UAE to invest at least $4b in Indonesia's energy infrastructure

Commitment comes during Jokowi's visit to Gulf state, during which 16 deals were inked

Companies from the United Arab Emirates (UAE) will invest at least US$3 billion (S$4 billion) in energy projects in Indonesia, ranging from oil refineries to infrastructure for electricity, said a member of the Indonesian delegation accompanying President Joko Widodo on his two-day visit to Abu Dhabi.

The UAE companies will be equity investors partnering with Indonesian state-owned and private companies in projects which will have a combined value of US$22.89 billion, the government official, who is not authorised to be quoted by name, told The Straits Times via a mobile messaging app.

State oil company Pertamina, state utility PLN and private entities, Maspion Group and Chandra Asri Petrochemical, would be the Indonesian partners in the projects. No exact time frame for the disbursement of funds was given.

Bloomberg yesterday reported that the UAE would invest US$22.8 billion on infrastructure and energy projects in Indonesia, but Indonesian officials clarified that the sum referred to total project costs.

President Joko Widodo, popularly called Jokowi at home, has made the economy the top priority in his second and final term in office. The government has been trying to tackle a widening current account deficit amid a global economic slowdown. The deficit hit US$31.1 billion in 2018, caused by rising fuel imports among other things.

Last year, President Joko expressed regret that Indonesia had not built a new oil refinery in the past 30 years. He pledged to take a personal interest in a programme to build new oil refineries and to revitalise existing ones to raise productivity. State oil company Pertamina has been tasked to carry out the programme.

On Sunday, Mr Joko and Abu Dhabi's Crown Prince and Deputy Supreme Commander of the UAE Mohamed bin Zayed witnessed the signing of 16 agreements and Memorandum of Understanding between companies and institutions in the UAE and Indonesia. The agreements covered various sectors, including energy, ports and agriculture, said a UAE government statement yesterday.

The agreements included those between Indonesia's Pertamina and Abu Dhabi National Oil Company, and Indonesia's cookware, household appliance manufacturer Maspion group and Dubai-based global terminal operator DP World to jointly build a container port in East Java, the statement said.

President Joko "appreciates the significant progress in the bilateral cooperation between Indonesia and the United Arab Emirates", according to a statement issued yesterday by Indonesia's presidential secretariat.

It added: "The UAE would remain one of Indonesia's key economic partners, especially in the investment sector."

Mr Joko's state visit to Abu Dhabi ended yesterday.

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A version of this article appeared in the print edition of The Straits Times on January 14, 2020, with the headline UAE to invest at least $4b in Indonesia's energy infrastructure. Subscribe