Indonesia sneaks up on Singapore with flurry of port projects

 20 June 2019   

GRESIK, Indonesia -- It may not look like much right now, but an 1,800-hectare tract of land on the eastern edge of Java symbolizes Indonesia's future.

The site, at the entrance to the busy Madura Strait, is to host the largest industrial park in East Java -- the Java Integrated Industrial and Ports Estate. It is still mostly deserted, but construction is gaining steam. And it is just one of dozens of port projects sprouting up around the country, as President Joko Widodo pushes to turn the archipelago into a fulcrum of maritime trade.

"Why do I like this area? Because it is an integrated area -- it has a port and an industrial zone," Widodo said at the opening ceremony for the first phase of the Java estate in March. "By being integrated with a deep-sea port, this park will have direct access to domestic and international markets."

After taking office in October 2014, Widodo endorsed a five-year, 700 trillion rupiah ($50.6 billion) plan to build up the maritime sector. This included 243 trillion rupiah for developing 24 "strategic ports."

Progress in the first half of his presidency was sluggish, but infrastructure development began to gather pace last year. Now, old ports are being revamped and new ones are being built as Indonesia strives to tackle its notoriously high logistics costs and become a transshipment hub capable of challenging Singapore's dominance.

The port at the Java estate will have a total berth length of 6.4km. Some sections will be deep enough to accommodate large cargo vessels with capacities up to 100,000 deadweight tons. This is expected to reduce loads at nearby Tanjung Perak, Indonesia's second-busiest port and the main logistics gateway to the nation's eastern provinces.

"At Tanjung Perak now, eight ships at a time have to queue to dock [at one spot]," a director of the estate project said in May. "Ships often have to wait for a week outside [the port] before docking. We should have [developed the new port] three or five years ago."

The integrated estate currently hosts seven small manufacturers, serving their logistics needs with a 200-meter jetty. The goal is to complete the estate by 2030, by which time the developers -- state-owned port operator Pelindo III and private partner AKR Corporindo -- expect to play host to nearly 200 companies.

Freeport Indonesia, the local unit of U.S. miner Freeport-McMoRan, is reportedly looking at the site as a potential location for its second smelter in the country.