JAKARTA: Indonesia expects to conclude negotiations with China in the coming weeks on an additional US$560 million loan for a high-speed rail project being built in the Southeast Asian country, a senior minister said on Monday (Apr 10).
The cost of the line linking the capital Jakarta with the textile hub of Bandung has overshot, pushing Indonesia to seek a new loan from the China Development Bank to help cover a US$1.2 billion cost overrun.
The total cost of the most high-profile Belt and Road Initiative (BRI) in Indonesia has now risen to more than US$7 billion, Indonesian officials have said.
Senior Indonesian minister Luhut Pandjaitan said during a trip to Beijing last week China had cut the interest rate on a proposed additional loan to 3.4 per cent, from 4 per cent previously. The figure was, however, still above the 2 per cent rate Indonesia wanted, he said.
“We are finalising the interest rate. They’ve agreed below 4 per cent, but we want lower,” Luhut told a news conference.The China Development Bank in 2017 had given a consortium of Indonesian and Chinese companies building the railway a US$4.55 billion loan with a 40-year tenure and a 2 per cent interest rate.
Negotiations would also continue on the loan’s maturity, deputy minister Septian Hario Seto said, adding Indonesia wanted it to be similar to the 2017 loan with a 10 to 15 year grace period.