East Asia & the Pacific

IFC Helps Drive Growth in Indonesia

Although Indonesia's economy is growing at a promising rate of more than 6 percent, the country is still facing a number of economic challenges, including power shortages and small business' access to finance. But with IFC's help, the country is working to turn those challenges into opportunities.

Helping to Fuel the Power Sector

A persistent power shortage is holding back industrial output. Indonesia, formerly a member of the Organization of the Petroleum Exporting Countries, became a net importer of oil in 2008. In the past two years, the country has failed to meet its annual oil and gas production targets, partly because of few investment and lack of incentives in the domestic oil and gas sector.

IFC is supporting the government's goal of boosting oil and gas production to satisfy the country’s growing energy needs.

In January, IFC signed a loan agreement of $45 million with Wintermar Offshore Marine, an Indonesian provider of support vessels to the domestic oil and gas industry, that will allow the company to add 15 supply vessels to its fleet over the next two years and support the exploration and development of new offshore oil and gas fields, particularly in eastern Indonesia.

“The level of activity in the Indonesian offshore energy industry has risen significantly in the past year, leading to higher demand for Indonesian-flagged offshore support vessels. IFC's loan will enable us to cater to this demand and help create jobs to support the economy,” said Sugiman Layanto, Managing Director of PT Wintermar Offshore Marine Group.

Rachel Robbins, IFC Vice President and General Counsel, who attended the signing during her recent visit to Indonesia, said, “Oil and gas industry is very important to Indonesia’s economic growth, particularly in developing the economy in the eastern part of the country, which is relatively unexplored. Our investment can help Wintermar increase its fleet that can help develop that industry.”

Ramping Up Small Businesses

At the same time, IFC is stepping up its work in addressing another development challenge in Indonesia: access to financing. Currently, only 30 percent of Indonesia’s small and medium enterprises have access to funds needed to scale up their businesses.

IFC increased its equity investment in Bank Hana Indonesia by $12.5 million to maintain its 19.9 percent stake at the bank, funding that would support the bank in expanding products and services targeted at small and medium enterprises. With IFC's investment, the bank plans to open 50 more branches to reach over 5,000 small and medium enterprises by 2015.

“Indonesia’s challenges are not so unlike other developing countries. In the next few years we are going to target sectors that contribute most to the country’s economic growth, such as infrastructure, expanding financial services for small and medium enterprises, and agribusiness," said Sarvesh Suri, IFC Country Manager for Indonesia.