Indonesia, US sign $750m infrastructure, trade deal

(The Jakarta Post) – The governments of Indonesia and the United States (US) have inked a memorandum of understanding on infrastructure and trade funding worth of US$750 million. The deal signed by Indonesian Ambassador to US, Muhammad Lutfi, and President of EXIM Bank, Kimberly Reed yesterday.

The figure higher than the previous agreement of U$500 million in 2017 – 2018. Lutfi stated, “This MoU will further strengthen the Indonesia – US economic partnership in an effort to expand the field of investment cooperation and procurement of goods and services.”

While, Reed emphasized that the agreement was a significant achievement to strengthen US participation in Indonesia’ energy, infrastructure, transportation, information and communication technology, health services. also environment sectors. In the meeting with US’ secretary of state, Mike Pompeo, President Joko Widodo encourage US’ businesses to invest more in Indonesia, including for projects in the outer islands, such as Natuna Island.

Pompeo also announced, Washington to provide roughly US$11 million of government assistance and 1,000 ventilators for Indonesia. The funds part of the more than $20 billion his country has pledged around the world for the global COVID-19 response. He also emphasized that there should be much more investment from the United States, especially in the digital, energy, and infrastructure sectors in Indonesia.

“We are poised to use that American tool to promote private sector investment that can support President Widodo’ plans to spend $327 billion on more than 250 infrastructure projects,” he asserted.

Pompeo said, the International Development Finance Corporation is catalyzing private sector investment in Indonesia’ growing infrastructure, digital, and energy sectors, and the recent signing of a bilateral Infrastructure Finance agreement will attract private sector capital to meet Indonesia’ estimated $1.5 trillion infrastructure gap.

US companies are major investors in Indonesia’ economy, contributing to sustainable growth across diverse sectors. In October 2020, Kimberly-Clark executed its $1.2 billion acquisition of Softex Indonesia with a strategy to fuel the company’ growth through brand building and innovation.

While, Earlier this year, Pennsylvania-based Air Products and Chemicals Inc., announced a $2 billion investment to create a world-class production facility in Kalimantan for methanol, a chemical feedstock. The company joined with two state firms, PT Bukit Asam Tbk (IDX: PTBA) and PT Pertamina.