China provides Indonesia with infrastructure loans

By: | at 08:00 PM | International Trade  

China has agreed to lend at least $1.8 billion in soft loans to Indonesia as part of its free trade agreement with the 10-member Association of South East Asian Nations (ASEAN), a minister said.

The China-ASEAN Free Trade Agreement, which imposed zero tariffs on a range of goods, came into effect in January and has prompted fears among some Indonesian businesses that the domestic market would be flooded with cheap Chinese imports, leading to job losses in a country which already has high unemployment.

Indonesia’s Trade Minister Mari Pangestu, who met China’s Commerce Minister Chen Deming in Yogyakarta, Central Java, on Saturday, afterwards announced that China would provide $1.8 billion in export buyers credits to finance the import of Chinese goods used for infrastructure projects such as toll roads, bridges and coal-fired power plants.

In addition, China will provide 1.8 billion yuan ($263.7 million), also for infrastructure-related projects, while Chinese banks would help finance trade between the two countries.

Export-Import Bank of China will provide a $100 million loan and Industrial and Commercial Bank of China may lend $250 million to companies investing in both countries, according to a statement from the trade ministry.

Indonesia’s largest lender PT Bank Mandiri Tbk will open a branch in China to further help trade between the two countries, according to the ministry.

With its abundant coal, gas and minerals, Indonesia has attracted strong interest from Chinese investors, and Chinese Premier Wen Jiabao is scheduled to visit Southeast Asia’s biggest economy later this month.

Imported goods from China topped Indonesia’s total non-and-gas import list, accounting for 18.58 percent in the first two months this year, followed by Japan and Singapore, according to Indonesia’s statistics bureau. Non-oil-and-gas imports from China rose 55 percent to $2.79 billion in January-February 2010, from $1.8 billion the previous year, the bureau said on its web site.

Non-oil-and-gas exports to China in January-February 2010 more than doubled to $1.997 billion, from $840.5 million in the same period the previous year. (Reuters)


Be the first to comment on this article!

To avoid Spammers, we ask that you log in using your account. Free accounts have access to commenting.

Did you forget your password?

It happens...