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ADB in talks to fund up to $600m for MRT expansion

Jakarta Globe - December 15, 2023

Jayanty Nada Shofa, Jakarta – Asian Development Bank, or ADB, is currently in talks to help finance up to $600 million for the expansion of Jakarta's mass rapid transit (MRT) project.

The MRT today stretches from Lebak Bulus to the Hotel Indonesia Roundabout. Work is underway to extend the tracks to Kota – and later eventually West Ancol – on what they call a "north-south" line. There are also further plans to develop the "east-west" line which connects West Java's Cikarang and Banten's Balaraja.

Jiro Tominaga, ADB's country director for Indonesia, recently said that the bank had been having active discussions with the government on taking part in the east-west expansion. The funding will likely be a co-financing scheme together with the Japan International Cooperation Agency (JICA).

"We will be working with JICA. It will likely be a co-financing in loans. We are looking at [a financing worth] between $300 million and $600 million," Jiro told a press briefing in Jakarta on Thursday.

Speaking to the Jakarta Globe on the sidelines of the briefing, Jiro said that the $300 million-$600 million would be the financing on ADB's part. ADB did not say how much money would the JICA plan to provide if they do agree to work together. However, the exact figure of ADB's possible financing is still subject to major changes as the discussions are still ongoing. Aside from loans, ADB also plans to provide technical assistance to develop the MRT project.

"There is some technical assistance that we would probably be able to provide through grant financing. But a bulk of the financing will be loans," Jiro said.

Jiro refused to go into details on the grant portion. He added: "[The grant value] is attached to the particular assessment and training they need to do. It kind of depends on the scope."

Although ADB's financing for the MRT expansion would mainly be in loans, Jiro said that Indonesia had a robust debt management policy and capacity.

"Their [Indonesia's] debt-to-GDP ratio is quite low compared to some other countries," Jiro told the Globe.

Earlier this year, a senior official at the MRT Jakarta hinted at the possible ADB financing for the expansion. Weni Maulina, the construction director at MRT Jakarta, revealed in October that the ADB could possibly fund the East-West Line project. ADB would likely take part in the Tomang-Medan Satria route, Weni said at the time, as reported by news agency Bisnis Indonesia.

The JICA is the institution responsible for implementing Japanese government-sponsored technical cooperation programs. The Finance Ministry announced in February that JICA had funded 551 billion yen (about $3.9 billion) worth of projects in Indonesia. Approximately 227 billion yen went into the MRT project development. As of the end of July 2023, Indonesia's public debt ratio stood at 37.78 percent of the country's gross domestic product (GDP).

Source: https://jakartaglobe.id/business/adb-in-talks-to-fund-up-to-600m-for-mrt-expansio