State-owned tourism management enterprise Indonesia Tourism Development Corporation (ITDC) has received funding from the Asian Infrastructure Investment Bank (AIIB) to develop infrastructure in the Special Economic Zone (KEK) in Mandalika, West Nusa Tenggara.

“After the AIIB board of directors approved it on December 7, 2018, we signed an agreement on funding facility for the Mandalika Urban & Tourism Infrastructure Project (MUTIP) worth US$248.4 million, or equal to Rp3.6 trillion on Dec 31. This non-indifferent detail shows the trust in the prospects of the tourism industry in Indonesia,” ITDC President Director Abdulbar M. Mansoer stated here on Tuesday.

It is the first standalone financing, with the most substantial value made by AIIB in Indonesia, and the first AIIB financing for tourism infrastructure development in the world.

Read more on the Mandalika Project and why it has been dubbed the next Nusa Dua

AIIB is a multilateral development bank, with member countries from around the world, including Indonesia. AIIB aimed at supporting the building of infrastructure in member countries in Asia and the Pacific region.

Meanwhile, ITDC Director of Finance Nusantara Suyono said, the MUTIP funding has a tenor period of 35 years and grace period of 10 years. The specifics on the case mean that the interest rate set under the London Interbank Offered Rate, or LIBOR,  six per cent and 1.4 per cent additional rate per year, is extremely competitive.

MUTIP funding will be focused on the development of infrastructure and basic facilities in Mandalika, including road, clean water, sanitary and drainage, waste treatment, power distribution, disaster risk management, and several other public facilities.

The company has targeted to build star-rated hotels, with more than 10 thousand rooms, convention centre, 27-hole golf course, retail mall, theme park, hospital, and street race circuit for world-class races, such as MotoGP.

“The MUTIP funding will also cover the surrounding area to ensure that the project would benefit the local people and to mitigate the negative impact about increased tourist visits,” Mansoer noted.

ITDC has successfully managed the tourism destination area in Nusa Dua, Bali, since some 45 years, with the World Bank funding in its early years. ITDC has developed Nusa Dua into a world-class integrated resort.

According to Mansoer, development of tourism in Mandalika will have a multiplier effect on the local, social, and economic areas, as it will create jobs for more than 50 thousand workers within the next 25 years.

Data of the Central Bureau of Statistic (BPS) showed that the number of foreign tourists to Indonesia had increased to 14 million in 2017, from 11.5 million in 2016.

In 2018, the number of foreign tourists had reached more than 13 million as of November.