Jakarta. Japan has pledged $1.12 billion in loans to fund the development of the Patimban Port project in Subang, West Java, and to finance research facilities at Gadjah Mada University, or UGM, in Yogyakarta.
According to a statement released by Japan's Ministry of Foreign Affairs, Prime Minister Shinzo Abe announced the Japanese government's decision to provide loans for the projects during his meeting with President Joko "Jokowi" Widodo on the sidelines of the Association of Southeast Asian Nations summit in Manila, Philippines, on Sunday (12/11).
The loan will be funded by the Japan International Cooperation Agency (JICA), under the Japanese government's official development assistance (ODA) program.
Indonesia and Japan signed the loan agreement on Monday during a meeting between director general for Asia Pacific and Africa at the Ministry of Foreign Affairs, Desra Percaya, and Japanese Ambassador Masafumi Ishii.
"I believe this agreement will further strengthen bilateral relations between Indonesia and Japan, especially in infrastructure and human resources development," Desra said, as quoted in a statement issued by the ministry.
The two countries will celebrate 60 years of diplomatic ties next year.
During the meeting between Jokowi and Abe, the latter reaffirmed Japan's commitment to participate in Indonesia's infrastructure development, including in the Jakarta-Surabaya railway project and the capital city's underground drainage system.
"We hope these projects will further strengthen friendly relations between Indonesia and Japan," deputy chief of mission at the Embassy of Japan, Kozo Honsei said during a press briefing in Jakarta.
Improving the Quality of Education
The government of Japan has also lent its Indonesian counterpart around $73 million to develop and improve education, research and vocational facilities at UGM.
"Through this project, we aim to improve the quality of education and encourage research and product development to further contribute to Indonesia's economic growth, particularly through industrial and human resources development," Honsei said.
Patimban Port is one of Indonesia's strategic infrastructure projects to improve and ease logistics in the country. The bulk of the agreed loan, worth $1.05 billion, represents 83 percent of the project's total value, making it one of the biggest handled by JICA.
"Among other projects within the yen loan schemes it's rare to have those valued at more than ¥100 billion [$881 million], so we can consider this project to be a large-scale one," Tomoyuki Kawabata, senior representative at JICA Indonesia, told reporters.
According to Honsei, the port construction is expected to begin early next year, with a soft opening for its car terminal in March 2019, almost a year earlier than the Indonesian government initially expected.
"Through our support we hope to contribute to improving Indonesia's logistics and investment climate, thus supporting the country's economic development," Honsei said.
The port will be located in Subang, about 70 kilometers from the Karawang Industrial Estate in Bekasi, West Java. Many Japanese industrial companies, including automotive manufacturers, operate there.
The port is designed to have a container capacity of 800,000 20-foot equivalent units (TEUs) by 2024, and an annual car capacity of 360,000. It is expected to ship and receive 7.5 million 20-foot equivalent units per year, almost as much as Jakarta's Tanjung Pirok Port, which now handles half of Indonesia's cargo traffic..
The government said in May that Japanese automotive conglomerates Toyota Motor Cooperation and Mitsubishi Corporation are among companies queuing to obtain Patimbang Port's management rights.