DP World JV begins construction of container terminal in East Java

The global ports operator will work with Indonesian conglomerate Maspion Group to develop new logistics infrastructure in Gresik

Officials at the the ground-breaking ceremony for the new terminal. Photo: DP World

Global ports operator DP World and Indonesian conglomerate Maspion Group have begun construction of a new container terminal in Gresik, East Java to position it as a key trade gateway for the South-East Asian country.

The joint venture company, DP World Maspion East Java, will operate the international container terminal with a design capacity of up to three million 20ft-equivalent units (TEUs), Dubai-based DP World said in a statement on Wednesday.

The JV will also develop an integrated industrial and logistics park next to the container terminal, with an initial land area of 110 hectares and with "scope for future expansion", it said.

"We see significant potential in Indonesia as a major hub for global trade, and we hope to unlock further growth in the region through meaningful partnerships and investments that bring opportunities through greater trade connectivity for local businesses," said Sultan bin Sulayem, group chairman and chief executive of DP World.

The partnership will also "serve as a cornerstone in our strategy to expand our global ports and logistics network to offer our customers end-to-end solutions and boost supply chain resilience".

The UAE’s Comprehensive Economic Partnership Agreement (Cepa) with Indonesia has come into force and will begin a new era of trade and investment co-operation, the Ministry of Economy said in August.

The UAE-Indonesia Cepa, signed in Abu Dhabi in July last year, is projected to boost the value of bilateral non-oil trade from its current $4.08 billion to more than $10 billion within five years of implementation.

In March 2021, DP World signed the deal with Maspion Group to build a port and industrial logistics park in East Java.

Work was expected to begin in the third quarter of 2021 and commercial operations at the container terminal were expected to begin in 2023, DP World said at the time.

"As with projects of this nature and scale, we have to exercise due diligence to ensure we adhere strictly to all concessions, including legal and operating frameworks – and these require co-ordination with all stakeholders," DP World said in a statement to The National on Wednesday when asked about the project timeline.

"It is important to start strong and [therefore] we have been committing required resources to ensure we set things up for long-term success."

DP World is expanding in Asia where it will begin operations at Indonesia’s Belawan New Container Terminal, after finalising an agreement with the Indonesia Investment Authority and state-owned port operator Pelindo to manage the terminal and expand its capacity, it said in June.

In November 2021, DP World and Indonesia's sovereign wealth fund signed an agreement to develop the South-East Asian country's seaports in a deal valued at an estimated $7.5 billion over a period of up to 30 years.

DP World has an agreement with the Indonesia Investment Authority and Pelindo to manage the Belawan New Container Terminal. Photo: DP World

Indonesia's economy is forecast to grow 5 per cent in 2023 and 4.9 per cent in 2024, the World Bank said on October 1 in its East Asia and Pacific October 2023 Economic Update report. This compares with 5.3 per cent in 2022.

Growth in developing East Asia is projected to stay strong at 5 per cent in 2023, but will ease in the second half of 2023 and is forecast to reach 4.5 per cent during 2024, the World Bank said in its semi-annual economic outlook for the region.

Regional growth this year is higher than average growth projected for all other emerging market and developing economies but lower than previously projected, the Washington-based lender said.

The region, excluding China, will grow 4.6 per cent this year and 4.7 per cent in 2024, according to the report.

The ground-breaking ceremony for the new container terminal in Gresik was held on October 2, DP World said.

“Maspion Group ... is dedicated to contributing to sustainable economic development in Indonesia and harnessing investment opportunities in the interest of the country’s fiscal growth," said Alim Markus, chairman and chief executive of Maspion Group.

"This project is a strong testament of how both companies – with the support of the government – can leverage our respective resources and capabilities, to jointly develop East Java’s infrastructure."