Jakarta. Sinar Mas Group, a diversified conglomerate owned by tycoon Eka Tjipta Widjaja, secured $1.5 billion in loans from Chinese financial firms, as President Joko Widodo continues to foster business ties between Indonesia and China during a four-day visit to the world’s second largest economy.

Sinar Mas secured the loan from China Development Bank and ICBC Financial Leasing to fund the company’s expansion  in the power, pulp and telecommunication industries.

Sinar Mas’s board of management signed the loan agreement in Beijing on Friday in the presence of Joko and China’s Prime Minister Li Keqiang.

“This agreement strengthens collaboration between Chinese financial institutions and us,” said Franky O. Widjaja, Sinar Mas vice president. “The agreement reflects our full support of the government’s efforts to boost electrical capacity across Indonesia to 35,000 megawatt in five years — particularly to meet industry demand.”

Dian Swastatika Sentosa, a coal and power business unit of the Sinar Mas Group, signed a $510 million loan deal with China Development Bank to develop a 300 megawatt power plant worth $480 million in Musi Banyuasin, South Sumatra, and a 100-megawatt power plant in Kendari, South Sulawesi, worth $200 million.

Sinar Mas received another $700 million in loans to further develop its pulp and paper industry, while Smartfren, the conglomerate’s mobile phone operator, secured $300 million.

Separately, private equity firm China Minsheng Investment announced on Friday it would invest $5 billion to develop an industrial park in Indonesia. The investment is part of an agreement worth $40 billion with the Indonesia-China Business Council.

China’s direct investment plans for Indonesia have reached $13.7 billion in six months, according to Indonesia’s Investment Coordinating Board, or BKPM.

China — whose foreign direct investments are mostly in the mining, machinery and electronics, and food and beverage industries — still lags behind Singapore and Japan in terms of realizing investments in Indonesia.

China’s President Xi Jinping has pledged to provide aid for Indonesia’s infrastructure projects, including the development of industrial estates, power plants, ports and a monorail system.

GlobeAsia with additional reporting from Reuters

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Source: The Jakarta Globe