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The Japan Bank for International Cooperation (JBIC; Governor: Tadashi Maeda) signed today a buyer's credit agreement totaling up to approximately USD103 million (JBIC portion) with PT. Chandra Asri Petrochemical Tbk (CAP) of Indonesia. The loan is co-financed with the Tokyo Branch of BNP Paribas Bank, which brings the overall co-financing amount to USD172 million. The co-financed portion is covered by insurance from Nippon Export and Investment Insurance (NEXI).
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The loan is intended to provide financing for CAP to establish a manufacturing plant for high density polyethylene (HDPE), linear low density polyethylene (LLDPE), and metallocene linear low density polyethylene (mLLDPE) inside its petrochemical complex in Cilegon, Banten province, located in the western part of the island of Java, Indonesia. The funds from the loan will be used to purchase a whole set of plant facilities from Toyo Engineering Corporation and its subsidiary.
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In Indonesia, demand for petrochemical products has increased along with high economic growth, but the domestic supply has not been catching up with the demand. As a result, a large part of the country's demand continues to be met by imports. In particular, domestic supply of polyethylene used to make plastic for various daily necessities remains at about 50% despite its recent demand growth and this project will contribute to import substitution of polyethylene. In Indonesia, a large number of capital investments in the petrochemical sector is anticipated. Through this project, JBIC is supporting Japanese companies with the export of equipment related to establishing a petrochemicals plant. The project will contribute to Japanese industry maintaining and enhancing its international competitiveness through creating business opportunities for Japanese companies in the petrochemical field in Indonesia.
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Furthermore, this project is in line with the Making Indonesia 4.0 roadmap, promoted by the Indonesian government. Under this initiative, the country is aiming to upgrade the domestic manufacturing industry to alleviate the country's reliance on imports and generate exportation capacity.
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As Japan's policy-based financial institution, JBIC will continue to support Japanese companies' export of plant machinery and equipment, as well as their overseas business deployment, by drawing on its various financial facilities and schemes for structuring projects and enhancing its risk taking and managing measures.
