ASEAN KEY DESTINATIONS
FC boosts investments to over $1b until June 2015
The International Finance Corporation (IFC), the World Bank’s finance arm, is increasing investment in Indonesian companies to more than US$1 billion for its fiscal year that will end in June 2015.
In the 2013-2014 fiscal year, which ended in June this year, IFC recorded US$804 million in investment in Indonesia, up 84 percent from a year earlier, about $600 million of which was for infrastructure projects.
IFC director for East Asia and the Pacific Vivek Pathak said that IFC had committed to cooperating with the incoming government’s plan to enhance the country’s infrastructure and capital markets.
“An 84 percent jump in our investment itself is an indication of how much we value what’s happening in this country and what can be done [here],” Pathak said in a press conference on Wednesday.
“With the new government coming in there is a lot that we can all do collectively,” he continued.
IFC country manager Sarvesh Suri, meanwhile, said that despite the economic challenges, as shown in the country’s moderating economic growth, IFC still saw huge opportunities with the new government that takes over later this month.
“If you see longer term, we continue to be very optimistic about Indonesia. The demographics of the country, GDP per capita, the rising income level of the people, the consumer middle class, which is expanding quite a lot, all lead to a very high growth in the medium and long term,” Suri said.
“We are a long-term investor and we remain bullish on Indonesia,” he continued.
IFC’s total investment in the East Asia Pacific region for fiscal year 2014 reached a record of $4.2 billion, up 24 percent from the previous fiscal year.
Since IFC set up its Indonesian office 46 years ago, it has financed a total of $6.2 billion worth of long-term investments, nearly a quarter of which were committed in the last 15 months alone.
“If we look at a country like Indonesia, we need to create jobs over here. And what is essential for creating jobs is we need to have a competitive manufacturing space. The area that should be a focus is agribusiness,” Pathak said. “How do we get competitive manufacturing is I think through the infrastructure,” he continued.
Two major investments in these sectors are a $509 million long-term loan to chemical manufacturing company PT Panca Amara Utama (PAU) last month and a $280 million loan facility to independent power producer PT Bajradaya Sentranusa.
The former deal is to fund PAU’s construction of a greenfield ammonia plant in Central Sulawesi province, while the latter is to support the long-term operation of Asahan 1, a 180-megawatt hydroelectric power plant in North Sumatra.
“We also mentioned about how important is the development of domestic capital markets in improving infrastructure finance. In that area we worked with PT Ciputra Residences. They issued a bond for about Rp 500 billion. We provided a guarantee to increase the credit worthiness of the bond,”
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