commission meeting between Indonesia and China in Yogyakarta.

Mari said last week that she expected to use the meeting to finalize talks between China and Indonesia over a possible renegotiation of the ACFTA.

The Indonesian government has previously said it would attempt to delay the implementation of the free-trade deal on some categories of goods.

However, Indonesia’s state-run Antara news agency reported on Sunday that the Indonesian government had agreed on Saturday to implement the ACFTA without delay.

“I think we will both apply ACFTA as scheduled,” the news agency quoted Chen as saying.

The ACFTA came into effect on Jan. 1, giving rise to fears that some local businesses would be unable to compete with cheaper Chinese imports.

In addition to the Chinese government’s loans, Mari said the Export-Import Bank of China will provide a $100 million loan and the Industrial and Commercial Bank of China may lend $250 million to companies investing in both countries.

The Chinese government has approved a request by PT Bank Mandiri to open a branch in China to further boost trade.

China has also agreed to facilitate greater market access for Indonesian tropical fruits such as bananas, rambutans and pineapples, Mari said.

“I think we have found a good solution, one that will be more beneficial to Indonesia,” Mari told Antara.

China is Indonesia’s third-largest export market.

 source: Jakarta Globe