SOUTH KOREA LOOKS TO DEVELOP RI INFRASTRUCTURE

Following the state visit by South Korean President Moon Jae-in to Indonesia last week, the East Asian country has laid out concrete plans to get involved in Indonesia’s infrastructure projects through both government loans and private sector financing.

In a meeting between Public Works and Public Housing Minister Basuki Hadimuljono and South Korea’s Minister of Land, Infrastructure and Transport Kim Hyun-mee, the latter said her country was interested in developing two water conveyance systems to distribute water from the Karian Dam in Lebak, Banten, to nearby Serpong, Tangerang, South Tangerang and West Jakarta and an intelligent transport system (ITS) in Indonesia’s toll roads as well as building prefabricated houses for the low and middle-income population.

Korea keen on water distribution, toll road support, housing projects. Project to be funded through loans, private sector financing

The construction of the dam, set to become the country’s third largest dam after the Jatiluhur and Jatigede dams in West Java, began in October 2015 by state-owned construction enterprises PT Wijaya Karya dan PT Waskita Karya, along with South Korea’s Daelim Industrial Co, Ltd.

South Korea has channelled a loan that will total Rp 1.07 trillion (US$ 78.9 million) and cover most of the project’s costs. The construction, which is 48 percent complete, is expected to finish in 2019, on year faster its initial target in 2020.

“We discussed how to complete the Karian Dam according to the schedule,” Hyun-mee told reporters recently. Once complete, the dam willbe able to store 314,7 million cubic meters of water that can cover 22,000 hectares of land in banten province.

During the meeting, South Korea conveyed its commitment to provide a loan worth Rp 2,1 trillion through the Economic Development Cooperation Fund (EDCF) to build water pipes from the dam to Serpong. The loan agreement is expoected to be signed at the end of 2018.

Prior to that, a feasibility study will be carried out for six months so that the project can be proposed into the government’s list of foreign-funded projects, also known as the green book. The facilities are scheduled to be finished the same time the dam development concludes in 2019.

Another water conveyance project to distribute water from the dam to Tangerang, South Tangerang and West Jakarta will be carried out under a public-private partnership (PPP) and engage Korean government agency Korea Water Resources Corporation (K-Water)

K-Water is conducting a feasibility study for the project, which is slated for completion by January next year. When the process is done, the Public Works and Public Housing Ministry will put the project in a bidding under the right-to-match scheme for K-Water as the solicitor of the project.

The Korean Minister also expressed Korea’s interest in installing an ITS in toll roads. “The Ministry of Public Works (and Public Housing) plans to implement this ITS in 3,000 KM long toll roads by 2019 in November, Korean experts will visit Indonesia to analyze and investigate the site and figure out how to implement this project,” Hyun-mee said.

For the housing priject, state-owned construction firm PT Pembangunan Perumahan will team up with Korean construction firm Hanwha Engineering and Construction. Basuki said the ITS in toll roads would help in the flow of traffic across multiple lanes, as outlined in its e-toll program. “We have another offer from Hungary and we will compare its price with this [South Korea’s offer],” Basuki said.

JAPAN TO SOON DISBURSE 118.9B YEN LOAN

Japan will soon disburse a 118.9 billion yen (US$ 1.05 billion) loan in a move that will allow Imdomesia to kick off construction of Patimban Port in Subang, West Java, early next year.

Both parties signed a loan agreement for the project on Wednesday after inking another agreement that specified the approved terms, technically known as an exchange of notes, on Monday.

The funds will be used to finance the first phase of the project, which will comprise the development of a 8.1 KM access road to the port, a new terminal, a bridge and a back-up area. The loan will benefit from the Sepcial Terms for Economic Partnership (STEP) from the Japan International Cooperation Agency (JICA), including a fixed interest rate of 0.1 percent with a 40 year maturity period.

JICA senior vice president Shinya Ejima said the agency would also gear up to process another loan agreement by next year. “Because the project cost is quite huge, it will be covered by two consecutive loans. ‘We would like to process the second loan agreement next year,” he said in his speech on the occasion nothing that the effort was aimed at achieving the target of operating facilities at the port, including a new terminal, in March 2019.

The Patimban Port project, one of the national strategic projects prioritized by the government, has been delayed for four months because of administrative issues, such as a location permit from the regional government.

This has delayed the beginning of construction to March next year instead of January as planned. The project, which will cost $3 billion in total is one of the flagship projects between Indonesia and Japan.

Patimban Port will be located about 70 kilometers from the Karawang Industrial Estate and Bekasi in West Java, where many Japanese industrial firms, particularly automotive manufacturers, operate. It will also help ease heavy congestion at Indonesia’s busiest port Tanjung Priok.

The container terminal planned at the new port will be 14.7 hectares, while the container yard will be 35 ha with a capacity to handle 250,000 twenty-foot equivalent unit (TEU) containers. It will also host a car terminal.

In the next phase, the government will extend the container terminal to 60.9 ha, while its yard will be extended to 66 ha with a 3,5 million TEU capacity. The government expects its container capacity to reach 7.5 million TEUs by 2027.

Apart from the Japanese funding, the government will cover the land-procurement costs of around Rp 500 billion ($36.9 million). Meanwhile, port operators will be in charge of procuring and maintaining equipment to support operational acitivites.

Transportation Miinistry port director Chandra Irawan said the government also planned to wrap up the land-procurement process through a special public agency, National Asset Management (LMAN) by January.

“The land procurement is expected to be done in January. It has gone through the appraisal process so we just have to make the payment,” he said. Finance Minister Sri Mulyani Indrawati said the development of the port would significantly boost economic growth in the Subang area where the port will be located.

“Patimban Port will facilitate a more efficient and productive value chain between Jakarta Subang to the rest of Indonesia as well as the rest of the world,” she said.