WASHINGTON, D.C., July 9—The International Finance Corporation (IFC) recently signed a US$35 million investment agreement with P.T. Alumindo Light Metal Industry (Alumindo) -- Indonesia's largest manufacturer of aluminum sheet and foil -- to support its US$97.4 million expansion program.
The company is located in Sidoarjo, near Surabaya, the capital of East Java Province. IFC is thus helping to support the government's initiative to shift the emphasis of development from Jakarta and West Java to less developed areas.
IFC's financing will be used to expand Alumindo's cold rolled aluminum sheet and foil production to meet growing local and regional demand. It will help to raise product quality to international standards as well as reduce costs and increase productivity by introducing more efficient equipment and better process layout. Extensive training to upgrade worker skills will be provided by the foreign technical adviser, Hoogovens of Holland.
Alumindo is a member of the Maspion Group, a well known East Java conglomerate with activities covering the manufacture of consumer durables, household appliances, construction and packaging materials, and banking.
IFC's investment consists of a US$15 million loan for its own account and a US$20 million loan for the account of participating banks, which are Banque National de Paris, Banque Worms, Raiffeisen Zentralbank Osterreich Aktiengesellschaft and Banque et Caisse d'Epargne de l'Etat, Luxembourg.
"Alumindo's expansion will help modernize its operations, making it more competitive on the international market and enabling it to supply Indonesian manufacturers with better quality and cheaper aluminum products", said Mr. Rashad Kaldany, Director of IFC's newly-created Asia II Department, which covers Bangladesh, Bhutan, India, Indonesia, Malaysia, Maldives, Myanmar, Nepal and Sri Lanka.
Mr. Kaldany added, "Through this project, we are also helping a medium-sized manufacturing company to access long-term financing on reasonable terms, which it has not been able to do so far. In addition, our participation will broaden Alumindo's exposure to the international syndicated loan market and establish a sound basis for financing future expansion and diversification."
IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
