Indonesian minister says SoftBank offers to invest up to $ 40 billion in new capital

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JAKARTA (Reuters) – SoftBank has offered to invest up to $ 40 billion in the new capital that Indonesia plans to build on the island of Borneo, a minister said on Friday, although the Japanese technology conglomerate has said there is not yet a suggested number.

ARCHIVE PHOTO: The SoftBank Group Corp logo is displayed at the SoftBank World 2017 conference in Tokyo, Japan, on July 20, 2017. REUTERS / Issei Kato / File Photo

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Indonesian President Joko Widodo announced in August plans to move the administrative capital to Borneo's East Kalimantan province to ease Jakarta from "a heavy burden" due to overcrowding and pollution.

Indonesia had previously estimated the cost of capital change at $ 33 billion, but Luhut Pandjaitan, Indonesia's coordinating minister for maritime affairs and investments, said Softbank Group Corp offered up to $ 40 billion.

"Then, we will negotiate the structure (of the investment). It can reach US $ 30-40 billion," he told reporters.

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A SoftBank spokeswoman said the group did not suggest specific numbers, echoing comments from CEO and founder Masayoshi Son last week.

"We are not yet discussing specific figures, but a new smart city, the newest technology, the clean city, with a lot of artificial intelligence (AI), is what I am interested in supporting," said Son during a visit to Jakarta last week.

Pandjaitan said he would further discuss the potential investment with Son on Monday at the World Economic Forum, at the Swiss resort of Davos, and that President Joko Widodo will likely decide on the deal in February.

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Widodo said on Thursday that a planned sovereign wealth fund to finance infrastructure projects in Southeast Asia's largest economy will raise at least $ 20 billion once it is established, although Pandjaitan said it is still under discussion whether the investment will be channeled through the sovereign wealth fund.

Widodo discussed plans to establish the fund with Abu Dhabi's Crown Prince Mohammed Bin Zayed al-Nahyan last weekend during an official visit to the United Arab Emirates.

Sovereign wealth funds are typically used by countries to target funds from resources such as oil, although Indonesia also plans to invite foreign investment into the fund.

To help attract investment, Indonesia asked Abu Dhabi's Crown Prince, former British Prime Minister Tony Blair and Softbank's son to advise on plans to move the capital, ministers said.

Planning Minister Suharso Monoarfa said this week that Softbank was interested in supplying autonomous vehicles to the capital.

In June, SoftBank and Toyota Motor's autonomous car joint venture said it plans to start operating in Southeast Asia this year.

Additional reporting by Fransiska Nangoy and Sam Nussey in Tokyo; Written by Stanley Widianto; Editing by Ed Davies and Simon Cameron-Moore

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