17 October 2019 (closed)
USD/IDR (14,140) -32.00 -0.23%
EUR/IDR (15,731) +30.31 +0.19%
Jakarta Composite Index (6,181.01) +11.42 +0.19%
After Japan was disappointed by not being awarded the contract to build a high-speed railway between Indonesia's capital city of Jakarta and Bandung (West Java), the Indonesian government now plans to offer the revitalization of the northern Java railway to Japan. Another project that is expected to be offered to Japan is the Patimban seaport project in Subang (West Java). Indonesian President Joko Widodo is currently in Japan for a two-day visit to attend the Group of Seven summit on invitation of Japanese Prime Minister Shinzo Abe.
The northern Java railway revitalization project involves the upgrading of the railway between the two largest cities of Indonesia: Jakarta and Surabaya (East Java). By straightening up several sections of the track as well as the construction of underpass and overpass infrastructure the top speed of the trains should rise from 70 to 150 kilometers per hour across the 725 km track between both cities. This would cut travel time to four hours from nine hours currently.
Another project that is expected to be offered to Japan is the USD $3 billion Patimban seaport project in Subang (West Java). A new presidential regulation related to this project has just been finalized. According to an official at Indonesia's Transportation Ministry, President Widodo will offer the project to Japan during his visit to the country (26-27 May). Previously the Indonesian government expressed its intention to launch an international tender for the Patimban seaport. Japan, Belgium, the Netherlands, and the United Arab Emirates have all shown interest in this project.
Start of construction of the Patimban seaport is envisaged to start in 2019 and completed by 2027. Reportedly Japan is ready to disburse a loan of IDR 34.90 trillion (approx. USD $2.6 billion). This seaport would significantly enhance the flow of goods to - and from - the industrial estates in the regions east of Jakarta. Various electronic, automotive, and machinery manufacturers are based in this area.
The Patimban deep seaport is the substitute for the Cilamaya deep seaport project (also in West Java) which was cancelled as Cilamaya is too closely located to an oil and gas block operated by Pertamina Hulu Energi Offshore North West Java, a subsidiary of state-owned energy company Pertamina.
Besides the construction of the high-speed railway between Jakarta and Bandung (which was awarded to China), Japan was also not pleased by Widodo's decision to call for an onshore liquefied natural gas (LNG) plant in Masela (located in the Arafura Sea, Moluccas). This decision went against the agreement reached between Inpex and Indonesian energy authorities. Previously, Japan-based oil company Inpex Corp and Netherlands-based Royal Dutch Shell proposed to construct the LNG plant offshore (which would have made it the world's largest floating LNG plant). The Masela LNG plant is Indonesia's largest deep-water gas project. Inpex already invested USD $1.6 billion on gas exploration in the block.