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Jakarta Post

Japan expresses interest in Patimban project

  • Farida Susanty

    The Jakarta Post

Jakarta   /   Tue, March 29, 2016   /  08:32 am

Following its failure to win the head-to-head competition with China for the US$5.1 billion high-speed railway project late last year, Japan does not want to miss another massive investment opportunity in Indonesia and has expressed an interest in financing the development of the new deep-sea port project in Patimban, Subang, West Java.

The interest was expressed in an official letter recently sent by the Japanese government to the Transportation Ministry in reply to an offer from the Indonesian government to take on the largest share, $2.49 billion, of a private loan to finance the development of the port, which will require a total investment of $3.09 billion.

The ministry'€™s acting director general for sea transportation Umar Aris said the Japanese government had mentioned in the letter that they agreed to the investment plan '€œin principle'€.

'€œJapan has agreed to the investment plan subject to several requirements,'€ he told The Jakarta Post over the phone on Monday.

Patimban Port, located some 120 kilometers east of Jakarta, is to be a replacement for the previously planned Cilamaya Port in Karawang, West Java, which was scrapped last year because of concerns it would affect the expansion of state-run oil and gas firm Pertamina'€™s nearby offshore operations. The government moved the project further east.

Based on the ministry'€™s data, the port is supposed to begin its first phase of operations by 2019. Once completed, the port will have an initial container capacity of 250,000 twenty-foot equivalent units (TEUs) and will be expanded to 7.5 million TEUs by 2037, half that of Jakarta'€™s Tanjung Priok Port, the country'€™s largest port and a hub for more than 50 percent of the goods shipped in and out of Indonesia.

One of the requirements sought by the Japanese government, Umar said, was the issuance of a presidential regulation to ensure the ease of the port development.

Should the government agree, the form of the presidential regulation might mirror that issued for the China-Indonesia joint high-speed railway project, Presidential Regulation No. 107/2015 on the acceleration of the project, in which President Joko '€œJokowi'€ Widodo instructed various ministries and regional administration to support the project.

The flagship rail project will span 142.3 kilometers between Jakarta and the West Java capital of Bandung and will stop at four stations, namely Halim, Karawang, Walini and Tegalluar. The deal was signed in October after Indonesia selected China over Japan for the three-year project.

For the Patimban Port project, the ministry previously proposed a loan with a 0.1 percent interest rate, with the loan from Japan expected to amount to $2.49 billion of the total project cost of $3.09 billion. Japan was previously reported to have proposed a 0.25 percent interest rate.

The loan would be over 40 years, including a grace period of 10 years.

Meanwhile, the remaining $600 million will be allocated from the state budget for land procurement and road construction around the port, according to Transportation Ministry data.

Umar, however, said the ministry'€™s correspondence with its Japanese counterpart had not discussed details of the loan agreement.

Should the funding mechanism be agreed to, it will be the biggest project funded by the Japanese government in Indonesia.

The mechanism has strayed from the initial government intention to fully use private investment to reduce state expenditure, while the ministry stated that the payment for the loan was likely to come from the state budget.

The ministry'€™s port and dredging director Mauritz Sibarani previously said that if Japan took over the financing for the project, the developer of the port was '€œvery likely'€ to come from Japan.

He said that before the construction, many things still needed to be done, including finishing the detailed engineering design (DED), obtaining an Environment Impact Analysis (Amdal), as well as adjusting the location to the provincial spatial planning (RTRW) of the Subang area.

'€œThe construction might really start at 2018, with all those processes, but I hope that we can sign the loan agreement by the end of this year,'€ he said.

The port is expected to benefit many Japanese manufacturing giants, such as Toyota and Honda, as their factories are located in the Bekasi and Karawang manufacturing centers, which are situated not far from the planned port.

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