RI inks US$7.5b in deals with China
Primastuti Handayani, The Jakarta Post/Beijing
Following the signing of five agreements between the Indonesian and Chinese governments, the private sectors of the two countries followed them up on Friday by signing four agreements and three memorandums of understanding worth more than US$7 billion in energy and infrastructure.
President Susilo Bambang Yudhoyono and Chinese Deputy Prime Minister Zhen Pey Yan witnessed the signing of the agreements at the China World Hotel in Beijing.
The four principal agreements cover the construction of two power plants in South Sumatra, the Tuban refinery project and a railway transportation system for coal mining also in South Sumatra.
Indonesian Chamber of Commerce and Industry (Kadin) chairman MS Hidayat briefed the press onboard a Garuda aircraft heading to Shenzhen, saying the government was focusing the infrastructure projects on energy in South Sumatra as the province had the potential for coal mining.
"Some of the projects are expected to start this year. Once the projects in the energy sector start, Chinese investment in Indonesia will be one step ahead of Japan," he said.
"China has been very efficient in offering a price, which could be 35 percent below Japan's," he added.
Elsewhere, South Sumatra Governor Syahrial Oesman said the next step after the signing was pursuing necessary principal permits from the Ministry of Energy and Mineral Resources and state electricity firm PT PLN.
Other projects considered include the development of an oil palm plantation along the border of Indonesia and Malaysia in Kalimantan, the construction of a 400-hectare industrial estate in West Java, and the development of a railway system for coal connecting Tanjung Enim and Lampung.
Commenting on the involvement of tycoon Tomy Winata, who is close to the military, in the construction of the industrial estate in West Java, Hidayat argued that Tomy was well-connected with Chinese businesspeople, particularly those from Guangzhou.
Earlier in the day, Susilo had one-on-one meetings with Chinese businesspeople: governor of the China Development Bank Chen Yuan; executive vice governor of the Export Import Bank of China (EXIM Bank) Li Ruo Gu; chairman of the China Petroleum and Chemical Corp. (Sinopec) Chen Tong Hai; president director of the China International Trust and Investment Corp. (CITIC) Kung Dan; president of the China Railways Engineering Corp. (CREC) Qin Jiaming, managing director of the Microsoft Research Center Asia- Beijing Harry Shum and country director of Microsoft Indonesia Tonny Chen.
Principal agreements:
1. On the Tuban oil refinery project in East Java, between PT Pertamina and Sinopec worth $2.4 billion. 2. On the Tanjung Jati project. A coal-fired power plant with a capacity of 2x660 MW, between Chengda Engineering Corp., Bakrie Power, the MSH Group and Bank of China worth $1.1 billion. 3. On a coal-fired power plant in South Sumatra, with a capacity of 4x600 MW and investment of $2.1 billion to be financed by the China Development Bank and China Exim Bank, and constructed by Hua Dian Engineering, Indonesian consortium and state mining company PT Bukit Asam. 4. On a railway and transportation system for coal in the Bukit Asam mine connecting Tanjung Enim and Palembang, worth $500 million.
MOUs: 1. The project of a 2x100MW coal-fired power plant in S. Sumatra worth $190 million, to be financed by China Bank. 2. The project of a 450-hectare Chinese industrial estate in Karawang, West Java, worth $70 million. 3. The project of railway system for coal transportation linking Tanjung Enim and Tarahan worth between $650-$750 million, to be financed by Industrial Commersial Bank of China, EPC Contractor China Railways Engineering Corporation.