PT Industri Kereta Api (INKA) and PT Kereta Api Indonesia (KAI) together with Swiss' company train manufacturer Stadler Rail has form a joint venture to build a railway factory in Banyuwangi, East Java - Photo by SOEs Ministry Office

JAKARTA (TheInsiderStories) PT Industri Kereta Api (INKA) and PT Kereta Api Indonesia (KAI) together with Swiss’ company train manufacturer Stadler Rail AG has form a joint venture company (JVC) to build a rolling stock factory in Banyuwangi, East Java, said the companies last weekend (09/21). The two state-owned firms is the government arm to build and an operator of the train and railway businesses.

For the first phase, the total investment will worth of US$100 million to produce 125 coaches per annum which will be increased to 1,000 gates per year. KAI will be the main buyers of this joint venture production company.

The factory will be built over an area of 83 hectares in Banyuwangi regency, which have sea ports as far as 3 kilometers from the plant site. Construction of the plant is expected to be completed in 2020.

Its expected the construction of the plant was a precursor railway train sales from Indonesia to the international market. In order to meet the manpower needs of the industry, Stadler Rail will establish railways vocational school in Indonesia.

Previously, INKA and state-owned miner PT Timah Tbk (IDX: TINS) announced will invest in mineral projects in Madagascar joint with local’ mining firm Kraoma SA. This cooperation will complement the plan of the Indonesian Railways Development Incorporated for Africa (IRDIA) and Kraoma in the construction of a railway to transport chrome production from the mine site to the export port.

The IRDIA consortium consists of INKA, KAO, PT Wijaya Karya Tbk Tbk (IDX: WIKA) and PT LEN Industry. As a preliminary project of this collaboration is a chrome ore transportation project which will be transported from the mining area, Brieville to the Tamatave port as far as 220 Kilometers.

Established in May 18, 1981, INKA is the first fully integrated rolling stock manufacturer in Southeast Asia. Besides sell the products in Indonesia, the company also operated in Bangladesh, Philippines, Malaysia, Thailand, Singapore and Australia.

Recently, INKA exports trains to several countries. With Laos, the company joined with a number of SOEs will conduct business cooperation in various fields ranging from railroad infrastructure, mining, to agriculture .

IRDC has signed an agreement with Phonsavanh Group to support Laos government projects to build Petrotrade and Phaiboun Import Export Trading. The companies agreed to explore cooperation with Phonsavanh in the field of railroad development from Thakek in Laos to Vung Ang Port in Vietnam.

IDRC will build a 195-kilometer train line from Laos to the port area in Vietnam. The Rp9 trillion ($642.86 million) project will support Indonesia’ coal exports to Laos and import potassium to Indonesia.

In train business, recently, Philippines has ordered six sets trains rail diesel type with total price Rp1.48 Trillion. According to CEO of INKA, Budi Noviantoro the train purchases had been agreed and would be sent to Philippines in mid-July.

While in the meeting with Argentine’ President, President Joko Widodo offered the country to order train from INKA. Mauricio Macri responded that he does not only was interested in train but also interested to aircraft maintenance services from PT Garuda Maintenance Facilities Tbk (IDX: GMFI).

INKA says it wants to strengthen its foothold in Southeast Asia by participating in the many railway mega projects in Thailand and other countries. The company itself has a target to be able to control the carrier market in Southeast Asia in 2020.

Last year, INKA joined with Thanakorn Co. Ltd and the State Railway of Thailand set up a JVC INKA Thailand Co, to handle Thai government’ mega projects seven double-track railways spanning 933 kilometers worth a combined 113.66 billion baht (US$3.63 billion).

Thanakorn owns a 59 percent stake in the JVC, while INKA holds the remaining shares. Chief executive of Thanakorn, Thananot Thunyaphongphaiboon said the partnership also covers both parties’ presence in Laos, Cambodia, Vietnam, and Myanmar. While, Noviantoro, said that the cooperation between the two parties in the form of 150 locomotives delivery.

Recently, to support the export market, INKA immediately realized the construction of its second plant in Banyuwangi, East Java with an investment of Rp600 billion. The main factory of the manufacturer in Madiun, also in east Java.

US$1: 30.61 Baht and Rp14,000

by Linda Silaen, Email: linda.silaen@theinsiderstories.com