India’s GVK plans Indonesia’s first privately-built airport

The Indian conglomerate GVK is ready to invest $500m in developing a new, greenfield international airport in Indonesia, making it the country’s first built with private finance.

GVK will create a joint venture with Indonesian state-owned airport operator Angkasa Pura I later this year to develop the airport in the province of Yogyakarta on the island of Java, reports Indonesia Investments.

Karthi Gajendran, president of airport development at GVK, said the new airport would handle 20 million passengers a year and replace the existing Adisucipto International Airport, which is having capacity problems and cannot expand due to surrounding developments.

According to Indonesia Investments, GVK is planning to discuss the duration of a concession to run the airport with the Indonesian government.

Last week the Indonesian government prioritised 30 infrastructure projects in a bid to accelerate development in the country.

A mix of public-private partnerships and state-funded developments, the projects included revitalising 10 airports in the country, as well as roads, sanitation schemes and power plants.

Indonesia is also in the process of removing foreign-ownership limits on companies in a range of sectors, from hotels to creative industries, in order to drive growth.

GVK believes a new airport in Yogyakarta, called Kulo Progo, will be a lucrative investment, since Indonesia is seeing growth in demand for air travel.

GVK and Indonesian operator Angkasa Pura I worked together before on the modernisation and expansion of Ngurah Rai International Airport on Bali, completed in 2013. Here GVK holds a 65% stake as airport operator.

In India, a GVK-led consortium has operated Mumbai’s GVK Chhatrapati Shivaji International Airport since 2006.

According to Indonesia Investments, Angkasa Pura I has been preparing plans for the new Kulo Progo airport for several years, and has said that would be the first Indonesian airport built with private finance.

In Indonesian law foreign investors cannot own a majority stake in an Indonesian airport, but can own a majority stake in a management concession.

Photograph: The new airport would replace Adisucipto International Airport, Yogyakarta province, which has capacity problems (Gryffindor/Wikimedia Commons)

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