China-backed Asian Infrastructure Investment Bank (AIIB) could announce as early as next month a plan to co-finance a national slum upgrading project in Indonesia, in what could be the bank’s first foray into the country, Indonesia’s finance minister said.
The $1.74bn project, co-funded by the Indonesian government, the World Bank and the Islamic Development Bank (IDB), will seek to improve Indonesian urban slums to ensure residents have access to clean water, electricity and basic sanitation.
Finance Minister Bambang Brodjonegoro told Reuters in an interview yesterday that he hoped the newly-established AIIB would announce the financing plan at its annual meeting in Beijing on June 25-26, making it one of the bank’s first projects.
“I believe in the first two or three years (AIIB) will do more co-financing than their own financing,” Brodjonegoro said on the sidelines of IDB’s annual meeting in Jakarta.
“Hopefully this deal with Indonesia will be the first.”
AIIB launched in January with the support of US allies including Australia and Britain - despite initial opposition from Washington.
AIIB is expected to lend $10bn-15bn a year for the first five or six years.
Indonesia is the eighth largest AIIB shareholder, pledging to contribute $672.1mn of capital over the next five years.
Under President Joko Widodo, Indonesia is expected to be one of the main beneficiaries of AIIB as Jakarta seeks significant funding to build new roads, ports and bridges to boost growth in Southeast Asia’s largest economy.
Brodjonegoro said he hoped the Indonesian economy will grow more than 5% in the second quarter, from a year earlier, after lower-than-expected 4.92 % growth in the first three months of this year.
“We still have the possibility to grow at 5.3% (this year) given the fact that the first quarter this year was higher than last year,” he said.