State-run port operator Pelabuhan Indonesia II (Pelindo II), also known as the Indonesia Port Corporation (IPC), has finally opted for Japanese conglomerate Mitsui Co as its partner in jointly operating the first container terminal at Kalibaru Port in North Jakarta, which is expected to begin operations in mid-2015.
The two companies will soon establish a joint venture to operate the terminal, which will be the first of three container terminals to be built at Kalibaru Port as part of the expansion of Tanjung Priok Port, reported The Jakarta Post.
Under the shareholders' agreement signed in Jakarta, Pelindo II will own a 51 percent stake in the joint venture and the Japanese business group will hold the remaining 49 percent.
"IPC appointed Mitsui as terminal operator because we believe Mitsui can give added value to the Indonesian port business. Mitsui can build and develop port facilities that will make Tanjung Priok Port equal to other ports in developed countries," Pelindo II president director Richard Joost Lino said.
The agreement was signed amid press reports that Mitsui had pulled out of its investment plan in the container terminal project.
Lino said the signing of the shareholders' agreement was the continuation of the memorandum of understanding (MoU) signed by the two companies in Tokyo in February this year. In the MoU, Pelindo II agreed to appoint Mitsui as the preferred bidder to operate the container terminal.
The construction of the first container terminal will be divided into two stages. The first is to construct a terminal with a length of 400m that will be fully completed by the end of this year, and the second will be to extend the length of the terminal to 800m, which is expected to be completed in May next year, according to Lino.
"We estimate the construction of the first container terminal will be accomplished and begin operations in the middle of 2015," Lino said. "We are upbeat we can operate the first terminal on time," he added.
He said the first terminal would have a total capacity of 1.5 million TEUs.
After the first terminal is completed, Mitsui will build two other container terminals with an additional capacity of 4.5 million TEUs, which is expected to be completed in 2018. The three container terminals are estimated to cost up to US$2.5 billion, Lino added.
Meanwhile, the first container terminal will cost about $393 million, which will be fully financed by Mitsui, Lino said.
He said the construction of the container terminals at Kalibaru Port, which is also called New Tanjung Priok Port, was crucial to easing cargo traffic at Tanjung Priok Port, which handles about 70 percent of the country's exports.
"We need to improve our services so the distribution system in the country can also be improved and to help cut the high costs of logistics," he said.
According to the Indonesian Logistics Association (ALI), Indonesia's logistical costs are between 25 and 30 percent of its gross domestic product (GDP), among the highest of any Southeast Asian country. This is higher than in Thailand and Singapore, which stand at 16 and 10 percent, respectively.
"The three terminals can reduce logistical costs to 12 percent if fully operated," said Lino.
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