Indonesia expects to finalise US$560 million railway loan from China next week

[beijingwalker]

Indonesia expects to finalise US$560 million railway loan from China next week​

Published Mon, Oct 09, 2023 · 3:51 pm

The new loan is in addition to a 2017 loan worth US$4.55 billion that the China Development Bank has approved for the consortium.

The new loan is in addition to a 2017 loan worth US$4.55 billion that the China Development Bank has approved for the consortium.​

PHOTO: REUTERS


INDONESIA expects to sign a long-delayed US$560 million loan with China during the Belt and Road Forum (BRF) in Beijing next week, an Indonesian official said on Monday (Oct 9), with the amount slated to cover rising costs for its first high-speed railway project.

President Joko Widodo earlier this month launched the US$7.3 billion railway, which connects the capital Jakarta to Bandung, even though funding was not fully secured due to the lengthy negotiations on the terms of the loan.
The project, being built by a consortium of Indonesian and Chinese state companies, is running US$1.2 billion over budget, according to Indonesia’s government.

“Next week it should be done,” Kartika Wirjoatmodjo, deputy minister of state-owned enterprises, told reporters when asked about the status of the loan.

He said the signing may take place during the BRF, when Widodo and Chinese President Xi Jinping are expected to virtually inaugurate the bullet train’s commercial operations.

The new loan is in addition to a 2017 loan worth US$4.55 billion that the China Development Bank has approved for the consortium. That loan has a 40-year tenure, with a 10-year grace period, and an interest rate of 2 per cent per annum

Indonesian officials have previously said Jakarta was seeking similar terms for the additional loan, but China had offered a higher interest rate of between 3.4 per cent to 4 per cent.

China has also asked for government guarantee for the additional loan, which the Indonesian government accepted in September after initially rejecting it.

The terms of the new loan have yet to be made public.

Asked how the money would be spent, Indonesia’s state railway company Kereta Api Indonesia, which leads the consortium behind the project, and spokesperson for the consortium did not respond to Reuters’ request for comment.

https://www.businesstimes.com.sg/international/asean/indonesia-expects-finalise-us560-million-railway-loan-china-next-week

 

[Viet]

That’s ok with 2 percent per year. Indonesia pays for 10y gov bonds 7.11 percent. If taking grace period into account then China effective interest rate is about 1.5 percent.
That’s a good deal for Indonesia.

 

[beijingwalker]

That’s ok with 2 percent per year. Indonesia pays for 10y gov bonds 7.11 percent. If taking grace period into account then China effective interest rate is about 1.5 percent.
That’s a good deal for Indonesia.

Still the west will be routinesly calling it debt trap

 

[Viet]

Still the west will be routinesly calling it debt trap

Two things. Chinese still make big profits even with low interest on additional loan. Second, Indonesia is a tough partner not easy to cheat by Chinese contractors.

China is not transparent but probably 80 percent of Chinese loans are given to poor and very poor countries they will never pay back. That’s impossible. The returns on the infras are in most cases lower than the interests they pay for Chinese loans.

Let’s wait if Indonesia Hsr makes any profits at all.

 

[Reashot Xigwin]

Two things. Chinese still make big profits even with low interest on additional loan. Second, Indonesia is a tough partner not easy to cheat by Chinese contractors.

China is not transparent but probably 80 percent of Chinese loans are given to poor and very poor countries they will never pay back. That’s impossible. The returns on the infras are in most cases lower than the interests they pay for Chinese loans.

Let’s wait if Indonesia Hsr makes any profits at all.

It ain't. Even a minister here even goes as far to claimed that the HSR are not going to turn a profit till the end of time. It's hyperbole. In reality It will be around 60 years before it turns a proft.

Fun fact: There's also an increase in anti-chinese sentiment in the country counciding with the HSR fiacso & other thing.

More broadly, in a side-by-side comparison across different questions, China ranks less favourably than the United States across a range of indicators, from military and economic leadership, and influence and security concerns, to ‘soft power’ benchmarks such as education and work destinations.

United States–China - Indonesia Poll 2021

Trust in both China and the United States has declined amongst Indonesians, but more negativity exists in relation to China.

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