Sat, 05 Mar 2005

France pledges commitment to RI projects

Zakki P. Hakim and Urip Hudiono, The Jakarta Post/Jakarta

France is committed to boosting investment and trade relations with Indonesia, including active participation in the projects announced during the recent Infrastructure Summit slated for construction over the next five years.

French Minister for Foreign Trade Francois Loos said on Friday that his government and the private sector were ready to do more in Indonesia in order to finance and assist with the development of infrastructure projects here worth hundreds of millions of euros.

"We are among the best in sectors such as transportation, electricity, water, energy, and oil and gas. We believe we would be helpful with our knowledge in those areas," he told reporters after a luncheon meeting with representatives of the Indonesian Chamber of Commerce and Industry (Kadin).

During his visit, the French minister was accompanied by delegations from 27 of France's top companies including those who have offices in the country such as CMA-CGM Indonesia, Groupe SNEF, Total E&P Indonesie and SOFEMA Indonesia.

Other firms included BNP Paribas, EADS Singapore, GIAT Industries, Groupe Louis Dreyfus and SNCF International.

Kadin chairman Mohamad S. Hidayat said that France would likely invest in the power sector and the setting up of natural gas distribution facilities.

"Apparently, the structure of our power sector is somewhat similar to the French system. Therefore, French technology might better suit our existing system," Hidayat told reporters.

Hidayat said that Kadin representatives would visit France in May to meet local businessmen there and explore opportunities for French companies to invest in Indonesia, not only in the infrastructure sector but also in the manufacturing sector, particularly the textile and apparel industry.

During January's Infrastructure Summit, the government offered 91 infrastructure projects worth US$22.5 billion to investors to be built over the next five years.

During the summit, SNCF International signed a memorandum of understanding with the government allowing the French state rail company to conduct a feasibility study on the building and restoring of the rail network connecting Banda Aceh and Medan, and the possibility of setting up a commuter line in Surabaya.

The study would be funded by the French government through grants worth about 1 million euros (US$1.3 million) for each project, which should be worth about $1 billion in total.

Meanwhile, Loos and his delegation also met with Coordinating Minister for the Economy Aburizal Bakrie during which talks on a debt moratorium were high on the agenda.

"We are prepared to pursue the renegotiation of Indonesia's foreign debt, upon the repayments of which France has placed a moratorium. And we are also prepared, as far as the debt is owed to France, to convert it into investment of up to US$65 million," Loos said.

Government officials confirmed a possible debt-swap deal with France, although they admitted that the question of how exactly it would be implemented was still subject to negotiation.

The finance ministry's director general of the state treasury, Mulia Nasution, said that the debt-swap deal would be a "debt-to- equity" scheme in which the French government would write off a portion of Indonesia's debts in return for shares of equal value in state-owned enterprises (SOEs).

"We're still discussing the amounts involved and whether strategic SOEs would be involved," he said.

"But France has, of course, expressed its interest in SOEs that have good prospects in terms of their technological know-how and markets," he said, adding that the SOEs could well turn out to be those in the transportation or telecommunications sector.

However, there were also other options.

"If, for instance, we have particular infrastructure projects but do not have the funds to finance them, then France will be prepared to support the financing of these projects," Aburizal said.

"France will also let us determine the priorities as regards the projects to be financed by the debt-swap deal."