JAKARTA — Japan and Indonesia on Wednesday signed a loan agreement worth $1.05 billion for a project to build a new international seaport east of Jakarta.
Patimban Port will be built in Subang, West Java province, approximately 70 kilometers from the Karawang Industrial Estate where many Japanese automotive companies have built factories.
With a 40-year tenure, the 118.9 billion yen loan carries a fixed interest rate of 0.1 percent per annum, according to the Japan International Cooperation Agency.
The loan agreement was signed on Japan’s part by Shinya Ejima, JICA’s senior vice president, who said the ceremony that construction is slated to begin early next year and the port is expected to at least partially begin operating in March 2019.
Completion of project, which has been declared a “National Strategic Project” of Indonesia, is scheduled for December 2022.
According to JICA, the objective of the project is “to strengthen the port logistics capacity of the Jakarta Metropolitan Area and improve the total economic activities in the region by constructing an international seaport and access roads in Patimban.”
Without a new port, it said, the flow of goods would likely stagnate as a result of congestion at the area’s only existing port, Tanjung Priok Port in East Jakarta, which is already struggling to accommodate container demand.
JICA said the project will contribute to improve the business environment for Japanese companies with a manufacturing base in the region.
Indonesian Finance Minister Sri Mulyani, who oversaw the signing, said the project includes construction of a terminal, a bridge and 8.1 kilometers of access roads.
She called the port “very critical because we all understand that Indonesia, with an economic growth rate above 5 percent, will definitely have a challenge to make sure that infrastructure does not lag behind.”
The Patimban project was agreed as a symbolic project of cooperation between Japan and Indonesia in talks between Japanese Prime Minister Shinzo Abe and Indonesian President Joko Widodo in May 2016, at which time Abe said he hoped to secure the participation of Japanese companies in managing the new port.
Earlier this year, Abe again reminded him of the importance of consigning operation of the port to a joint venture company between the two countries.