AIIB lends $692 million to Indonesian infrastructure

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The Beijing-based Asian Infrastructure Investment Bank (AIIB), which started operations in January, 2016, has cumulatively approved US$691.5 million in loans for four Indonesian infrastructure projects, thereby making the country the second-largest borrower among its 66 members.

AIIB head of communications Laurel Ostfield said before a leaders discussion meeting on infrastructure development on Tuesday night that the bank was also finalizing the process of approving another $260 million loan for Mandalika urban and tourism infrastructure development on Lombok Island.

Indonesia is the eighth-largest shareholder of AIIB, which has an authorized capital of $100 billion.

The four loans approved over the last two years were allocated for two irrigation improvement projects, a slum improvement and a regional infrastructure development fund, all cofinanced with the World Bank and the government.

The discussion, led by Finance Minister Sri Mulyani and AIIB president Jin Liqun, focused on issues regarding why the public-private partnership (PPP) model, which in many countries has been recognized as a key solution to deliver private capital and technical expertise to infrastructure, has not made significant progress in Indonesia.

Lawyers, consultants, infrastructure investors and senior Indonesian officials discussed ways to address various issues including land acquisition, overlapping regulations and the acute lack of a solid project pipeline.

Ostfield said AIIB hosted the discussions as part of its ongoing effort to devise innovative solutions to mobilize private capital in collaboration with other development banks and governments to cover the huge infrastructure financing gap in Asia.

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