China Investment Corp plans to offer $4 billion of loans for Indonesian infrastructure, part of a package of deals Indonesia is hoping for during a visit this week by Chinese Premier Wen Jiabao, Indonesian officials said on Thursday.
The plans by the $300 billion wealth fund are likely to be announced during a two-day visit to Indonesia by Wen, due to arrive in Jakarta later on Thursday in an effort to boost bilateral trade and gain access to the archipelago's resources.
"CIC plans to provide about $4 billion in the form of loans to Indonesia's infrastructure projects ... and the loans are supposed to be for Indonesian firms," Gita Wirjawan, Indonesia's investment chief, told Reuters.
In addition, Bank of China and and Industrial and Commercial Bank of China plan to lend several billion dollars to Chinese firms for investing in Indonesian industry, Agus Tjahajana of the industry ministry, told Reuters.
Indonesia is trying to attract over $100 billion from investors to overhaul poor infrastructure among its 17,000 islands, while China is on a global hunt to secure long-term resource supplies to fuel its fast-growing economy.
So far Chinese infrastructure investment in Indonesia has lagged that from other Asian countries such as Japan, South Korea and India, though China is the largest trading partner for Indonesia, the world's top exporter of coal for power plants.
CIC is in talks with Indonesia's largest coal firm Bumi Resources on the possible swap of $600 million debt into equity, the miner said last month.
Bumi owes a total $1.9 billion to the sovereign wealth fund. Wirjawan said China's State Development and Investment Corp, a state-owned investment holding firm, also plans to invest up to $200 million to build a cement factory on Indonesia's Papua island and may invest in power plants there.
This would be the first cement factory on Papua, cutting construction costs in a province lacking infrastructure but home to the world's largest gold mine, huge natural gas deposits and forests that the government wants to turn into food plantations.
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