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The Indonesian and Qatar governments have signed a memorandum
of understanding (MoU) for the establishment of a trust fund that will
provide investment funds of up to US$1 billion for infrastructure
projects in Indonesia.
"The signing of the MoU represents a follow up to President Susilo
Bambang Yudhoyono's recent roadshow in the Middle East," State Minister
for State Enterprises Sugiharto said Friday.
The President visited several Arab countries in May to introduce 25
proposed Indonesian infrastructure projects to Middle Eastern investors.
Sugiharto explained that the MoU with Qatar would serve as a benchmark
for similar agreements with other Middle Eastern countries, such as
Bahrain, Kuwait, the United Arab Emirates, Qatar and Saudi Arabia.
Besides the MoU with Qatar, Indonesia has also signed an agreement with
the Islamic Development Bank (IDB). Under this agreement, the IDB will
provide $65 million in loans to partly finance a project by state gas
distribution company PT Perusahaan Gas Negara to construct pipelines
linking gas fields in Pagardewa and Grissik in South Sumatra to West
Java.
The IDB is also expected to provide loans for construction projects by
state railway operator PT KAI, in addition to opening "trade-line"
facilities for Bank Rakyat Indonesia, Bank Negara Indonesia, Bank
Mandiri and Bank Ekspor Indonesia.
Together with Bank Ekspor Indonesia, the IDB is also planning to
provide a loan to finance projects by state railway producer PT INKA in
Bangladesh.
The Qatar Islamic Bank has also promised to invest up to US$100 million
to establish a foothold in Indonesia through the taking of a stake in
an existing bank here.
"The Qatar Islamic Bank wanted to set up a new bank, but instead we've
offered them the chance to purchase a local lender or a local sharia
bank," Sugiharto said.
The Dubai-based Qatar Islamic Bank is following in the footsteps of
other overseas lenders from emerging markets, such as China's
Industrial & Commercial Bank, in investing in Indonesia, Southeast
Asia's largest market by population.
In addition, Bank Syariah Mandiri has signed an MoU with Standard
Chartered Bank Dubai for cooperation in correspondent banking and
trade-line facilities, international financing syndication for
Indonesian projects and other crossborder transactions.
Most Middle East banks are sharia-based. Sharia forbids investment in
businesses with high levels of indebtedness or those connected with
proscribed activities, such as gambling and alcohol production.
Apart from the banking and financial sectors, state-owned PT Krakatau
Steel has signed an agreement with Al-Tuwairqi Group, a manufacturing
company from Qatar, for cooperation in the development of a steel and
cold rolling mill worth $326 million.
Also benefiting from the cooperation with the Middle East is
state-owned dredging company, PT Rukindo, which has signed an agreement
with SMS Global Dubai for a joint land reclamation venture worth US$50
million over a period of five years.
Meanwhile, one of the country's largest construction firms, PT Adhi
Karya, is expected to cash in on its experience by constructing a
monorail in Mecca, Saudi Arabia, while another construction company, PT
Waskita Karya, has signed a deal to build three office towers, each 85
stories high, in Dubai.
Also in the action is airports operator, PT Angkasa Pura I, which will
team up with financial firm EMAAR Dubai to build an airport in Lombok.
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