Japan to finance lion’s share of $3bn Indonesian port

13 April 2016 | By GCR Staff 0 Comments

The government of Japan has offered Indonesia a low-interest loan to build a deepwater port at the town of Patimban on the northern coast of Java.

The Indonesian government has indicated that the port will cost about $3bn, and the Japanese have offered to provide $2.4bn over 40 years with a 10-year grace period. The Indonesian government will contribute the remaining $600m, which will be spent on land procurement and road construction.

The scheme was discussed during a meeting between Japanese prime minister Shinzo Abe and Indonesian president Joko Widodo’s during a meeting in Kuala Lumpur last November.

The Indonesian government then signalled its willingness to go ahead with the project in February, when Ignasius Jonan, Indonesia’s transportation minister, notified the Japanese government of Jakarta’s acceptance of the finance terms during a trip to Tokyo. According to the Jakarta Post, the deal is now agreed “in principle”.

Abe aims to make up lost ground in one of Southeast Asia’s fastest growing markets (Japan Kentei)

Commentators in the Japanese press have suggested that the project is particularly attractive for Abe because of his drive to boost Japan’s stagnant economy through the export of Japanese infrastructure, and also to help Tokyo recover from the loss of Indonesia’s $5.1bn high-speed rail project to Beijing last year.

The port is expected to serve the many industrial parks in the 120km between Patimban and Jakarta, to the west. Among the companies with operations there are Japanese giants such as Toyota and Honda.

The first phase of the port project is scheduled to handle 250,000 containers a year, although this will be expanded to 7.5 million by 2037.

The start of the construction is subject to a range of requirements, including the completion of detailed engineering design, as well as a Japanese feasibility study.

It was reported in March that Belgian firms have also been pitching for work on the scheme. The Jakarta Post reported that Dredging, Environmental & Marine Engineering, a company based in Zwijndrecht, was interested in winning work.