China Minsheng Investment: Build an industrial park in Indonesia
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Chinese President Xi Jinping meets with Indonesian President Joko Widodo in Beijing’s Great Hall of the People on March 26, 2015. |
Indonesian President Joko Widodo told the media during his state visit to China last March 26-28 that there are now new collaborative investment and trade opportunities for China and Indonesia, and that he hoped China would step up its investment in his country’s infrastructure. This year the Indonesian government is to invest IDR 290 trillion (US $22.3 billion) in infrastructure exploration – the highest amount of any in its history.
China Minsheng Investment Corp., Ltd. (CMI) and its partner Indonesia China Business Council signed on March 27 the cooperative agreement in Beijing’s Great Hall of the People whereby scores of domestic competitive private enterprises will jointly invest US $5 billion in building the CMI Indonesian Industrial Park. The funding scale will surpass US $10 billion in the short term. The project was among a package of cooperative agreements between the two countries with a total investment of more than US $40 billion.
Huge potentially, complementary advantages
Indonesian President Joko Widodo released in December 2014 the medium-term reform agenda and economic development plan from 2015 to 2019 whose main focus is future major infrastructure construction projects in 12 fields. Mr Widodo expressed admiration during his visit to China for the fruitful technological experience of Chinese companies and their rapid construction of infrastructure, saying that Indonesia hopes the Chinese government will support it and invest substantially in the construction of its highways, railways, electric power, and harbors.
“If two nations can conduct cooperation in these fields, development in Indonesia should pose no problem,” Mr Widodo said.
Meanwhile, Indonesia is also a founding member of the Asian Infrastructure Investment Bank (AIIB). Mr Widodo commented that many nations experience funding problems, and that international financial organizations including the World Bank, the Asian Development Bank, and the International Monetary Fund can scarcely meet Indonesia’s IDR 3,000 trillion (US $230.5 billion) need for infrastructure capital. “The establishment and operation of the AIIB is sure to push forward the world economy dramatically,” Mr Widodo said.
Coupled with the proactive attitude of the Indonesian government, the Chinese government cherishes this promising business opportunity and development potential. Indonesia is the second largest investment destination in the Association of Southeast Asian Nations (ASEAN). In the decade from 2004 to 2014, China’s investment in Indonesia increased from US $61.96 million to US $1.109 billion – a dramatic growth of 1,690 percent – 17.9 times that of a decade ago.
Premier Li Keqiang said that the Chinese government should encourage more competitive and qualified domestic enterprises to invest in Indonesia and take part in the construction of high-speed rails, light railways, and port-centered industrial parks. We should not only share our technology and experience with the people of Indonesia, but also ensure the speed and quality of such projects.
In fact, Chinese enterprises with mature technology and equipment and high construction competency hold a superior position in the Indonesian potential infrastructure market, displaying lower cost and higher speed than European, American and Japanese enterprises. What’s more, Chinese investment objectives nowadays are more diversified, showing a year-on-year drop in state-owned enterprise participation and growingly competitive private companies that have adopted various investment strategies to accelerate the funding process.
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