State-owned airport operator Angkasa Pura II (AP II) says that it will allocate Rp 2.1 trillion (US$216.3 million) to build an “integrated cargo village” at the country’s main gateway, Soekarno-Hatta International Airport, next year to ease traffic at the existing overwhelmed terminal.

AP II president director Tri Sunoko said the project would help the company to increase the capacity of its cargo terminal from current 500,000 tons to 1.5 million tons annually.

“We need to expand our cargo facilities because the traffic keeps increasing every single year causing the [cargo] terminal to operate at overcapacity. We handled over 600,000 tons of cargo at Soekarno-Hatta last year,” Tri said in Jakarta on Tuesday on the sidelines of the Soekarno-Hatta Trade Facilitation Committee meeting and seminar, adding that cargo volume was expected to rise by around 10 percent in 2013.

He said that the construction was set to begin in early 2014 and was projected to finish by the end of 2015.

“We are hoping the cargo village can commence operations in 2016 because we need to better facilitate Indonesia’s cargo and logistics sectors, which mostly pass through Soekarno-Hatta,” he said.

The new facilities will be equipped with a modern information and technology system and automated handling terminal system in order to accelerate cargo handling and moving processes at the airport.

The new cargo terminal is expected to help increase Indonesia’s logistics competency in Southeast Asia and is part of preparations for the full integration into the ASEAN Economic Community (AEC) in 2015.

In the AEC context, he said, Indonesia became a very important country because it was home to 45 percent of ASEAN’s population.

Indonesia’s logistics performance currently is one of the poorest among ASEAN countries. It ranks 59th out of 155 developing and high-income economies included in the World Bank’s 2012 logistics performance index, behind Malaysia (29th), Thailand (38th), the Philippines (52nd) and Vietnam (53rd).

Moreover, the system is inefficient, as shown by the fact that logistics costs account for 17 percent of the price of most goods — a figure which is expected to rise to 20 percent this year — while average costs in ASEAN stand at about 10 percent.

“Thus, we cannot work alone because to help improve logistics sector in the country. We need better public infrastructure including roads, railways and ports,” Tri said.

The expansion of the cargo terminal is part of the Soekarno-Hatta’s upgrade that began in August last year. AP II is in the process of expanding its passenger terminal capacity to 62 million per year by spending Rp 7.6 trillion from internal cash.

The annual number of passengers passing through the airport reached 57.7 million in 2012, more than double its maximum capacity of 22 million passengers a year.

The firm plans to finish the expansion of passenger terminals by the end of 2014.

In the massive airport upgrade, the firm will also construct a new apron on a 385,000-square-meter plot of land to accommodate up to 30 wide-body aircraft, such as the Airbus A330 and the Boeing 747.

Soekarno-Hatta has four aprons that can handle up to 125 wide-body aircraft as of today.

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