Indonesia Eximbank has secured US$500 million in a club deal loan from the Indonesian unit of the Industrial and Commercial Bank of China Ltd. (ICBC Ltd.) and Hong Kong-based sister company ICBC Asia Ltd. to support its export financing activities.
ICBC Asia acts as the lead arranger and ICBC's Indonesian unit, ICBC Indonesia, is the facility agent in the club deal loan, which will mature in five years.
The loan is a first phase of a memorandum of understanding (MoU) on loan facility worth $20 billion signed in Beijing earlier this year between ICBC Ltd., one of the world's largest banks by assets, and the Indonesian government, for the country's economic development.
"This agreement marks our commitment to become a financial bridge between Indonesia and China as we want to continue our role in helping this country's economy to grow," ICBC Indonesia president director Shen Xiaoqi said in his speech during the event.
Aside from supporting President Joko "Jokowi" Widodo's program to boost infrastructure, Xiaoqi said the bank also aimed to provide comprehensive financing for Indonesian state firms, including Indonesia Eximbank, which is fully owned by the government.
ICBC Indonesia was also committed to providing more financing for Indonesia Eximbank in the future, including in Renminbi, as trade relations between both countries remain growing amid global weakening, Xiaoqi said.
Chinese Ambassador to Indonesia Xie Feng, who was present at the Tuesday event, said that both countries had similarities in terms of being large developing nations and played important roles as trade partners.
As trade and financing partnerships between both countries continue to grow, Feng also expected that the Indonesian government would keep up its efforts in facilitating Chinese businesses operating in the country.
Surya Wijaya, deputy head of ICBC Indonesia's strategic management and transformation office, said recently that the bank had booked around Rp 26 trillion (US$1.79 billion) to Rp 27 trillion in outstanding loans so far, growing slightly from Rp 24 trillion at the end of last year.
The bank has set loan targets in its business plan to reach between Rp 28 trillion and Rp 29 trillion by the end of this year as it remains cautious amid global and domestic economic challenges, Surya said.
"We are still committed to providing loans for infrastructure projects, especially those constructed under state-owned firms," Surya said.
Despite a weak global and domestic economy, Indonesia Eximbank executive director Ngalim Sawega said the company's funding needs, which comprised 55 percent foreign exchange, continued to increase as demand kept growing.
"The interest rate for this club deal loan is a little bit above 3 percent," Ngalim said.
Indonesia Eximbank, also known as the Indonesian Export Financing Agency (LPEI), will also get an additional state capital injection amounting to Rp 3 trillion from the Finance Ministry next year, with Rp 1 trillion already allocated and to be disbursed this year.
Indonesia Eximbank managing director Basuki Setyadjid said recently that the firm would use the funds to expand its export financing business, which grew by almost 30 percent due to a weakened rupiah.
Basuki said the agency had booked Rp 77.1 trillion in total assets and Rp 70.8 trillion in outstanding loans as of August.
To support its expansion plan, Basuki added, the LPEI would also issue bonds worth Rp 2 trillion on Sept. 13 and was optimistic they would be oversubscribed.
