The development of the Kalibaru Port in Tanjung Priok, North Jakarta, has received great deal of interest from foreign investors, with a major Chinese shipping firm already confirming its intention to join the tender for the expansion project at Indonesia’s biggest seaport.
Hong Kong-based China Merchants Holdings Co. Ltd., an investment company specializing in port management and transportation, with a market capitalization of US$8.5 billion, says it will tender again for the Kalibaru Port project, despite being unsuccessful in its first bid.
China Merchants lost the tender for the concession rights for Terminal 1 to Mitsui & Co. Ltd., but signaled that it would make a comeback with a more lucrative proposal. This time, it plans to table offers for two terminals at once; namely terminals 2 and 3 at the port.
“We think that it’s worth taking to bid for two terminals, not just one,” Jared H. Zerbe, the chief development officer with China Merchants, said during a meeting with State-Owned Enterprises Minister Dahlan Iskan and senior executives of state-owned port operator PT Pelabuhan Indonesia II (Pelindo II) in his office in Beijing, China.
“It’s necessary for you to build new capacity [at the port] and we believe that there’s an opportunity to invest in Indonesia,” said Zerbe, whose firm is the largest seaport operator in China with a market share of 23 percent.
An infrastructure project valued at $2.5 billion, the new Kalibaru Port will consist of seven container terminals, with total new capacity of 12.5 million 20-foot equivalent units (TEUs). It is designed to help solve congestion at the existing Tanjung Priok Port, which is already operating beyond its capacity of 7 million TEUs.
Pelindo will grant concessions for the first three terminals to foreign investors, with the hope of managing the remaining four terminals by itself after it gains the required management capability.
China Merchants, Singapore’s PSA Terminals, Port of America, China’s Cosco Group and Mitsui all competed for the tender for Terminal 1.
“I’m giving [the concessions for] terminals 1, 2 and 3 to foreign investors because I realized that at present we don’t have the capacity to manage them all by ourselves,” said Pelindo CEO Richard Joost Lino.
“Therefore, we are now ‘studying’ them to learn how to manage a world-class seaport, so that Pelindo can fully manage terminals 4, 5 and 6 by itself.”
The construction of the new port in Kalibaru is expected to be a boost for Indonesia’s exports, as the new facilities should reduce logistical and shipping costs by at least 40 percent, according to Lino.
The new Kalibaru Port will have a draft of 16 meters, while the existing Tanjung Priok only has a depth of between 6 and 12 meters. Draft, which measures depth, indicates the maximum capacity of a ship that can dock in a port, with bigger ships normally needing a deeper draft when offloading cargo.
Due to the shallow draft and limited facilities in its seaports, Indonesia normally exports its goods to Singapore by small- and mid-sized ships, before being shipped throughout the world by bigger ships from the city state.
However, after the establishment of Kalibaru Port, larger vessels will be able to dock in Jakarta, thus easing the flow of goods into and out of Indonesia, ultimately reducing logistics costs for local businesses.
If Indonesia’s seaport facilities were better developed, the cost of moving goods by sea could be 10 times lower than land transportation, given traffic congestion and the poor road infrastructure, according to calculations by Pelindo.
“Transporting goods by sea is actually cheaper than by land,” said Saptono Irianto, the director for commercial and business development at Pelindo.
“The reason why some businesses still use land transportation is because it receives subsidies, which mostly come in the form of fuel subsidies,” he argued. “On the other hand, sea transportation does not receive similar support.” (Satria Sambijantoro, The Jakarta Post)