France pledges commitment to RI projects

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."