Indonesia Renegotiates with China to Cut Loan Interest Rate of Fast Train Project
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April 12, 2023 | 09:54 pm
TEMPO.CO, Jakarta - The Indonesian government is renegotiating with the China Development Bank (CDB) to lower the loan interest rate for the Jakarta-Bandung Fast Train (KCJB) project to 3 percent, SOE Deputy Minister Kartika Wirjoatmodjo has reported.
Indonesia previously hoped that the CDB could lower the loan interest rate to 2 percent. A few days ago, Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan left for Beijing to reach the deal. However, the CDB decided to cut it to 3.4 percent.
“We are negotiating again [by proposing] a guarantee scheme. So hopefully in the next 2 weeks, we get a clearer response from them,” Kartika Wirjoatmodjo or Tiko told reporters at the Parliament Complex on Wednesday, April 12.
He explained that at present, the government is preparing an agreement scheme so that the loan interest rate could drop to 3 percent. The government will no longer persuade the Chinese bank to cut the loan interest rate to 2 percent as it is already reasonable given the current treasury rate that has risen from 2 to 4-5 percent.
“I think the increase is still very reasonable because this is a long tenure," Tiko argued.
Indonesia asked for a longer loan tenure of 30 years and an interest rate of more than 10 years. “So it is a very soft loan. It's pretty good,” he added.
Coordinating Minister Luhut emphasized that the 3.4-percent loan interest rate was the first offer made by CDB so the government could still ask for a lower rate. However, Luhut claimed the figure is already lower than the debt from other parties which may reach 6 percent for the KCJB project. “So if we get 3.4 percent, well, we're doing okay,” he said.
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