BNI Shifts Focus to Infrastructure by Offering Loan to Semen Indonesia

Bank Negara Indonesia (BNI) has shifted its corporate lending focus to the infrastructure sector. This is marked by its latest move to provide a loan to Semen Indonesia. The lending aims to boost infrastructure development to create a multiplier effect on national economic growth.

BNI corporate business director Herty Sidharta said that the bank has set a target to disburse IDR 186 trillion in corporate lending this year. This is a 24-percent increase on actual corporate lending last year of IDR 150 trillion. Some 40 percent of the lending will go to infrastructure projects.

The move is in line with the management’s policy to shift its corporate lending focus to the infrastructure sector, including toll roads, telecommunications, and the maritime sectors. “Now’s the time for investment. If the economy improves, other (sectors) will improve too,” he said after the signing of a cooperation agreement between state-owned enterprises at the Ministry of State-owned Enterprises in Jakarta, Friday (22/4).

(Read: Eastern Indonesia Records Highest Growth in Construction Sector)

One of the companies that obtained a corporate loan from BNI is Semen Indonesia. BNI provided a working capital loan of IDR 1 trillion to the state infrastructure firm. Herty said that this is a short-term loan with at an interest rate of below 10 percent, which the company will use for general and operating purposes.

Going forward, BNI plans to provide a larger and longer term loan of IDR 10 trillion to Semen Indonesia. According to Herty, the loan will be used to finance the construction of cement plants in Aceh and Kupang, East Nusa Tenggara.

(Read: Rapid Reduction in Interest Rate May Threaten Bank Stability)

On the same occassion, president director of Semen Indonesia Suparni said that the loan will be used to optimise the company’s funding scheme, especially for bridging loans to support its strategy.

Semen Indonesia also needs a funding to finance the construction of two integrated cement factories, each with a capacity of three million tons in Rembang, Centra Java, and Indarung VI in Padang, West Sumatra. "The factories in Rembang and Indarung will enter the comissioning phase by the end of the year," said Suparni.

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The cement factory in Rembang is expected to commence operations in September or October and will be fully operational next year.

Suparni admitted that the construction of the cement factory in Rembang has generated some controversy. She promised that the company is willing to negotiate to solve the matter. The factory will employ 300 people and more than 1,000 support workers. Some 40-50 percent of these workers will be from Rembang and the rest from Central Java.

Semen Indonesia has set a target to increase its sales volume this year to 29 million tons. Actual sales, however, have remained stagnant, even decreasing slightly by 1.5 to 2 percent. Nevertheless, Suparni estimated that sales in the second quarter will increase. “We expect production to increase by 5 percent.”