From Aceh to Papua: Jokowi’s Infrastructure Visions

Jakarta Globe, Yanto Soegiarto, Apr 19, 2015

Cyclists crossing the Kelok 9 flyover in Payakumbuh, West Sumatra on
 July 3, 2013. GlobeAsia Both local and international investors have turned
 their attention to President Joko Widodo’s ambitious plans. (JG Photo/Afriadi Hikmal)

The building of infrastructure in Indonesia is the key to understanding the extent of progress in the country.

During the World Economic Forum on East Asia, a question will be asked: Is Indonesia doing enough to show the public and investors they can trust that infrastructure development is moving ahead toward growth and becoming competitive in the region.

Indonesia, meanwhile, has been given the opportunity to showcase development and attract investment while playing host to the WEF event.

The administration of President Joko Widodo has set an infrastructure target, to be achieved by 2019, in which 24 seaports, 15 airports, power plants with a capacity of 35,000 megawatts and nine million hectares of agriculture land will be developed.

This was reiterated by WEF Indonesia committee member and Trade Minister Rachmat Gobel in a recent briefing to ambassadors and prominent business leaders.

The administration is confident in its programs to build dams, toll roads and railways to boost the local economy and raise the living standards of local communities.

Joko traveled to Aceh in March to inaugurate a number of projects in the area.

In North Aceh, he presided over the groundbreaking of the Keureuto dam — the largest to be built this year and expected to increase agricultural output in the region.

The construction of the dam will allow the irrigation of other regions which are in a deficit of rice production.

The dam is being built by state-owned construction companies Brantas Abipraya, Hutama Karya and Wijaya Karya.

It will hold 167 million cubic meters of water and irrigate 4,768 hectares of agricultural land. The reservoir will also prevent flooding in the downstream region.

Joko then moved on to Sabang, Indonesia’s most western tip, where he jump-started the construction of the Seunara reservoir, which has been stalled for more than nine years due to land clearance issues.

The issue was eventually solved as Joko negotiated with over 200 local residents who had been holding out for a larger compensation package.

“After talking to the residents, they have no problem. We have the budget, what’s important is the reservoir will be completed this year and function,” said Joko, who was accompanied by Aceh Governor Abdullah Zaini and Public Works and Housing Minister Basuki Hadimulyono.

The reservoir will provide water and help the local community boost income through the development of water tourism and aquaculture.

Veteran infrastructure expert Scott Younger says the president’s move to resolve the stalled Seunara project provides encouragement.

“He has quickly recognized the serious issue of lack of water storage across the country and acted on it. It is also positive that he has inaugurated the long-defined Keureuto project.

“With this early action it would seem that the president will certainly be trying to meet the target of 13 dam projects for this year,” Younger said.

But, he says, the longer-term concern is the lack of engineering and construction industry capacity to carry out all the work planned in the administration’s term, not just in water storage but across the infrastructure space as a whole.

Undaunted, the president pressed on to Lhokseumawe, the home of Kertas Kraft Aceh.

The company stopped production years ago, but the president has voiced he would like to see it running again as to contribute to the local economy.

“For more than 15 years I have wanted the company to be in operation again. There is adequate supply of raw materials from the forests which can be managed by the local people.

“We can plant fast-growing sub-tropical trees such as albizia or pine and we don’t have to wait 15, 20 or 30 years,” he said.

The president is no stranger to Aceh. He spent his early working years there and his first child was born in the province.

“Ibu Jokowi and I are very familiar with Aceh,” he said.

In Arun, just north of Lhokseumawe, the president launched the Arun regasification and storage terminal, marking a milestone in the country’s efforts to shift its energy consumption toward gas.

The plant sits on the now-depleted wells of Indonesia’s first natural gas resource, now run by Perta Arun Gas, a subsidiary of state-owned Pertamina Gas.

“The facility will regasify LNG sent from Kilang Tangguh in Papua,” Pertamina Gas president director Hendra Jaya explained, adding that the plant will provide the state electricity company with gas to power its generators in Belawan, Medan.

Joko’s initiative in Aceh marks a significant move in the nation’s infrastructure building, no president before him has had a similar strategy.

Dams and roads

This year, the administration is at work building at least 13 of the projected 49 dams it wants to construct over the next five years. The cost of the 13 dams will be at least Rp 12 trillion ($934 million), excluding land-clearance costs. The projects will be funded by the state budget.

Rising transportation and logistics costs have also won the attention of the government.

Many toll roads are to be constructed and work on the 2,700-kilometer Trans-Sumatra toll road, which will link Aceh and Lampung, is due to start this month.

The government has assigned Hutama Karya to undertake the project, as it is the only large state infrastructure firm not listed on the stock exchange.

Construction of the road has been estimated to cost Rp 300 trillion, with the government asking other state enterprises and local governments to cooperate without reservation.

The first stage of the project is to build 1,300 kilometers of road. Hutama Karya has been given an additional injection of funds by the government to get the job done.

Earlier Hutama Karya and other state enterprises, including banks, were ready to finance the project without relying on the state budget but the government deemed it would create too much of a burden.

During the previous administration of president Susilo Bambang Yudhoyono, the project was also to be managed by Hutama Kaya. The project proved difficult to get started due to financial concerns with investors reluctant to commit to such a long-term project.

The focus then turned to building the Medan-Binjai toll road, but that plan has also changed, with the focus now on the link between Bakaheuni in Lampung and Palembang, the capital of South Sumatra.

The April ground-breaking date was chosen at a limited cabinet session presided over by Joko, Vice President Jusuf Kalla, Public Works Minister Basuki Hadimulyono, State-owned Enterprises Minister Rini M. Soemarno and Finance Minister Bambang Brodjonegoro.

An important part of the decision was the revision of the previous presidential decree number 100/2014 which put an emphasis on land acquisition as a priority.

In a recent development, Rini revealed that four state enterprises — Hutama Karya, Jasa Marga, Waskita Karya and Wijaya Karya — will be tasked to jointly commission the project.

“The project will be done in sections. For instance Waskita Karya will do section 1, Wijaya Karya section 2 and so forth, Part of it will hopefully be completed in 2018,” she said, adding that some sections of the road will be commissioned by local governments involving the private sector.

Railway development

Following Joko’s pledge last year to develop railways in Papua, the Transportation Ministry will allocate at least Rp 105.6 trillion over the next five years to build railway networks beyond Java.

“We have evaluated the budget needs of the Directorate General of Railways at the ministry for the next five years and according to the new master plan pushed by the president, completion of the project is slated for 2019,” Director General for Railways Hermanto Dwiatmoko said.

In business terms, railway development beyond Java can be complex because of feasibility and financing, and as a result funding for railway development has to come either from the state budget or through public-private partnership, he said.

The plan may appear ambitious but Hermanto insisted that the project will begin in 2016.

It will contribute to what will become a total national railway network stretching 3,258 kilometers and be the longest railway project since the Dutch occupation of Indonesia.

Meanwhile, a feasibility study for the construction of the Trans Papua Railway has already begun. The new railway track will span 595 kilometers connecting Sorong and Jayapura.

Home Affairs Minister Tjahjo Kumolo said that development outside Java is one of the president’s priorities.

“There are many regions and border areas which are still untouched by infrastructure development.

“The president is committed to developing the eastern part of Indonesia where infrastructure is less developed.

“We at the Ministry of Home Affairs have reached a consensus with the Ministry of Public Works to support and develop infrastructure mainly in Papua, East Nusa Tenggara and the Kalimantan border areas,” he said.

House Commission V members who have visited Papua to see the prospective railway plan say they back the government’s initiative.

They have also encouraged the people of Papua to support it.

At the local level, regional officials have discussed the railway project with the central government but still have questions about the source of finance.

“We will have certainty on that in one or two months,” said regional secretary Ella Loupatty.

“We think that the project will begin from Sorong in West Papua and connect the Sarmi district in Papua province. If the project is realized, the distribution of goods will be easier and prices will go down in many areas.”

Hermanto added that he had asked regional officials to help in the process of land clearance, which poses one of the major hurdles to any infrastructure project.

He believes it is feasible to complete the Papua railway project within five years.

“We expect the project to be expedited although we note that any infrastructure development in Papua is not easy. But, we can’t delay it,” he said.

Higher commodity prices

Without the development of better infrastructure in the area, the price of cement could go as high as Rp 2 million for a 50 kilogram sack, while basic commodities such as sugar could cost between Rp 15,000 and Rp 50,000 a kilogram, many times over the price for such staples on Java.

Commenting on the rail plans, Younger, the infrastructure expert, says the target dates are highly optimistic.

“While railways must be part of the transportation infrastructure build-out, an emphasis for off-Java railway construction seems difficult to reconcile,” he says.

“There is still much to do in rail in Java and especially around the main urban centers, such as Jakarta and for fast rail links between the major cities. Railways make sense when there are many people and/or a large volume of commodities to transport.

“Java and off-Java highly-populated centers, such as Medan, fill the first criterion and off-Java in certain specific locations for the movement of commodities.”

And, he adds, the public-private partnership concept has been around for more than a decade, but a workable model is still to be found.

More needs to be done to encourage private investment.

Meanwhile, a number of countries in the East Asia region such as Singapore, Japan, and China have expressed interest to invest power plants projects in Indonesia, according to the Investment Coordination Board (BKPM).

The BKPM has received 12 new applications for investment permits from foreign investors to build power plants worth $8.9 billion, or around Rp 116 trillion.

It’s not just foreign investors looking towards Indonesian infrastructure — many domestic investors are interested as well.

BKPM chairman Franky Sibarani said that his office has also received applications for investment permits from 17 local investors.

GlobeAsia and the Jakarta Globe are media partners of the World Economic Forum on East Asia. Parts of this article originally appeared in the April issue of GlobeAsia.

GlobeAsia

Indonesia to Offer PPP Projects Worth $52b

Jakarta Globe, Eko Adityo Nugroho, Nov 06, 2014

Jakarta's government has set the capital's Decent Living Index at Rp 2.5 million
 ($206) for 2015, a strong signal to workers that minimum wages are unlikely
to increase substantially. (Reuters Photo/Beawiharta)

Jakarta. The Indonesian government plans to offer 43 infrastructure projects worth $52 billion to private investors next year, according to an official of the National Development Planning Ministry.

Bastari Panji Indra, a director at the ministry, said the projects will be offered under public-private partnership (PPP) schemes.

The projects offered include airports, monorail and, light rail transits, toll roads, coal transportation trains, ports, and water supply.

The government has published details regarding the projects in the Public Private Partnership Book 2015, which guides infrastructure development in the country.

Speaking on the sideline of Indonesia Infrastructure Week late on Wednesday, Bastari said of the 43 projects, eight are classified as “ready” to be offered, 11 are   “prospective” and 24 are marked as “potential.”

Bastari said the government will offer 10 major airport projects to private investors, including Juwata in North Kalimantan, Tjilik Riwut in Central Kalimantan and Fatmawati Soekarno in Bengkulu.

“Apart from airports, there are also a monorail project, coal transportation by train, water supply and six ports,” Bastari said.

Citing the Public Private Partnership Book 2015, he said the government plans to build an express train line connecting the Halim Perdanakusuma Airport in East Jakarta to the Soekarno-Hatta International Airport in Tangerang, Banten, in order to ease passenger commuting.

The director also announced a light rail transit system in Bandung, West Java, new train networks for South Sumatra, three water supply projects in Semarang, Central Java; Pekanbaru in Riau, and Pondok Gede in Bekasi.

Bastari also flagged a project for waste disposal processing in Bogor and Depok.

Deputy Minister Dedy Supriadi Priatna, who is charged with infrastructure affairs, said the government plans to revise the PPP scheme to attract investors, including with the introduction of a performance-based annuity scheme.

Under such a scheme, private investors contribute to development, financing and the operation of a project with a given concession time.

Once the project is open for commercial use, investors will receive regular payments for providing the service to the public, with a performance standard agreed to by both parties.

The new government under President Joko Widodo has a lot of research to do into the infrastructure sector.

Poor road and toll road conditions, over-crowded airports, over-capacity ports, and a lack of train networks have been cited as the main stumbling blocks to strong and sustained economic growth.

The previous administration under Susilo Bambang Yudhoyono repeatedly offered infrastructure projects to tender, but only a few have been completed.

Poor preparation of projects, complex bureaucracy and low return in investment for the private sector remain major factors that deter investor interest.

Indonesia’s Lion Air to Buy 230 New Boeing 737s in $21.7b Deal

Jakarta Globe, November 17, 2011

Indonesia’s Lion Air has agreed to buy 230 Boeing 737 aircraft with a
 list price of $21.7 billion, the White House said on Thursday, touting the
sale as the US firm’s biggest-ever commercial order. (Antara Photo/File)   

     

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Nusa Dua. Indonesia’s Lion Air has agreed to buy 230 Boeing 737 aircraft with a list price of $21.7 billion, the White House said on Thursday, touting the sale as the US firm’s biggest-ever commercial order.

The deal was announced soon after President Barack Obama touched down in Bali for the East Asia summit on the final leg of a regional tour partly aimed at drumming up markets for US products at a time of slow growth back home.

The White House also highlighted other deals, some already announced, including the sale of eight Boeing 777 planes to Singapore Airlines and an order for Sikorsky Black Hawk helicopters by Brunei’s Ministry of Defense.

Officials said the Lion Air order was for 201 Boeing 737MAX aircraft and 29 Next Generation 737ER planes.

“The President will join a signing ceremony between the representatives of Boeing and Lion Air on November 18,” a White House statement said.

“With 230 airplanes at a list price of $21.7 billion, this order represents the largest commercial airplane agreement ever for Boeing.”

Aviation Week reported on November 4 that Lion Air, Indonesia’s largest privately-held carrier, was seeking new narrow bodied aircraft and was considering 737s and the European-made Airbus 320.

The White House also said that the deal included options for a further 150 aircraft valued at $14 billion, which could put the eventual deal at $35 billion.

Officials said that the deal would support 110,000 American jobs at Boeing and at suppliers throughout 43 American states, at a time of 9.0 percent unemployment which is clouding Obama’s 2012 reelection prospects.

The White House also highlighted another big Boeing deal, the sale of eight 777-300ER jets to Singapore Airlines worth $2.4 billion which will support a further 11,000 US jobs. That contract had already been made public.

Indonesia’s Garuda Airlines meanwhile has signed a contract to buy 50 CFM56 General Electric engines worth $1.3 billion, the White House said..

And Sikorsky will sell Brunei 12 Blackhawk S-70i helicopters worth $325 million, the White House said, adding that the total value of all the deals was $25 billion.

Agence France-Presse

Indonesia's Lion Air has placed the largest ever commercial airplane
order in Boeing's history, valued at $21.7 billion. (AFP Photo) 

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Firm earmarks $655m to expand five airports

The Jakarta Post, Jakarta | Fri, 08/26/2011

State airport operator PT Angkasa Pura I (AP I) has allocated Rp 5.6 trillion (US$655.2 million) to expand five airports in Bali, East Kalimantan, East Java, Yogyakarta and South Kalimantan, the company’s spokesman said.

Company public relations manager, Merpin Butarbutar, said in Jakarta on Thursday that AP I would upgrade the five exports into world-class airports, with “airport city” concepts, equipped with hotels and shopping centers, by 2013.

“Almost all airports operated by AP I are currently over capacity. AP I will prioritize the expansion of passenger and logistic terminals to enhance our services as well as revenues,” Merpin said.

The five airports include the Ngurah Rai airport in Denpasar, Bali; Sepinggan International Airport in Balikpapan, East Kalimantan; Juanda International Airport in East Java and Adisutjipto International Airport in Yogyakarta.

In addition to the five airports, the company also operates another eight airports, most of which are located in eastern areas of Indonesia.

The total number of passengers at the 13 airports rose by an average of 11 percent, from 41 million in 2009 to 49 million in 2010, Merpin said.

He pointed out the Ngurah Rai airport in Bali served more than 11 million passengers in 2010, a figure far higher than the 7.5 million passengers the airport could ideally handle.

Ngurah Rai International Airport, which contributes the most to AP I’s revenues, is currently undergoing renovations to upgrade its capacity to be able to handle 25 million passengers a year, while expansion projects for the remaining four airports are expected to begin soon.

According to an earlier report, under the planned expansion, AP I will exchange the domestic and international terminals at Ngurah Rai airport in order to cope with an increase in international passengers.

The new international terminal will be expanded to cover an area of 120,000 square meters.

The company also plans to build a 39,000-square-meter, three-story car park, which will have room to accommodate up to 1,500 vehicles.

The Ngurah Rai airport expansion will use Rp 1.94 trillion of the total budget — the highest amount among the five airports — while the expansion of Sepinggan airport in Balikpapan will require Rp 1.56 trillion.

The company will use internal funds and bank loans to finance the projects, Merpin added.

As part of its expansion plans, he continued, AP I has established subsidiaries in four sectors: hotels, property, logistics and services, with a total investment of Rp 100 billion, to boost its non-aeronautical revenue.

“We expect the establishment of the new subsidiaries to boost the contribution of our ‘non-aero’ businesses to our total revenue to 60 percent by 2020, from 22 percent in 2010,” he said. AP I also recently launched its new logo in Bali, hoping to refresh its company’s image.

The new logo, worth more than Rp 200 million, depicts two hands of two different colors — green and blue — shaking each other, which “symbolize humane service, as well as safety and security, two key elements in the airport business,” Merpin said. (swd)

Jakarta’s Soekarno-Hatta International Airport to Get $1.37b Face-Lift

Jakarta Globe, July 26, 2011

Mobile Brigade (Brimob) officers conducting search operations in an
 attempt to clean up Soekarno-Hatta International Airport on the outskirts of
 Jakarta recently. The substandard airport is to get a Rp 11.7 trillion
($1.37 billion) overhaul, the Ministry of Transportation said on Tuesday.
(JG Photo/F. Raharjo)  

    

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Jakarta’s substandard Soekarno-Hatta International Airport is to get a Rp 11.7 trillion ($1.37 billion) overhaul, the Ministry of Transportation said on Tuesday.

Herry Bhakti Gumay, director general of aviation transportation at ministry, was quoted by Detik.com as saying the revamp would be entirely funded by State-owned airport operator Angkasa Pura II.

“Construction will start in 2012 and in 2014, Soekarno-Hatta will become a world-class airport,” Herry told the news portal.

Changes included completing development of Terminal 3 by 2013, renovating terminals one and two, building a new cargo terminal by 2013.

Other improvements include an automated transportation system linking the terminals as well as a shopping mall and a hotel.

Herry acknowledged that Soekarno-Hatta was now incapable of coping with the number of passengers, which continue to grow.

“Currently the airport’s capacity is designed for 22 million passengers [annually] but in reality, the number of passengers has grown to 44 million,” Herry said.

The plan to redevelop the airport was first announced by Vice President Boediono in May.

Vice Presidential Spokesman Boediono’s said it was hoped that the number of passengers would increase to 62 million people by 2014.

“That will mean increasing the apron capacity from the current 125 aircraft to 174 aircraft.

Govt Announces 17 Infrastructure Projects Worth Rp190 Trillion

Antara News, Fri, May 27 2011

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Jakarta (ANTARA News) - The Indonesian government announced 17 new infrastructure projects worth Rp190 trillion as part of its 2011-2025 Indonesia Economic Development Expansion and Acceleration Master Plan.

"The number of projects officially started is 17 and they are part of all infrastructure projects to be carried out until 2014 worth Rp400 trillion," coordinating minister for economic affairs Hatta Rajasa said in his speech at the launching of MP3EI here on Friday.

Hatta said the projects were launched in four locations namely Sei Mangke in the province of North Sumatra, Cilegon in Banten, Lombok Timur, East Nusa Tenggara and Timika, Papua, with funds coming from state-owned companies, national private companies, foreign direct investment and national budget.

"The groundbreaking is a start for MP3EI other projects. In the months and years to come it will continue to be done and therefore a solid team is needed to conduct monitoring so that no obstacles are to be found by prioritizing transparency and accountability.," he said.

Hatta said the launching of MP3EI would be the start of "business not as usual" to accelerate economic development across the country sustainably and equally through synergy building involving all components in the central and regional governments.

"The master plan is expected to be able to eradicate various obstacles of development such as `bottleneck` that disrupt business climate and certainty," he said.

In Sei Mangke there will be three projects which are to be developed namely an oil palm area development project by PT Perkebunan Negara III with an estimated investment of Rp2.5 trillion.

The other ones are the Peusangan 1 and 2 (2x44MW) hydro-powered plants (PLTA) in the Aceh province worth Rp1.53 trillion and the Broadband Access and Through Broadband Access Plan by PT Telkom.

Five main projects in Cilegon in the West Java province of Banten meanwhile are the modern steel plant development project by PT Krakatau Steel and POSCO of South Korea worth Rp60 trillion and energy gasification project worth Rp59 trillion.

The third project is the extension of Samping, engine, casting and assembling plant for motor vehicles by PT Astra Daihatsu worth Rp2.4 trillion.

The fourth project meanwhile is the Tanjung Priok toll road worth Rp1.6 trillion by JBIC, the central government, the Jakarta administration, PT Angkasa Pura and PT Jasa Marga and the fifth is the aluminium grad chemical plant worth an investment of Rp4.3 trillion in Sanggau, West Kalimantan.

Four projects meanwhile will be carried out in East Lombok namely the Pandan Duri dam with an estimated investment of Rp728 billion, the Titab dike worth Rp481 billion, the Ngurah Rai airport expansion worth Rp1.94 trillion and the development of new Garuda Airlines routes o 13 cities in the Indonesian eastern regions.

Four projects to be carried out in Timika, Papua, meanwhile include the 135-kilometer long Timika-Enarotali highway with an investment of Rp600 billion and the 600-kilometer long Merauke-Waropko worth Rp1.2 trillion.

The others include a mining project and a cobalt and nickel processing plant worth Rp50 trillion and 150 KWp and 200 KWp solar power projects (PLTS).

Editor: Ella Syafputri

Rp 80b for expansion of Bandung’s Husein Sastranegara Airport

The Jakarta Post, Jakarta | Tue, 04/05/2011

Airport operator PT Angkasa Pura II says Rp 80 billion (US$9.2 million) has been allocated to expand the passenger terminal at Husein Sastranegara Airport in the West Java capital of Bandung.

The terminal now covers 5,051 square meters of area and can accommodate up to 350,000 passengers per year. The plan is to expand the area to eventually cover 8,650 square meters of land and boost capacity to serve up to 1 million passengers annually.

“[The expansion work] is expected to be completed by 2013,” PT Angkasa Pura II director Tri S. Sunoko said Tuesday, as quoted by tempointeraktif.com.

He said the first stage of the expansion plan comprised renovation of the existing terminal this year.

Tri added Angkasa Pura II was currently working on the 7.5-centimeter overlay of the airport’s runaway, which was scheduled for completion in mid-April.

He said the overlay work would cost about Rp 40 billion.

Husein Sastranegara serves both domestic and foreign routes, with AirAsia Indonesia contributing 79 percent of the international routes to and from Kuala Lumpur and Singapore.

United States Companies Eye Railways, Airports in Indonesia: Official

Jakarta Globe, April 04, 2011

United States firms are eying investments in Indonesian infrastructure
such as railways and airports but are concerned about graft and a lack of
protection of intellectual property rights, the US under secretary of
commerce said on Monday. (Reuters Photo)

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United States firms are eying investments in Indonesian infrastructure such as railways and airports but are concerned about graft and a lack of protection of intellectual property rights, the US under secretary of commerce said on Monday.

Under President Barack Obama, the United States is trying to improve ties with the world’s most populous Muslim country, including through investment and by boosting bilateral trade of $23 billion a year, which is two thirds of Indonesia’s trade with China.

“We have some American companies that are interested in supporting Indonesian transportation infrastructure needs, particularly in the railway system,” Francisco Sanchez said in an interview with Reuters.

He declined to identify the companies.

Indonesia’s government plans next week to offer investors $32 billion worth of infrastructure projects, including a railway, toll road and power plant, as Southeast Asia’s largest economy struggles to fund an overhaul of its transportation network.

Inadequate infrastructure is seen as both an investment opportunity and an obstacle to growth, and was cited by Fitch Ratings last month as a key risk to the chances of the country winning an investment grade rating in the next 12-18 months.

Other sectors US investors are interested in are health care, agriculture and green energy, said Sanchez, in Jakarta to explore closer commercial ties.

Indonesia opened up health care for foreign investment last year, and is looking to boost food security and expand geothermal power, where U.S. energy major Chevron is already an investor.

Foreign direct investment has picked up in Indonesia in the past year, but there has been far more investment from Asia than from US or European firms, with Japan having pledged more than $50 billion in infrastructure investment.

Indonesian President Susilo Bambang has vowed to tackle corruption, a concern for many investors, though progress appears to have stalled.

Sanchez said further reforms on transparency were needed to attract more investment.

“Corruption, protection of intellectual property rights and overall transparency, all of these will have more long-term impact and positive impact on the Indonesian economy,” he said, adding businesses also wanted an opportunity to have a say on proposed regulations and laws.

Policy flip-flops have been a major concern for investors, particularly in the resources sector with rules aimed at reducing foreign ownership or involvement.

ExxonMobil has been in protracted negotiations over gas fields, while Indonesian regional authorities are competing with the national government to grab a stake in a nickel mine operated by US miner Newmont.

Reuters

Dumai airport built for Boeings

Antara News, Wed, February 02 2011

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Dumai, Riau (ANTARA News) - The Pinang Kampai airport of Dumai, Riau, normally used by Fokker planes, will be built for use by bigger planes like Boeings.

Head of the Dumai transportation agency H Marwan said here Tuesday that the promotion is first of all carried out by increasing the length of the runway from 1,800 x 40 meters to 2,250 x 40 meters.

"We are doing this because the runway of a Boeing is basically 2,000 meters long. We therefore have to renovate the airport by making its runway longer," he said.

The renovation of the airport Marwan said is also necessary because of the loan (for use) cooperation in running Pinang Kampai or a grant of state oil company PT Pertamina to Dumai city administration for 2011 will be continued.

"This is an agreement of the city administration which had reviewed the MoU reached in 2008," Marwan said.

Marwan said not only to lengthen the runway, the other facilities of the airport which are thought to be not enough need to be renewed by the procurement of supporting heavy equipment.

"The improvements and building of Pinang Kampai will have its funding and budget from the State Budget of the Transportation Ministry estimated at Rp 34 billion," Marwan said.

The company has five Fokker-50 planes, and is trying to procure several Boeings.

Editor: B Kunto Wibisono

China to build seaports and airports in Papua

Nani Afrida, The Jakarta Post, Jakarta | Mon, 01/03/2011

Nine Chinese companies are interested in building seaports and airports in Papua and West Papua, an official said in Jakarta on Monday.

“Chinese ambassadors will bring nine Chinese companies to Papua and West Papua on Jan. 5 to see directly what kind of transportation investments would be feasible there,” Transportation Minister Freddy Numberi said, adding that the governors of Papua and West Papua would also present investment opportunities in the provinces.

According to Freddy, the companies have shown interest in Sorong, Biak, and Jayapura, with the port in Jayapura likely to only handle containers.

“This is in line with the need of investment in Papua and West Papua,” he said.

He added that some Chinese investors might refurbish airports in Manokwari, Timika, Biak and Sorong.

“We plan to upgrade those airports to become international ones,” Freddy said.

Govt to build three new airports

The Jakarta Post, Jakarta | Sun, 12/26/2010

The government has planned to build three new airports in 2011 in Sulawesi and Maluku to improve access to the regions.

The planned airports are Mamasa Baru and Toraja Baru in Sulawesi and Moa in Southeast Maluku.

“We need at least Rp 130 billion (US$14.4 million) in investment per airport,” Transportation Ministry air transportation director general Herry Bhakti said over the weekend, as quoted by tribunnews.com.

Most of the projects at the airports would be financed by regional budgets, he said, however, “the state budget will cover the construction stage.”

Angkasa Pura I ready to tender Bali airport expansion

Nani Afrida, The Jakarta Post, Jakarta | Thu, 12/23/2010

State airport operator PT Angkasa Pura I is readying to expand Ngurah Rai International Airport in Bali, saying it will organize a tender for the first phase of the project soon.

The expansion has been estimated to require up to Rp 1.9 trillion (US$ 210 billion) in investment and is scheduled for completion by 2013.

“The project will be separated into four phases. We are ready to commence the first phase, disbursing Rp 227.7 billion in investment,” Angkasa Pura I planning director Yuda Prana Sugarda said in Jakarta on Wednesday, adding that during the first phase the company would construct access roads and substitute buildings.

The second phase will require Rp 344 billion, while the third and fourth phases will cost Rp 1.2 trillion and Rp 100 billion, he said.

Of this amount, up to Rp 1.2 trillion will be financed by the state and the government investment center, involving three state banks — Mandiri, BNI and BRI. The remainder will be taken from the company’s cash reserves.

According to an earlier report, under the planned expansion Angkasa Pura would switch the domestic and international terminals to cope with an increase in international passengers.

The new international terminal would also be expanded to cover 120,000 square meters.

The management also plans to build a 39,000-square-meter three-story parking with room for up to 1,500 vehicles.

By 2013, the airport’s terminals will cover 190,000 square meters and be able to serve up to 20 million passengers a year.

PT Angkasa Pura to expand five airports

Antara News, Friday, October 15, 2010 20:48 WIB

Jakarta (ANTARA News) - PT Angkasa Pura I plans to expand five airports in the country in the next two or three years with an investment reaching Rp4 trillion, its president director, Tomy Sutomo said here on Friday.

"The airports to be expanded are Ngurah Rai in Denpasar, Bali, Sepinggan in Balikpapan, Adi Sutjipto in Yogyakarta, Juanda in Surabaya and Ahmad Yani in Semarang," he said after signing a collective labor agreement for 2010-2012 between the company`s board of directors and employee association and union.

He said the expansion was needed to increase service in the airports. In general, he said, the airports are already overcapacity making their service to decline.

Citing an example he referred to the case of Ngurah Rai airport in Bali which was initially designed for accomodating 1.5 million passengers a year but was now accomodating more than 9.5 million passengers a year consisting of 4.5 domestic and five foreign passengers.

He said the first to be expanded would be Ngurah Rai early next year.

The enterprises ministry as the shareholder and the ministry of transportation have already given the permits, he said.

He said the documents for bidding some works had already been prepared and hopefully the project would all be completed in 2013.

He said for Ngurah Rai around Rp2 trillion would be needed, Rp1.25 trillion of it from loans and the rest from the company`s internal cash.

He said the company would cooperate with the Bali provincial government to help clear 129,000 square meters of land needed for the project.

The company expected its income this year to reach Rp2.361 trillion with a net profit of around Rp500 billion.

Until the third quarter this year, the state-owned airport operator company for the eastern region already earned Rp1.79 trillion.

Lion Air builds US$40 M hangar in Manado

Antara News, Friday, October 8, 2010 21:58 WIB

Jakarta (ANTARA News) - Indonesia`s largest private airline companies, Lion Air, is building a hangar complete with maintenance, repair and overhaul facilities worth US$40 million in Manado, North Sulawesi.

"The hangar is intended to become a center of maintenance, repair and overhaul (MRO) services," the company`s director of general affairs, Edward Sirait, said here on Friday.

The laying of the corner stone to mark its construction had been done on Thursday (Oct 7, 2010) by North Sulawesi governor Sinyo Harry Sarundajang and the company`s president director, Rusdi Kirana.

Edward said initially the facility would only be used internally for maintaining the company`s aircraft which is now at 64 but will increase to 178 following the delivery of B737-900ER the company has ordered.

"Nine months after the start of its construction yesterday the hangar would be completed with other facilities such as an engine shop, a cabin repair shop, an avionic shop, a non-destructive test shop,a hydraulic component shop, a wheel brake shop and ground support equipment on the ground floor while the second floor would be used for an office an employee guest house," he said.

Initially the project would be on a 12-hectare plot of land and the facility would be capable of accommodating two Boeing 737-900ERs.

"More land would certainly be needed in line with its development later," he said.

Edward predicted following its development at least 600 certified personnel with certain expertise would be employed there supported by up to 1000 workers.

"The market potential is big not only domestically but also regionally including East Asia such as Japan," he said.

With regard to human resources he said the company had already trained dozens of technicians in Surabaya, Bandung and Jakara.

In its press statement earlier the company said it was time for the company to have an MRO facility of its own in line with its increasing operations.

At present it serves 390 flights across Indonesia a day carrying 62,000 passengers. It said the number of passengers is expected to reach 20 million this year.

This means, Edward said, a hangar is urgently needed to meet the development of national aviation industry.

He said the facility would cut cost of maintenance, increase employement, tax revenue, manpower`s capability in maintenance service and reliability, security and safety of the company`s aircraft.