The Indonesian government plans to bid out the Cilamaya port project in Karawang in West Java to the private sector this year, according to Indonesia Investments, a real estate firm in the Netherlands monitoring economic developments in Indonesia.
The construction of the port, which will occupy 2,000 hectares of land some 65 kilometers east of Jakarta, is intended to reduce the country’s logistics costs and ease traffic at the Port of Tanjung Priok, the country’s largest seaport, in Jakarta.
The Cilamaya Port is one of the five flagship infrastructure projects in the Greater Jakarta Area under an investment framework jointly established by the governments of Indonesia and Japan.
When realized, the new port will facilitate movement of goods between the industrial estates in Karawang, a large industrial area that houses various estates for the automotive, electronics, machinery and information technology manufacturing sectors.
Construction is estimated to take five to 10 years and cost about IDR130 trillion (US$10.3 billion), said Indonesia Investments.
Last year, the administration decided to postpone the Cilamaya port construction due to a conflict with state-owned energy company Pertamina over the amount of compensation required for the latter to relocate one of its offshore plants from the construction site.
On February 12, Indonesia Transportation Minister Ignasius Jonan said the seaport can be relocated three kilometers away from the initially proposed location in order to avoid disruption at Pertamina’s oil and gas production block. Another problem that occurred was that the Cilamaya seaport is to be constructed in a farming area and could hamper the central government’s food self-sufficiency program.
So far, Jonan said, no investor has expressed interest in the project. He added that the government may provide incentives to investors and ease their bureaucratic difficulties in an effort to make this project more attractive.
The port is needed as Indonesia’s logistics costs are high. Currently, about 20 percent of a company’s production costs in Indonesia are absorbed by logistics costs, particularly by transportation costs.
Citing data from the World Bank, the report said Indonesia’s logistics costs account for 26 percent of the country’s gross domestic product. In the World Bank’s “Logistics Performance Index and its Indicators,” Indonesia ranks 53rd, lagging behind other Southeast Asian markets such as Singapore (5th), Malaysia (25th), Thailand (35th), and Vietnam (48th).
Inefficiencies at Jakarta’s Tanjung Priok port, which handles about two-thirds of the country’s international trade, are a major cause of Indonesia’s high logistics costs. Currently this harbor has a cargo dwelling time of 5.98 days resulting in port congestion and additional costs.
The central government is now hammering out the terms of reference for the Cilamaya project, said Indonesia Investments.
Industrial port project rising in Bantaeng
On the other hand, the Bantaeng district government in South Sulawesi plans to start constructing in May an IDR4 trillion (US$300 million) industrial port as part of the development of Bantaeng Industrial Park.
The Jakarta Globe reports that the port located near the Flores Sea and expected to be completed in 2017 would be one of the main ports that could facilitate international shipping. Currently, the district is working to finish the port’s feasibility study.
Photo: Hullie
