State-owned train operator PT Kereta Api Indonesia (KAI) has agreed to take over construction of a railway network between Cikarang Dry Port in Karawang, West Java, and Tanjung Priok Port in North Jakarta.

Transportation railway director Hanggoro Budi Wiryawan said that the government had appointed KAI to run the project to help ease the flow of goods at Tanjung Priok as truck congestion remained a big issue at the country'€™s busiest port.

'€œThe government has its limitations. Due to the urgency, the Transportation Ministry and the State-Owned Enterprises Ministry have decided to task KAI with constructing the railway,'€ Hanggoro told reporters on Thursday night.

Hanggoro said that the government would do its part by immediately acquiring land that had yet to be purchased.

According to Hanggoro, for four years now the government has failed to reach an agreement on the price of 1,420 square meters of land needed to begin construction of the railway system with the owners.

'€œWe hope to complete land acquisition by December this year so that KAI can start construction in January or February 2015,'€ he said.

KAI president director Ignasius Jonan refused to give detailed information on the railway construction or its cost estimates.

Hanggoro, however, estimated that development of the new railway will cost around Rp 200 billion (US$17.3 million).

He said that construction of the railway would enable the transport of more containers between Tanjung Priok and Cikarang Dry Port each day.

'€œEach truck can only make 1.5 trips per day due to traffic congestion between Tanjung Priok and Cikarang; that is why the country'€™s logistic costs are so high,'€ Hanggoro said.

'€œMeanwhile, a train can transport 40 TEUs [twenty-foot equivalent units] on a single trip. It will definitely help ease traffic and reduce logistic costs,'€ he continued.

Data from the Industry Ministry showed that the country'€™s logistic costs were 23.6 percent of the gross domestic product (GDP), higher than those in Japan (10.6 percent), South Korea (16.3 percent) and the US (9.9 percent).

Furthermore, the country'€™s competitiveness in terms of infrastructure and logistics ranked 82nd out of 148 countries in the 2013-2014 Global Competitiveness Index, released by the World Economic Forum (WEF).

The government ha s also committed to speeding up construction of the 33.6-kilometer Cibitung-Cilincing toll road to help ease the flow of goods to Tanjung Priok Port.

According to the Public Works Ministry, the concession agreement on the Cibitung-Cilincing toll road was signed in 2007, but its construction is pending due to another land acquisition issue.

Of the total 107.5 hectares of land required to construct the toll road, the government has only secured around 14.5 hectares, or less than 15 percent.

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