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JAKARTA - The German government plans to provide 52 million euros (US$66 million) in loans and grants for the improvement of commuter train services in Greater Jakarta. The funds, provided through the German Development Bank (KfW), will be used to finance the assembly of 10 trains and their engines, and is expected to be agreed upon in December.
"The trains will be built in Indonesia, with technical assistance from Germany," KfW senior vice president for Asia and Europe, Norbert Kloppenburg, said on Monday, after the signing of two debt swap agreements between Indonesia and Germany. Director of KfW's Jakarta office, Jens Clausen, explained that the funds will be in the form of a 51 million euro soft loan with an interest rate of 1.3 percent per year, for the assembly of the trains at state-owned PT Inka in Madiun, East Java, as well as for the rehabilitation and maintenance of Jakarta's railway system.
"Another one million euros will be in the form of a grant, for the training of railway personnel," Clausen said, adding that the project was important in view of the need for a better mass rapid transportation system. Meanwhile, of the debt swap agreements, the German government has signed a commitment to write off 23 million euros of Indonesia's debt. In exchange the Indonesian government is required to build 100 junior high schools in 10 provinces of eastern Indonesia where school enrollment is below 70 percent. The debt will be written off upon completion of the schools.
Another debt swap deal, leading to the cancellation of 25 million euros in debts, will be for proposed projects in natural resource protection and industrial pollution control. Germany had previously canceled 25.6 million euros in debts through a debt swap deal as well, from a total of some 1 billion euros Indonesia owes. Minister of Finance Yusuf Anwar, who witnessed the signing, said that the government would continue negotiating similar debt swap schemes with other countries.
"The schemes are in line with the government's goal of alleviating poverty, and is one of the most feasible ways of financing our debts," he said. Deputy for the Coordinating Minister for Economic Affairs, Jannes Hutagalung, explained that the government would soon sign other debt swap agreements with the governments of the United Kingdom (UK), France and Italy. "The Netherlands has also shown an interest in a debt swap scheme with us," he said.
Data from the National Planning Agency (Bappenas) shows a debt write-off potential of $156.1 million with the UK, $262.5 million with France and $38 million with Italy, through debt swap schemes. Ministry of Finance Director General for State Treasury Mulia Nasution recently said that the government had been negotiating with the British government on a debt swap deal worth Rp 644 billion (US$71 million), under which the Indonesian government must provide some 1,000 buses for public transportation in Jakarta in exchange for a debt cut.
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