The Indonesian government has asked its Chinese counterpart to set up a special fund within Beijing’s Belt and Road Initiative (BRI) for investment in Southeast Asia’s largest economy, Reuters reported.
The reason behind Indonesia’s request is to be able to better coordinate Chinese loans that are associated with BRI projects. During the Belt and Road Forum in April Indonesia offered China roughly 30 BRI projects worth $91 billion.
Indonesia’s request to China highlights a growing desire among the BRI participants to reshape the financing mechanisms and loan structures in their favour. President Joko Widodo met China’s President Xi Jinping on the sidelines of the G20 summit in Japan where the request was made.
Indonesia’s Finance Minister Sri Mulyani Indrawati has been handed the responsibility of coming up with a proposal to China on the size of the fund, its structure and also the criteria for loans. “I am currently doing a study about its form, its mechanism, the size of it and of course the consequences of its costs,” Sri Mulyani Indrawati told Reuters.
In recent years, China’s President Xi Jinping has pushed for the trillion-dollar effort to create a modern-day Silk Road. Indonesia, however, despite its strategic location has not been among the biggest beneficiaries. Indonesia’s biggest BRI project is the $6 billion railway project which links Jakarta to Bandung but the construction has faced problems related to land procurement.
Another project, a $1.5 billion hydropower plant funded by Chinese banks came under scrutiny as it is located in the heart of the Batang Toru rainforest on the island of Sumatra, home to the endangered Tapanuli orangutans. China proposed the Belt and Road Initiative in 2013 to improve regional integration, increase trade, and stimulate economic growth.