The Indonesian government’s cancellation of a plan to build a container terminal in Jakarta is fueling fears that the country’s failure to improve its infrastructure will constrain economic growth.
The government said the terminal project Tanjung Priok Port in North Kalibaru was scrapped because there isn’t enough money for new access roads and bridges.
The project was designed to relieve capacity at existing facilities at Tanjung Priok, which handles more than 60 percent of all international box traffic generated by Southeast Asia’s largest economy. Last year the port handled 5.8 million 20-foot equivalent units, up more than 20 percent from 2010 and above its rated annual capacity of 5 million TEUs.
The government in August shortlisted five consortiums to build and operate the terminal. The winner of the tender was originally supposed to have been announced October, and the Kalibaru terminal was expected to begin operating in 2014 with an annual capacity of nearly 2 million TEUs.
Lack of port capacity currently prevents lines from offering direct mainline calls at Indonesia’s leading ports, forcing the use of transshipment options via Singapore and Hong Kong, and driving up costs and delivery times for shippers. In the World Bank’s 2010 Logistics Performance Index, Indonesia ranked 75th, far below regional rivals for foreign direct investment such as Thailand, Malaysia and the Philippines.
APM Terminals estimated last year that, with five of Indonesia’s six leading container ports currently operating above rated capacity levels and suffering from congestion, a minimum of 6 million to 7 million TEUs of new capacity would be required by 2015. Another 15 million TEUs of capacity would be needed by 2020.
“Indonesia is not growing at its full potential because economic growth in Indonesia faces infrastructure challenges,” a spokesman said.
Bernardus Djonoputro, president director of Nusantara Infrastructure, part of a consortium including Evergreen and Mitsui that had bid to operate the Kalibaru terminal, told local media the decision to scrap the project would hurt Indonesia’s image among foreign investors because of the increased risk they would now attach to public-private partnerships.
“Companies could lose $1 million to $2 million spent on a feasibility study to participate in a tender if the tender is canceled,” he said.
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