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DP World, one of the world’s biggest port operators, and Canada's Caisse de dépôt et placement du Québec (CDPQ) signed a long-term agreement with Indonesian conglomerate Maspion Group to build a port and industrial logistics park in East Java.
Work is set to begin in the third quarter of 2021, with a total investment of up to $1.2 billion, DP World said in a statement on Saturday. Commercial operations at the container terminal are expected to begin in 2023.
The project is expected to develop Gresik, East Java’s infrastructure and position it as a key trade gateway for Southeast Asia's largest economy. Indonesia's economy shrank for the first time in two decades last year with output contracting 2.07 per cent.
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“Indonesia is rapidly developing as one of the world’s most important economies. This project will create modern, efficient infrastructure, as well as an industrial zone that provides quality logistics,” Sultan Ahmed Bin Sulayem, group chairman and chief executive of DP World, said.
DP World’s business model is aligned with Indonesian President Joko Widodo’s vision to spur faster economic growth through trade infrastructure development, more investment opportunities and job creation, Mr Bin Sulayem added.
The ports and terminals investment platform was first set up by DP World and CDPQ, a Canadian asset management firm that oversees Quebec’s public pension fund, in 2016. Since its launch, the $8.2bn DP World-CDPQ platform has invested in 10 port terminals globally.
As part of the new agreement, DP World and CDPQ’s global investment platform will establish a joint venture company with Maspion Group. The agreement is the first of its kind in the Indonesian transportation sector involving a foreign direct investor partner and a private sector Indonesian company, the statement added.
“It represents an important milestone for our joint platform with DP World with the addition of a first greenfield port to our portfolio of high-quality assets that have demonstrated their resilience over the past year despite important shifts in the global supply chain landscape,” Emmanuel Jaclot, executive vice-president and head of infrastructure at CDPQ, said.
DP World Maspion East Java will become the operator of the international container port that will have a capacity of up to three million twenty-foot equivalent units (TEU).
The port operator and CDPQ will also work with Maspion Group to develop an integrated industrial and logistics park, adjacent to the container terminal, with an initial land area of 110 hectares with scope for future expansion.
“The existence of this container port will further enhance economic development and investment opportunities in Indonesia,” Alim Markus, chairman and chief executive of Maspion Group, said.