Japan will soon disburse a 118.9 billion yen (US$ 1.05 billion) loan in a move that will allow Imdomesia to kick off construction of Patimban Port in Subang, West Java, early next year.
Both parties signed a loan agreement for the project on Wednesday after inking another agreement that specified the approved terms, technically known as an exchange of notes, on Monday.
The funds will be used to finance the first phase of the project, which will comprise the development of a 8.1 KM access road to the port, a new terminal, a bridge and a back-up area. The loan will benefit from the Sepcial Terms for Economic Partnership (STEP) from the Japan International Cooperation Agency (JICA), including a fixed interest rate of 0.1 percent with a 40 year maturity period.
JICA senior vice president Shinya Ejima said the agency would also gear up to process another loan agreement by next year. “Because the project cost is quite huge, it will be covered by two consecutive loans. ‘We would like to process the second loan agreement next year,” he said in his speech on the occasion nothing that the effort was aimed at achieving the target of operating facilities at the port, including a new terminal, in March 2019.
The Patimban Port project, one of the national strategic projects prioritized by the government, has been delayed for four months because of administrative issues, such as a location permit from the regional government.
This has delayed the beginning of construction to March next year instead of January as planned. The project, which will cost $3 billion in total is one of the flagship projects between Indonesia and Japan.
Patimban Port will be located about 70 kilometers from the Karawang Industrial Estate and Bekasi in West Java, where many Japanese industrial firms, particularly automotive manufacturers, operate. It will also help ease heavy congestion at Indonesia’s busiest port Tanjung Priok.
The container terminal planned at the new port will be 14.7 hectares, while the container yard will be 35 ha with a capacity to handle 250,000 twenty-foot equivalent unit (TEU) containers. It will also host a car terminal.
In the next phase, the government will extend the container terminal to 60.9 ha, while its yard will be extended to 66 ha with a 3,5 million TEU capacity. The government expects its container capacity to reach 7.5 million TEUs by 2027.
Apart from the Japanese funding, the government will cover the land-procurement costs of around Rp 500 billion ($36.9 million). Meanwhile, port operators will be in charge of procuring and maintaining equipment to support operational acitivites.
Transportation Miinistry port director Chandra Irawan said the government also planned to wrap up the land-procurement process through a special public agency, National Asset Management (LMAN) by January.
“The land procurement is expected to be done in January. It has gone through the appraisal process so we just have to make the payment,” he said. Finance Minister Sri Mulyani Indrawati said the development of the port would significantly boost economic growth in the Subang area where the port will be located.
“Patimban Port will facilitate a more efficient and productive value chain between Jakarta Subang to the rest of Indonesia as well as the rest of the world,” she said.