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JAKARTA (TheInsiderStories) – The government ensured the auction process for operators of Patimban Port in Subang, West Java, would begin in February after withdrawing from the initial plan in December 2019, officials said on Wednesday (01/22). The auction process will run for three months and is open to domestic and foreign companies.

The Indonesian transportation ministry has allocated an investment fund of Rp 23.5 trillion (US$1.67 billion) for the port development. The project has been started since 2018 and will operate at its maximum capacity by 2027, director-general of sea transportation Arif Toha told reporters in Jakarta.

“The auction will be conducted early next month, foreigners can participate but must joint with domestic companies. Domestic party’s shares must be the majority,” said Toha, adding the physical progress of the port is running smoothly and is targeted for soft-launching in June 2020.

Patimban Port, located near some of Indonesia’s key industrial areas – Bekasi, Karawang, and Purwakarta – is set to reduce heavy congestion at Tanjung Priok Port in North Jakarta that now shoulders most of the international trading activities.

The project is part of President Joko Widodo’s infrastructure push to boost connectivity in the world’s largest archipelago of more than 17,000 islands, where logistics costs are high, and also an attempt to make the country a rival to Singapore as a transshipment hub.

South-east Asia’s largest economy jumped 17 places in the World Bank’s Logistics Performance Index 2018 to 46th position out of 160 countries but still lagged behind some of its Asean peers – Singapore (seventh), Thailand (32nd), Vietnam (39th) and Malaysia (41st).

The Patimban Port development will run in three stages until 2027. The port will be able to handle containers of 3.5 million twenty-foot equivalent units (TEUs) when the first stage is completed. Its capacity will be expanded to 5.5 million TEUs in the second stage and then 7.5 million TEUs in the final stage.

“The construction of the first stages consists of two phases. The first phase swallowed Rp14 trillion in investment funds and in the second phase it reached Rp9.5 trillion, bringing the total to Rp23.5 trillion,” Toha said.

Currently, non-toll road access to the port has been done and is almost complete. The government targets the road to be completed between April-June 2020. The cost will be Rp1.12 trillion. The total length of the access road is 8.2 kilometers (Km), consisting of 7.5 Km of the elevated road and 0.7 Km of grade. Currently, the progress has reached 55.8 percent and land acquisition has reached 95 percent, it said.

For the development of the port, the government has selected a consortium of five companies, including Japan’s Penta-Ocean Construction, TOA, Rinkai Nissan Construction, and Indonesia’s PT Wijaya Karya Tbk (IDX: WIKA) and PT Pembangunan Perumahan Tbk (IDX: PTPP).

Indonesia has so far received JPY118.9 billion ($1billion) loan from Japan, covering around 83 percent of the total costs of the first stage of the project. The government previously announced that 51 percent operatorship of the port will be in the hands of a local company, while foreign companies can retain the remaining stake.