WASHINGTON, D.C., October 22, 1998 --- The International Finance Corporation is investing in an Indonesian plastic products exporter in the kind of investment it believes will spur the recovery of companies in the countries hardest hit by the Asian economic crisis.
IFC today signed its first agreement in Indonesia since the crisis, for a US$14 million investment in P.T. Megaplast Jayacitra to produce plastic video cassettes for export.
The project will introduce technology from industry world leaders as well as apply the latest marketing, management, and production techniques. It will create 1,600 jobs -- 80 percent for women -- and will shift employment from low-skilled to higher-skilled and higher-paid labor who will work in a setting with high environmental standards.
IFC's investment consists of a US$11.5 million loan for its own account and an equity investment of US$2.5 million. Deutsche Investitions und Entwicklungsellschaft mbH (DEG), the investment development agency of Germany, will provide a parallel loan of US$11.5 million and make an equity investment of US$2.5 million in the company. The total cost of the project is US$56 million.
The sponsors, each holding 50 percent stakes, are MJC Singapore Pte. Ltd. and C.V. Belanico of Indonesia. The project is an example of inter-regional cooperation among middle-tier business groups in the ASEAN region.
Mr. Rashad Kaldany, Director of IFC's Southeast Asia Department said that Megaplast would help to generate much needed foreign currency and hoped that IFC's support would serve as a model for other export-related enterprises in Indonesia, increase market confidence, and attract other foreign lenders to invest in sound projects.
IFC, part of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.