IFC to up investment on positive RI outlook
Rendi A. Witular, Jakarta
The International Finance Corporation (IFC), an investment arm of the World Bank, plans to increase its investment in Indonesia, Southeast Asia's largest economy, on optimism over the country's economic and political outlooks, a senior official said.
IFC country manager for Indonesia German A. Vegarra said the agency planed to invest about US$210 million in Indonesia in the next fiscal year starting in June and $250 million in 2006, up from $150 million this year.
"We plan to raise our investment here due to the high economic growth predicted for the next couple of years and a more stable political condition," Vegarra said during a press conference on Wednesday.
He said that aside from developing the country's small-and- medium enterprises and the agricultural and mining sectors, the investment allocated for next year would go mostly toward infrastructure, including power and water projects.
Since its founding in 1956, the IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndicated loans for 2,990 companies in 140 developing countries.
The agency has invested about $2.5 billion in Indonesia overall, making the country the sixth largest recipient of IFC funds.
Its Indonesian portfolio covers more than 35 companies, including Bank NISP, Bank Buana, insurance firm Asuransi Jiwa, Manulife Indonesia, shipping firm PT Berlian Laju Tanker and automotive producer PT Astra International.
The increased confidence shown by the IFC in Indonesia's outlook could have a positive impact on foreign direct investment in the country, which has been on the decline over the past several years for a number of reasons, including legal uncertainty, security fears, labor disputes and the poor implementation of regional autonomy.
The IFC also announced on Wednesday a deal to provide $35 million in five-year senior loans and a partial guarantee of up to Rp 210 billion ($23 million) to Bank NISP.
The country's 12th largest bank in terms of assets said it would use the funds to enhance its risk management and to develop export-oriented industries.
"The funds will improve the bank's liquidity management and the balance of long-term funding sources for the disbursement of long-term loans," NISP president Pramukti Sarjaudaja said during the press conference.
The IFC is the third largest institutional shareholder in NISP with 15.05 percent ownership. Oversea-Chinese Banking Corp. Ltd., Singapore's third-largest bank, has a 22.5 percent ownership share in the Bandung-based bank.