Indonesia is offering new projects worth up to US$60 billion (S$82 billion) to Chinese investors in a bid to capitalise on Beijing’s Belt and Road Initiative (BRI), a senior official has said, despite growing concern over the strings attached to some of the loans.
Despite Indonesia’s strategic location, South-east Asia’s largest economy has not been among the biggest beneficiaries of China’s trillion-dollar push to create a modern-day Silk Road.
Its best-known BRI project is a US$6 billion railway linking the capital city of Jakarta to the textile hub of Bandung, which has faced land procurement problems.
However, Jakarta has been in “structural communication” with Beijing since last year on possible infrastructure projects worth a combined US$50 billion to US$60 billion, said Mr Ridwan Djamaluddin, the deputy for infrastructure at Indonesia’s Coordinating Ministry for Maritime Affairs.
Indonesia has proposed potential projects across the archipelago, while Chinese officials and experts have toured regional governments in search of projects to fund, he told Reuters in an interview.
“We are fully aware that we must not let this cooperation end badly,” Mr Ridwan said. “Other countries have been forced to pay back loans and some have let go of their assets. We don’t want that.”
Securing agreement has taken longer than expected because Indonesia insisted on a business-to-business (B2B) structure for all its deals, refusing to take any government-to-government loans, he added.
“I understand we’re not as quick as other countries to tap into the fund because the fund owner will think longer on our offers,” Mr Ridwan said.
He expected agreements in the next round of talks in April, after China responded to Indonesia’s most recent proposal last month, he added.
The B2B model would help shield Indonesia from any risk of China wielding leverage because of the country’s financial dependence, Mr Ridwan said.
Any Chinese investment must also employ Indonesian workers and have the most advanced, environmentally friendly technology and allow for transfer of technology, he added.
Projects on offer include four hydropower plants with a combined value of US$35 billion in the province of North Kalimantan on the island of Borneo, he said.
In October, Power Construction Corp of China and Indonesia’s Kayan Hydro Energy signed a contract for engineering, procurement and construction on the first stage of one plant, the Chinese firm said in a statement.
The project is valued at US$17.8 billion, the media reported.
Indonesia’s proposal also offers China the opportunity to build mine-mouth power plants, industrial complexes, ports and other infrastructure in its provinces of Central Kalimantan, North Sumatra, North Sulawesi and on the resort island of Bali.