Directors of ICBC Indonesia, BNI, Bank Papua, Bank Maluku Malut and Bank Sulsebar. (Photo courtesy of BNI)

Eastern Palapa Ring Project Secures $300m Loan From Five Banks


MARCH 28, 2017

Jakarta. Five banks have agreed to finance the Palapa Ring fiber optic infrastructure project, paving way for the government to connect eastern Indonesia to the country's broadband network.

State-owned Bank Negara Indonesia (BNI) and the country's regional banks — Bank Papua, Bank Maluku Malut, Bank Sulselbar, as well as ICBC Indonesia, the local unit of China's ICBC — signed a memorandum of understanding (MoU) for a Rp 4 trillion ($300 million) syndicated loan, BNI said in a statement on Monday (27/03). The state owned lender acts as the lead arranger and book runner for the loan.

The loan will help funding the Rp 14 trillion project, the Palapa Ring East Package, developed by Eastern Palapa Telematics, a consortium of companies led by Sinar Mas group.

The consortium comprises of operator Smart Telecom, listed telecom tower supplier Inti Bangun Sejahtera and telecom infrastructure company Mora Telematika Indonesia (Moratelindo).

The signing of the MoU was witnessed by BNI director Iwan Putrama and Eastern Palapa Telematics president director Leon M. Kakisina.

"BNI supports the Palapa Ring East Package, as we earlier supported the financing of the Palapa Ring Central Package. Hopefully, the construction of the fiber optic network, the backbone of the broadband network, will now accelerate" Iwan said in a statement.

Palapa Ring East Package project will connect East Nusa Tenggara, Maluku, Papua and West Papua, where network infrastructure is largely unavailable, with a 6,300-kilometer undersea fiber optic cable optics.

It is also the last leg of the 11,000 kilometer Palapa Ring.

The Palapa Ring project is part of the government's strategic initiative, called Indonesia Broadband Plan, which aims to connect 71 percent of Indonesians in the urban and 49 percent in the rural areas to the internet by 2019.