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Indonesia Eximbank news and announcements.

28 Mar 2019

LPEI Supports Wika to Cost 3,950 Housing Units in Algeria

LPEI supports PT. WIJAYA KARYA (Persero) Tbk, through a National Interest Account (NIA) scheme to finance the construction of 3,950 subsidized housing units in Algeria. This success story is a concrete step by the government and LPEI in increasing the value of exports to non-traditional countries.

Jakarta, March 27, 2019. Indonesia Eximbank / Lembaga Pembiayaan Indonesia (LPEI) provides financing in the form of Export Working Capital Loans  to PT WIJAYA KARYA (Persero) Tbk. (WIKA) through the National Interest Account (NIA) scheme for subsidized housing development projects in Algeria.

LPEI Executive Director, Sinthya Roesly, said that export financing through the NIA scheme is a real form of support to increase the volume of Indonesia's export value. "It also creates and increases trade transactions between the two countries in infrastructure and construction, especially for non-traditional export destination countries," he explained.

She added that LPEI as a state institution that has a mandate to increase the value of Indonesian exports, not only provides export financing to debtors but also becomes an intermediary tool between debtors and exporters to increase the value of Indonesian exports. "One form is by cooperating with PT Integra Indocabinet Tbk. who will later support WIKA in terms of furniture procurement for WIKA projects abroad, "he said.

In accordance with the mandate in the Law of the Republic of Indonesia Number 2 of 2009, the establishment of LPEI aims to improve the competitiveness and added value of Indonesian products, support the growth of domestic industries, and explore prospective non-traditional market potential. Special assignments given by the Government to LPEI serve to provide financing, guarantees, and export insurance for transactions or projects that are commercially difficult to implement, but are deemed necessary by the Government to support export policies or programs in the form of NIA programs. Furthermore, in an effort to increase exports especially to non-traditional countries, the Ministry of Finance issued Decree of the Minister of Finance of the Republic of Indonesia Number 1 / KMK.08 / 2019 concerning Special Assignments to Indonesian Export Financing Institutions to encourage exports to African, South Asian and The Middle Eastern countries.

WIKA as a State-Owned Enterprise (SOE) in the engineering, procurement, and construction (EPC) field, won the trust of the Algerian government for the construction of 1,700 subsidized housing units (lodgement) in Baraki and El-Harrach in the Algier region. Also 2,250 units in Ain Defla and Khemis Miliana Blida region. The two projects were valued at Rp.187.7 billion. "The support provided by LPEI to WIKA is a form of strategy to market national strategic industrial products to prospective markets," said Sinthya.

Government & LPEI Synergy Creates Socio-Economic Benefits for Indonesia

The signing of the EWCL through the NIA scheme was carried out in line with WIKA's commitment which is now actively expanding the construction business in international markets, especially Africa, South Asia and the Middle East. WIKA's Director, Destiawan Soewardjono, assessed that LPEI’S role was very significant in the success of WIKA's work on projects abroad.

"LPEI has so far demonstrated its support to minimize the financial risks faced when entering new countries, also facilitating the Company's efforts to strengthen its position in the market that has been entered," he said. He added that LPEI’s support in financing export working capital is a form of cooperation that shows the strategic value in the form of government support to the national construction service sector in increasing competitiveness in the construction of overseas infrastructure projects. "In addition, it is a concrete step to increase exports and investments to non-traditional countries through the use of NIA funds, including through the use of derivative business opportunities."

Sinthya explained that LPEI as one of the Ministry of Finance's Special Mission Vehicles (SMV) is conducting export financing through the NIA scheme by taking into account the socio-economic benefits for Indonesia. "The subsidized housing construction (logement) project in Algeria carried out by WIKA directly and indirectly provides a multiplier effect for the country and the people of Indonesia, which includes encouraging strategies to increase exports to non-traditional countries and open fields and direct employment opportunities for 1,343 Indonesian workers."

Other benefits, she added, include increasing export value and competitiveness of Indonesian products and services, especially construction services in the international market, market penetration into African regions, and increasing the value of Indonesia's bilateral trade. "It is hoped that the form of support from the government as well as the synergy between SOEs and institutions will continue to be maintained and improved so that it is sustainable and can grow even more socio-economic benefits."