Japan hands over $1.96 million loans

JAKARTA (JP): Indonesia and Japan exchanged diplomatic notes yesterday on Japan's overseas developmental assistance loans worth 190.1 billion yen (US$1.96 million) to fund 23 development projects and one sectoral program loan.

The notes were signed here yesterday by Indonesian Minister of Foreign Affairs Ali Alatas and Japanese Ambassador Taizo Watanabe.

The loans constitute the bulk of Japan's overseas developmental assistance commitment pledged at the fifth meeting of the Consultative Group on Indonesia in Paris earlier this year.

Japan had pledged to lend 206.6 billion yen to Indonesia for the 1996/1997 fiscal year.

Alatas said he was pleased that most of the funds were allocated to the type of projects prioritized by the government, particularly those in rural areas and the eastern half of Indonesia.

"It once again shows the good cooperation between the Indonesian and the Japanese government," he said, adding that the aid comprised soft loans.

Over 174 billion yen will be used to fund projects, many focusing on environmental protection, human resources development, infrastructure and poverty alleviation.

Six billion yen will be used for an irrigation project in Batanghari, five billion yen for an irrigation project in Bili- Bili, 8.4 billion for the Sipansihaporas hydroelectric power plant project, 16 billion yen for the New Padang (Ketaping) airport construction project and 12.8 billion for the Surabaya airport construction project.

Other projects include 20.3 billion yen for pollution abatement equipment, 2.2 billion for a project to improve the district health system in Sulawesi, six billion yen for railway double tracking on the Java South line and 7.7 billion yen for integrated horticultural development in upland areas.

Under the agreement, the loans mature in 30 years, including a 10-year grace period.

There will be a 2.7 percent annual interest rate on the loans to 19 projects on energy, education, infrastructure, agriculture, transportation and irrigation.

The other four project loans will have annual interest rates of 2.5 percent or 2.3 percent. The remaining 16 billion yen will be used as a sectoral program loan with a 2.7 percent annual interest rate. (mds)