Indonesia, DP World agree to invest $7.5B in logistics infrastructure

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  • DP World has signed a strategic alliance agreement with Indonesia Investment Authority to enhance Indonesia’s maritime and port sector
  • The partnership is seen to improve the operation of ports, reduce logistics costs, and advance national competitiveness
  • A consortium and working team will be formed to explore investments in logistics infrastructure, including hinterland investments, inland terminals, cargo parks, feeder network systems, landside transport, and industrial zones

Cargo logistics firm and port operator DP World announced it has signed a strategic alliance agreement with Indonesia Investment Authority (INA) to enhance Indonesia’s maritime and port sector within the global manufacturing ecosystem.

The economic value of this partnership could reach up to US$7.5 billion over the long term, according to DP World in a release.

It added that it hopes the partnership with INA, the Indonesian government’s investment agency, will improve the operation of ports, reduce logistics costs, and advance national competitiveness.

DP World and INA will form a consortium and working team to explore investments in the logistics infrastructure in Indonesia, including hinterland investments, inland terminals, cargo parks, feeder network systems, landside transport, and industrial zones.

They will also explore collaboration with the Indonesia Port Corporation, the state-owned enterprise which specializes in seaport operation, development and investment.

DP World said it will seek to leverage its joint investment platform with Caisse de dépôt et placement du Québec which, since its launch in 2016, has invested in 12 port terminals globally.

INA’s chief executive officer Ridha Wirakusumah said the partnership aligns with the agency’s mission to optimize investment in Indonesia’s infrastructure and resources to deliver long-term economic development. INA’s investment focuses on several key sectors, such as airports, ports, toll roads, industrial estates, digital infrastructure, healthcare services, and renewable energy.

Indonesia, the largest archipelago in the world with more than 17,000 islands, is highly reliant on a strong domestic shipping network. Despite historically trailing neighboring countries in containerization rate and currently facing issues of high logistics costs, Indonesia is already among the top 15 countries in container traffic, with much potential to grow further. Furthermore, containerization rate in Indonesia will only increase given the burgeoning domestic consumption and production.

“Indonesia’s maritime and port sector is key to support trade and consumption across the archipelago, and this collaboration with DP World will enable us to resolve issues of high logistics costs and port inefficiencies,” said Wirakusumah.

DP World will also introduce its global best practices to Indonesia, including operations optimization, service innovation, disruptive technologies, and safety principles. Cutting-edge logistics technology includes fully automated stacking to eliminate inefficiency, hyperloop systems for fast cargo delivery, and 100% electric sustainable means of cargo transport.

Photo by Okkisafire