Indonesia has asked China to set up a special fund within its Belt and Road Initiative (BRI) for investment in Southeast Asia’s largest economy, after offering China projects worth US$91bil, government officials said on Wednesday.
Indonesia has not been among the biggest beneficiaries of China’s trillion-dollar push to create a modern-day Silk Road.
Indonesia says this is because it has insisted any loan within the BRI framework is done on a business-to-business basis to avoid exposing the government in case of default.
President Joko Widodo made the request for a special fund during a meeting with China’s President Xi Jinping on the sideline of a G20 summit in Japan last week, Indonesia’s Finance Minister Sri Mulyani Indrawati told reporters.
Indrawati has been given the responsibility of coming up with the fund’s structure, including a proposal to China on the size of the fund and the criteria for loans from it, she said.
“I am currently doing a study about its form, its mechanism, the size of it and of course the consequences of its costs,” she said.
Luhut Pandjaitan, coordinating minister for maritime affairs, separately told reporters the fund should provide loans “with low interest in regards to investment in Indonesia, in partnership with Indonesian companies”.
Pandjaitan, who overseas Belt and Road projects in Indonesia, previously said the Indonesian government had offered China involvement in about 30 projects, worth US$91bil, during a second Belt and Road Forum in April.
The most high-profile BRI venture in Indonesia is a US$6bil high-speed rail project connecting the capital, Jakarta, to the textile hub of Bandung, awarded to a consortium of Chinese and Indonesian state firms in 2015.
The project has faced land ownership issues.
Another controversial project is a US$1.5bil hydro-power plant, funded by Chinese banks and being built by the Chinese state firm Sinohydro, in the heart of the Batang Toru rainforest on the island of
Sumatra, which is home to the endangered Tapanuli orangutans.
Agus Djoko Ismanto, an executive of the power plant developer PT North Sumatra Hydro Energy, on Wednesday denied disrupting the orangutan habitat. He told reporters that 11% of the construction had been completed and it was due to begin operation by 2022.