Japan funds infrastructure

The Jakarta Post, Jakarta

Japan, Indonesia's largest donor country, has agreed to provide Jakarta with US$847.2 million in soft loans to help finance nine infrastructure and social projects in the country.

The terms of the loans vary among the nine projects, with annual interest rates ranging from 0.4 to 1.5 percent and repayment periods of between 30 and 40 years, including a 10-year grace period.

Diplomatic notes on the agreement were signed Wednesday by the deputy chief of mission at the Japanese Embassy in Jakarta, Satoru Satoh, and M. Ibnu Said, a management expert at Indonesia's Foreign Ministry.

"We expect that Indonesia can improve social and economic conditions and the investment climate, as well as human resources, through these projects," Satoh said after the signing ceremony.

He said Japan has been the biggest bilateral contributor to Indonesia and would continue to help the country develop.

The nine projects covered by these new loans include the construction of North-West Sumatra inter-connector power transmission lines, double-track railroads in southern Java, the development of a national geo-spatial data infrastructure networking system in Sumatra and the construction of infrastructure in disadvantaged regions.

There is also a project to establish IT facilities at schools in Yogyakarta and build infrastructure in areas affected by the 2004 tsunami in Aceh.

The loans also will be used to fund improvements to the operational system at state power firm PLN, and to improve facilities at Hasanuddin University in South Sulawesi and provide fellowships and research scholarships for university lecturers.

Tumpal Hutagalung, deputy director for East Asia and the Pacific at the Foreign Ministry, said the projects would begin this year as soon as the loans were disbursed by the Japan Bank for International Cooperation.

Japan also has approved loans of $16 million for the construction of a mass rapid transit system in Jakarta and $200 million for infrastructure reform and policy development.

The exchange of notes on these two loans occurred in November 2006 and on March 23, 2007, respectively.