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China seeks to invest in construction of Kuala Tanjung Port

Chinese state-owned enterprises have expressed interest to invest in the construction of stage II of the Kuala Tanjung Port, an official stated here.

“Several foreign investors have expressed willingness to be involved in the (construction) project, but Chinese enterprises appear to be more aggressive than others,” Bambang Eka Cahyana, the president director of state-owned port management company PT Pelindo I, stated in Medan.

Before China, some Dutch companies had expressed interest to invest in the project.

However, Cahyana explained that negotiations with Dutch companies had been sluggish, as two parties have yet to reach an agreement on the profit-sharing scheme.

“The (Dutch) companies are seeking a 15 percent return, but we only get 11 percent (of the profit), which means the tariff (when the port becomes operational) should be higher (than the standard rate). We are currently still negotiating with the (Dutch) companies,” Cahyana noted.

According to Cahyana, the Indonesian port operator is planning to seek a six percent investment of the total cost from the Dutch companies.

“If we share a 11 percent return (on this project), the investors will double their profits, as all cash is calculated in dollars. The problem is that the (foreign) companies appear to assume that they can leave whenever the situation becomes unfavorable for them,” he remarked.

Hence, Cahyana stressed that PT Pelindo I will keep its doors open to other investors interested in funding the port construction project.

“We will welcome any investors who are not seeking an unreasonable amount of return,” he emphasized.

Apart from the Dutch, Cahyana said that some foreign companies are currently still adopting a wait and watch approach with regard to the Indonesian government`s commitment to ensuring the construction of several crucial infrastructure, such as highways, railroads, electricity, as well as power plants.

“Constructing ports or highways and railroads is not too problematic, as the investors actually look for certainty on the government`s commitment (on this construction project),” he remarked.

Hence, port operator PT Pelindo I will build an industrial park to increase the trade volume at the Kuala Tanjung Port, which will be designated as an international hub for exports and imports.

“However, our real challenge is to downstream the products. Hence, at the onset, we are seeking to build an industrial park near the port area in order to accommodate the cargo,” he stated.

Cahyana explained that the port had set a target that once it became operational, for the next five years, the Kuala Tanjung international port would handle some one million Twenty-foot Equivalent Units of cargo.

The construction of stage II of Kuala Tanjung Port is spread across a three thousand-hectare plot of land, and the project is worth Rp30 trillion.

Transportation Minister Budi Karya Sumadi had earlier stated that the government will open its doors to foreign investors, including Chinese state-owned enterprises.

“They all may invest in this (construction) project. We just open the possibilities for other countries to get involved,” Sumadi noted.
Source: Antara

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