SUEUN Builds Indonesia's Largest Water Supply System with Integrated Financial Support Model

Financial Support Model for Indonesia's Mercury Water Supply System

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[Asia Economy Reporter Song Hwajeong] The Export-Import Bank of Korea announced on the 21st that it will provide $210 million in Economic Development Promotion Facility (EDPF) funds for the construction project of the Karian-Serpong water conveyance channel in Indonesia.

The Economic Development Promotion Facility (EDPF) is a financial instrument designed to support large-scale infrastructure projects in developing countries. The bank utilizes funds borrowed from the financial market as resources, supplemented by government finances, to offer long-term and low-interest financing.

This project involves constructing a 53.1 km long wide-area water conveyance channel connecting the Karian Dam (A) in Banten Province on Java Island, Indonesia, and the Serpong Water Purification Plant (B) in western Jakarta. The Karian Dam (A) has been under construction by a Korean company since 2015, funded by $140 million in Economic Development Cooperation Fund (EDCF) provided by the bank.

The Serpong Water Purification Plant project (B), promoted as a private investment project, will see the Korea Water Resources Corporation participating as an investor, with a mid-sized Korean construction company acting as the contractor.

The bank’s EDPF funding for the water conveyance channel sector effectively supports the private investment project of the water purification plant by Korean companies. In particular, the bank plans additional financial support such as loans and equity investments for the Serpong Water Purification Plant project in the future.

With $140 million EDCF for the Karian Dam, $210 million EDPF for the water conveyance channel, and future loans and equity investments for the Serpong Water Purification Plant, it is expected that the bank will present its first integrated financial support model for large-scale overseas infrastructure projects.

The water supply system construction project is a top priority in the Indonesian government’s national development plan. This is due to severe drinking water shortages in the Jakarta area caused by frequent earthquakes, ground subsidence from excessive groundwater use, and population overcrowding.

Once the entire water supply system is completed through the bank’s integrated financial support, the water supply coverage rate in target areas such as western Jakarta, Indonesia, is expected to significantly improve from 35% to 82%.

An official from the bank stated, "This is a very meaningful project as it is the first transaction to provide integrated support through the bank’s financial products across the entire water supply system in Indonesia," adding, "We will promote economic exchanges with developing countries through the Economic Development Promotion Facility and expand financial support for overseas landmark projects by creating opportunities for Korean companies to participate in overseas businesses."

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