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IFC to Double Its Investment In Indonesia, Focusing on SMEs

International Finance Corporation, an investment unit of the World Bank, is set to double its spending in Indonesia to help local companies meet their business expansion plans.

Sarvesh Suri, IFC’s country manager for Indonesia, said in a media briefing on Tuesday that it may invest between $400 million to $600 million in the current fiscal year ending June 30, 2013.

That would be an increase from its existing investment value of $300 million in eight projects from different sectors in the fiscal year ending June 30, 2012. The proposed spending would bring total investment from the IFC to $1.25 billion.

“We are making sure that we have a very healthy pipeline of investment right now,” Suri said.

He said that the IFC expects to take in some projects in the next few month as the organization continues to invest in “critical areas” such as increasing financial inclusion for small- to medium-sized enterprises, and helping the agriculture sector and developing sustainable infrastructure projects.

Last fiscal year, IFC invested the $300 million in eight projects, including the acquisition of 11 percent shares in Medco Power Indonesia, a unit of oil producer Medco Internasional, to support production of clean energy from geothermal and hydro power plants. IFC also exercised the right to exchange its $15 million of convertible bonds in Bank Tabungan Pensiunan Nasional into a 3 percent stake. IFC spent $12.5 million early this year in a rights offering to keep its 19.9 percent stake in Bank Hana.

IFC’s investment in the banking industry is aimed at increasing financial inclusions in small and medium enterprises — a sector that accounts for 90 percent of job creation in Indonesia, Suri said.

In the current fiscal year, IFC last week loaned $10 million to shipping company Wintermar Offshore Marine and that can be converted into equity in three years. The convertible bond followed loans of $45 million to Wintermar in January.

IFC has also invested in other projects. It spent $7 million on advisory projects including those for the Indonesian government on several public-private partnership projects.

Sergio Pimenta, IFC director for East Asia and Pacific, said that of more than 15 countries that the IFC covers in the region, Indonesia ranked third in term of number of transactions — after Vietnam and China. Last year, IFC invested a total of $2.9 billion in 71 projects in East Asia and Pacific. Globally, the organization spent $20.4 billion in investments last year.

(Source: Jakarta Globe)

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International Finance Corporation