Jakarta – The Washington-based World Bank has pledged up to $12 billion in new financing to Indonesia over the next three to five years, to support the nation speeding up infrastructure development.
"The World Bank is committed to building on the strong and successful partnership we have had with Indonesia for more than six decades," said Jim Yong Kim, president of the World Bank, in a statement on Wednesday.
Kim was in Jakarta during his meeting with President Joko Widodo and will remain in Indonesia from May 19 to 22.
"We plan to deliver one of our largest financial commitments in the world to Indonesia from the Jakarta office, sharing with Indonesia international knowledge and technical expertise in sectors ranging from energy, health, education, maritime economy, to the delivery of services at the local level."
According to the statement, of the total $11 billion in new financing, $8 billion is slated to come the World Bank International Bank for Reconstruction and Development (IBRD).
The $8 billion commitment represents a 25 percent increase over the lending provided to Indonesia from the previous 4 year period. IBRD provides loans and other assistance primarily to middle income bracket countries.
The World Bank will also channel $3 billion in combined financing from International Finance Corporation – the lender's private sector financing arm – together with the Multilateral Investment Guarantee Agency (MIGA).
Aside from Kim's meeting with Joko, Kim has been scheduled to meet with a series of high-level government officials during his first visit to Indonesia, among whom are Vice President Jusuf Kalla, Finance Minister Bambang Brodjonegoro and Yogyakarta Governor Sri Sultan Hamengkubawono.
The World Bank president has also been scheduled to visit the Sunda Kelapa Harbor and the Tanjung Priok Port in Jakarta on Thursday.
The World Bank is not the only one offering Joko support to make good on his promises of a massive infrastructure push during his five-year term.
Chinese President Xi Jinping on a visit to Jakarta in April had already expressed his interest to increase China's infrastructure investments to Indonesia. China is offering $40 billion to set up a Silk Road infrastructure fund to boost connectivity across Asia, including to Indonesia.
Indonesia has also expressed interest in joining the China-backed $50 billion Asian Infrastructure Investment Bank, which is seen as a rival to the World Bank.
In Indonesia, the problem with fixing infrastructure may not be about the money. Joko has budgeted Rp 290 trillion ($22 billion) for infrastructure projects this year, more than a 50 percent increase from the previous year, thanks to a fiscal windfall from eliminating fuel subsidies.
Yet, projects have stalled due to bureaucracy and a revision to the state budget. As of April 2015, the government had spent under 2 percent of its infrastructure fund. (Jakarta Globe & Reuters)