Keppel Logistics Moves Into Indonesia With Joint Venture

By : webadmin | on 1:59 PM December 06, 2012
Category : Archive

Zubaidah Nazeer - Straits Times

Jakarta. Keppel Logistics has pumped US$122,500 into a joint venture with Indonesian's Puninar Logistics, offering its management expertise and IT infrastructure to speed up the efficiency of goods distribution as the country grows.

The move by the Keppel Telecommunications and Transportation (Keppel T&T) subsidiary is seen as part of a strategy to expand in Southeast Asia.

Indonesia's investment chief says it is the type of investor he wants from Singapore, as he believes it will move Indonesia up the value chain.

The new company will be 49 percent owned by Keppel Logistics and 51 percent owned by Puninar Logistics, in keeping with the foreign ownership cap under Indonesian laws.

This will be Keppel T&T's first foray into Indonesia's logistics market, though the Keppel group has been in Indonesia for over 20 years with land and offshore and marine projects.

The new firm PT Keppel Puninar Logistics will marry the Singapore firm's logistics management experience.

Puninar's distribution network spans 400,000 sq m of warehouse space across Java, Sumatra and Kalimantan, Customs clearance facilities and transportation services.

Indeed, the deal comes as investors flock to markets in Asia, especially Indonesia, which is seeing record investment growth amid a bleak global economic outlook.

"(Indonesia's) solid economic growth... has encouraged a steady growth in foreign direct investment, driving manufacturing activities and boosting demand in the transportation and logistics sector in Indonesia," said Keppel T&T chairman Teo Soon Hoe.

Indonesia's gross domestic product has grown more than 6 percent a year since 2007, except in 2009 when it grew at 4.5 percent, and that is expected to continue with a predicted 6.3 percent growth for this year.

However, this growth has put a strain on the poor infrastructure, including bad roads and routes and outdated, overworked port facilities.

Keppel T&T chief executive Pang Hee Hon said this is where the Singapore firm can come in to share the processes it has tailored to ensure that goods with limited shelf life, such as food products, can be moved quickly.

"Keppel Logistics has the competence and it is the dominant player in Singapore with a proven track record," said Puninar Logistics chief executive Tjahjadi Lukiman.

Indonesia Investment Coordinating Board chairman Chatib Basri said he hopes the deal will raise productivity and efficiency.

"This is the sort of high-value investment we want... not only for investors to consider doing business here but also to help us move up to the next level of development."

Reprinted courtesy of The Straits Times