Infrastructure: Tender for Construction of Kuala Namu-Tebing Tinggi Toll Road
The local government of North Sumatra stated that a number of foreign investors have shown interest to participate in the tender for the construction of the Kuala Namu-Tebing Tinggi toll road. The toll road will connect the new Kuala Namu International Airport to the city of Tebing Tinggi, approximately 30 kilometers from North Sumatra's capital city of Medan. Kuala Namu is designed as Indonesia's air traffic hub for Southeast Asia as it has a more strategic location to Kuala Lumpur, Singapore and Bangkok compared to Jakarta's Soekarno-Hatta airport.
The Kuala Namu International Airport, Indonesia’s first airport designed to accommodate Airbus A380 double-decker jumbo jets, is Indonesia's second-largest airport (after Soekarno-Hatta International Airport located just outside Indonesia's capital city of Jakarta). Construction of the first phase of the new airport required IDR 4 trillion (roughly USD $400 million) worth of investments that were covered by state-owned airport operator Angkasa Pura II and Indonesia's Ministry of Transportation. The airport has an initial passenger capacity of 8.1 million people per year. By 2030, it is expected to have a capacity of 50 million passengers per annum.
However, accessibility to Kuala Namu International Airport is still insufficient. The current road from Medan to the airport is in a poor condition and thus time-consuming, while the new train service to the airport (provided by Railink - a joint venture between Angkasa Pura II and Kereta Api Indonesia) is very expensive and can only accommodate about 20 percent of the estimated 21,000 daily passengers that travel to the airport. As such, a new toll road is expected to relieve infrastructural troubles.
The regional government of North Sumatra stated that investors from China and Saudi Arabia have shown interest in the toll road project. The tender is expected to open in mid-April 2014. Previously, the construction of the toll road had been delayed due to land acquisition problems (a notorious problem in Indonesia). The government of North Sumatra has not published information whether these land acquisition issue still form a bottleneck to the project.
The economy of North Sumatra is expected to get a boost from recent development plans. Apart from the realization of the world-class Kuala Namu airport, the special economic zone of Sei Mangkei (part of the government’s Masterplan for Acceleration and Expansion of Indonesia's Economic Development, or, MP3EI), consisting of IDR 4,000 trillion (USD $354 billion) in investments for infrastructure projects and value-adding facilities for the processing of natural resources, aims to enhance economic development of the province.
Lastly, construction of the Kuala Tanjung Port, which is expected to start in 2014, will connect Indonesia's western region to the international world. This port will be developed in several phases and will have a total capacity of 25 million 20-foot equivalent units (TEUs) by the end of 2030. The first phase of the project costs about IDR 6.5 trillion (USD $670 million) and will be financed by a syndicated loan from state-owned banks. The new port is needed as the existing Belawan Port has become overcrowded, particularly its crude palm oil (CPO) terminal.
Further Reading:
• How does Infrastructure Block Indonesia's Economic Development?
• Land Acquisition Issue Limits Development of Indonesia's Toll Roads
• Indonesia Opens New Kuala Namu International Airport in North Sumatra
• Masterplan for Acceleration and Expansion of Indonesia's Economic Development
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