Indonesia has revised the planned Cilamaya deep sea port project in West Java and decided to relocate it, possibly to Subang or Indramayu in the eastern part of the island.
After a review, initiated by the country’s new government, it has been decided that the original position is too close to an oil and gas block operated by Pertamina Hulu Energi Offshore North West Java, a subsidiary of state-owned energy company Pertamina.
Indonesian Vice President Jusuf Kalla said that it would be dangerous to construct the seaport close to this block as there is a high likelihood that ships will hit oil and gas rigs, reports local media.
Construction of the $2.6 billion port has suffered a series of delays since 2010. The project was designed to ease congestion at Jakarta’s Tanjung Priok port which handles about two-thirds of the country's international trade.
Indonesia’s Ministry of National Development Planning will now conduct a new study to determine the new location for the seaport.
Half of the funding for the new port project is expected to come from foreign investors. The development of Cilamaya Port was one of five flagship projects planned with cooperation from Japan.
In Indonesia, about 20 percent of production costs are spent on logistics issues related to a lack of infrastructure. According to the World Bank, Indonesia’s logistics costs account for 26 percent of the country’s gross domestic product (GDP). In the World Bank’s ‘Logistics Performance Index and its Indicators’ Indonesia ranks 53rd, lagging behind other Southeast Asian countries such as Singapore (5th), Malaysia (25th), Thailand (35th), and Vietnam (48th).