JAKARTA -- Three Japanese and two Indonesian companies are set to win a $1.2 billion contract to build a port in West Java, Indonesia's Ministry of Transportation said Sunday, as the country looks to improve a costly and inefficient logistics system.
Japan's Penta-Ocean Construction, Toa and Rinkai Nissan Construction will work with local players Wijaya Karya and Pembangunan Perumahan on the port of Patimban, to be located 150km east of the capital. These companies will handle part of the first phase project and will break ground as early as June.
The port is expected to cost a total of $3 billion and open fully in 2027. It could open for partial operation as soon as next March. In addition to the construction work, Japan has furnished a yen-denominated loan for the project.
Transportation Minister Budi Karya Sumadi met with executives from the consortium on Sunday near the site and handed them documents notifying them of their selection. An official contract will be inked soon.
The government envisions Patimban becoming a major Southeast Asian transport hub, along with the port of Tanjung Priok in northern Jakarta.
Indonesia's infrastructure has not kept up with its rapid economic development, creating congestion that slows down shipping. The country's logistics costs have been estimated at well over 20% of gross domestic product, significantly higher than for other major Southeast Asian countries. The new port aims to improve this state of affairs and bolster Indonesia's competitiveness.
The construction of a new port is also a boon to Japanese companies operating in a West Java industrial park, including Toyota Motor. Until now, those companies have been forced to navigate severe traffic congestion to transport products to Tanjung Priok. The new port would help bring down shipping costs, boosting Indonesia's appeal as a production and export hub.
President Joko Widodo has repeatedly stressed the need for investment and exports to expand the economy, promising to turn the country into an export hub for manufacturers. The new port is central to Widodo's infrastructure push to that end.
Though the bidding process has been delayed slightly, the Indonesian government is eager to see part of the facility open in March 2019 as Widodo hopes to demonstrate his accomplishments ahead of the presidential election that April.