According to a recent article by the Jakarta Post, Japan will invest in sectors like electricity and geothermal energy in Indonesia, so the Head for Asia and Oceania Finance Department of Japans Bank for International Cooperation (JBIC).
“Indonesia has secured a US$100 million soft loan from Japan to finance exports, with Japan promising to disburse another $400 million later on.
The $100 million loan is provided by the Japan Bank for International Cooperation (JBIC) to the Indonesia Eximbank, an agency specialized in boosting exports. The agreement was signed on Friday.
Eximbank, established in September, has a preliminary capital base of Rp 4 trillion ($424 million), with the government planning to inject another Rp 2 trillion next year.
The loan has an interest rate of LIBOR plus 230 basis points, meaning that exporters can borrow money at a rate of about 5 percent, while dollar-denominated loans in banks are available at about 7 percent, Eximbank Chief Executive Officer Mahendra Siregar told reporters. “The low interest rate will cut borrowing costs. Our debtors can get cheaper funds *as opposed to borrowing money from conventional banks*” he said.
Apart from the $500 million from Japan, Indonesia is looking for trade financing from Australia, China and ASEAN countries said Mahendra.”
The loans, as far as I understand would also support Japanese suppliers, e.g. of turbines for planned geothermal power plants or service firms, to invest and provide their services and products in Indonesia.
Source: The Jakarta Post