China to strengthen investment in aluminum infrastructure and other fields in Indonesia

Indonesia hopes to obtain more than US$60 billion in investment and financing from China, which kicks off the plan of the country's President Joko Widodo. He hopes that Indonesia and China, the world’s second largest economy, will The economic relationship has entered a new era.

Franky Sibarani, Director of Indonesia's Investment Coordinating Agency, stated that during the visit of Victoro to China last week, a number of Chinese banks and state-owned companies have signed relevant agreements and will invest up to US$63.4 billion in total value. Project and financing discussions. He did not disclose the specific time frame for these projects or related discussions, and stated that these agreements signed under the joint witness of Widodo and Chinese President Xi Jinping are only preliminary agreements.

As the new Indonesian president, Widodo is now placing his bets on his ability to raise funds for overdue infrastructure projects. Prior to this, he suffered political attacks in Indonesia, and visits to China and Japan were basically ignored by Indonesian media. To a certain extent, the signing of the aforementioned agreement has brought an opportunity to Videdo. However, in the eyes of the Indonesian people, China always emphasizes its actions. According to data released by the Indonesian Investment Coordinating Agency, since 2005, China’s follow-up of its investment commitments has been only 7%, compared to 62% in Japan. For Indonesia, Japan is one of the largest sources of foreign investment.

At the same time, it also marked that the Victorian government is making concerted efforts to attract Chinese investment. He hopes that these current agreements will enable China to become Indonesia's largest investor in the next few years. The current feeling of the Victorian government is that China’s investment in Indonesia is really too low.

In the past five years, mainland China is the 12th largest source of foreign investment in Indonesia. This ranking is not as good as Malaysia and Hong Kong. However, the "trend in development" of China's investment is encouraging, and Sibala said on Wednesday. He pointed out that in the fourth quarter of 2014, China broke into the top four list of foreign investors for the first time. He also said that Indonesia's investment coordinating agency will soon open a branch in Beijing.

Indonesia’s investment coordinating agency stated that of the US$63.4 billion in investment and financing that the country hopes to obtain from China, approximately US$20 billion is expected to come from the financing of China’s major state-owned banks, and the target of financing is mainly Indonesia’s State-owned enterprises, that is, the main force of infrastructure construction in the country; the rest will come from the direct investment of Chinese state-owned enterprises. Previously, China’s state-owned enterprises have already built some large-scale power plants and other infrastructure in Indonesia, such as a 5 km long bridge, which is the longest bridge in Indonesia. Xibala declined to say which Chinese state-owned companies will participate in the plan.

The private equity investment fund China Citizens Investment Co., Ltd. had said earlier that it would lead a group of Chinese companies to establish an industrial zone in Indonesia and introduce a total investment of 5 billion U.S. dollars in steel, electricity, cement, aluminum and infrastructure. The company stated that the relevant agreement is only an initial intention and does not provide a specific investment schedule.

Of the investment and financing that Indonesia hopes to receive, at least US$25 billion will be introduced into the country’s infrastructure construction projects, including the power generation that Vedic focuses on and the expansion of seaports and railways. The Victorian government stated that the country needs more than 400 billion U.S. dollars in funds to build infrastructure in the next five years, and a large part of the funds will come from private investment.

China's state-owned banks did not comment on this. A consultant to Victoro said that the negotiations between the two parties are still in the "conceptual stage." Indonesian Cabinet Secretary Andi Widjajanto stated that the country has only a limited "window period" to persuade China and Japan to follow up on its investment and financing plans, especially those concerning energy infrastructure. "In the next three months, we must prove to Japan and China that financial commitments will soon be translated into more realistic and concrete agreements and master plans."

Basically, the private sector in Indonesia is optimistic about the above-mentioned agreements signed by China, but it is wary of China's past records in the Indonesian investment market.

"We have to see (investment and financing plans) come true," said Chris Kanter, vice chairman of the Indonesian Chamber of Commerce and Industry. “But I have greater hopes for this, because the agreements were signed under the witness of the heads of the two countries.”

According to reports, Zoko recently held talks with Chinese President Xi Jinping at the Great Hall of the People in Beijing. The two sides also signed eight agreements on cooperation in infrastructure construction, aerospace development and maritime search and rescue, including the relevant Indonesian capital. Memorandum for the construction of high-speed railways from Jakarta to Bandung.

In terms of infrastructure, the two sides agreed to maintain close communication on such projects as special economic zones and in-depth discussions on specific cooperation ideas and methods.

The two sides welcomed China's National Development and Reform Commission and the Indonesian Ministry of State-Owned Enterprises to sign the Memorandum of Understanding between China-Indonesia Infrastructure and Production Capacity and the Memorandum of Understanding on the Indonesia-Jakarta High-speed Rail Cooperation between Jakarta and Indonesia.

The report said that after meeting with Xi Jinping, Zoko said that these Memorandums of Understanding are an important part of the "comprehensive and strategic" cooperative relationship between Indonesia and China. “We will list action plans for the next five years and translate these action plans into concrete cooperation so that both countries can benefit.”