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Japan set to give Jakarta massive port project loan of $2.5bn

Japan set to give Jakarta massive port project loan of $2.5bn
Japan has agreed in principle to provide a $2.49bn private loan to finance the development of Indonesia's planned new deep-sea port project in Patimban, Subang, West Java, local media reported.

The port, which will require a total investment of $3.09bn, will have the remainder of the investment coming from the state budget.

Indonesia's Transportation Ministry’s acting director general for sea transportation Umar Aris said the Japanese government had said in a letter in reply to the Indonesian government's offer to take on the largest share in the project, that they agreed to the investment plan “in principle”, subject to several requirements.

It is understood that Japanese firms would be expected to play a major role in the port development project if they provided the loan, which will be the biggest project funded by the Japanese government in Indonesia.

Japan has been stung recently after losing out to China in another massive infrastructure project in Indonesia, a $5.5bn high-speed rail project.

The port project itself has been plagued by many setbacks, with Patimban Port, some 120 km east of Jakarta, having only recently been selected as 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 Pertamina’s nearby offshore operations. 

The new port is supposed to begin its first phase of operations by 2019 with an initial capacity of 250,000 teu and rising to 7.5m teu by 2037, about half that of Jakarta’s Tanjung Priok Port, and helping to alleviate pressure at the country’s largest port.

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. It is likely that this will be similar to the presidential regulation issued to help accelerate the China-Indonesia joint high-speed railway project.

In Presidential Regulation No. 107/2015 President Joko Widodo has instructed various ministries and regional administrations to support the project.

The Ministry’s port and dredging director Mauritz Sibarani 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.

“The 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 concluded.