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tate-owned port operator Pelindo IV signed on Thursday an agreement with state construction firm PT Pembangunan Perumahan (PTPP) to begin the first phase of development of the Makassar New Port in South Sulawesi.

The construction of the port is part of efforts to support the government'€™s program to solve the country'€™s logistic distribution bottlenecks in the eastern region.

'€œThe development of this new port would significantly help improve the country'€™s logistic performance as it will ease the burden on Tanjung Priok Port [in Jakarta] and Tanjung Perak Port [in Surabaya],'€ Pelindo IV president director Mulyono said after the signing ceremony.

He added that at present most cargo heading to Singapore or to other countries from the eastern part of the country was shipped from Jakarta or Surabaya due to the limited capacity in Makassar.

'€œThe development will support the government'€™s maritime highway program as Makassar would play the part of an international hub for the eastern region along with Bitung [North Sulawesi] and Sorong [Papua],'€ he continued.

According to Mulyono, the contract value reached Rp 326 billion (US$247,760) and the construction of the project, which comprises 16 hectares of reclamation and the development of a 320-meter-long quay, would be finished in early 2018.

The project saw a ground-breaking ceremony on May 22 and it would start construction next week, Mulyono said.

During the same occasion, PT PP director of operations Ketut Darmawan said the company'€™s main focus over the next few years would be to support the government'€™s maritime highway program, by handling dredging and breakwater projects.

'€œI believe it is one of our points of superiority and we are delighted to take part in supporting the maritime highway program,'€ Ketut said.

He added that the company had also established a cooperation with Pelindo I to construct Kuala Tanjung and Belawan ports in North Sumatra as well as with Pelindo II to construct New Priok Port.

By operating a new port, Pelindo IV, which manages ports in the country'€™s east, hopes to increase its capacity to handle larger volumes of containers in Makassar as business activities grow.

The existing port has a capacity of 700,000 twenty-foot equivalent units (TEUs). With the first stage of development of the new port, it will have an additional capacity of 400,000 TEUs. The port operator handled 560,000 TEUs last year.

'€œWith an additional 400,000 TEUs in capacity, we hope to record an additional Rp 320 billion in revenue per year,'€ Mulyono said.

The whole Makassar port project would probably require around Rp 12 trillion in total funds and would be finished in 2030 with a total additional capacity of 3.5 million TEUs, Mulyono said.

Last month, the port operator got a Rp 3 trillion bank loan from state lender Bank Mandiri to finance the project.

Besides the Makassar port, Pelindo is also looking to begin working on ports in other areas this year, including Ambon in Maluku province, Bitung in North Sulawesi province, Jayapura in Papua province and Samarinda in East Kalimantan province.

It will need about Rp 1.4 trillion in capital expenditure funds in 2015 alone.