JAKARTA (Reuters) – Indonesia next year will offer more airport management projects to foreign investors after awarding its first to a foreign company on Thursday, the transportation minister said.
The country handed over development and operatorship for 25 years of Komodo airport to a consortium of PT Cardig Aero Services <CASS.JK> and Singapore’s Changi Airports International Pte Ltd.
The airport is in the town of Labuan Bajo on a tourist island that is home to Komodo dragons.
This marked the first time a consortium involving a foreign company was given operatorship of an airport in Indonesia, Finance Minister Sri Mulyani Indrawati said.
The consortium will invest 1.2 trillion rupiah ($86 million) over five years to expand the airport, including lengthening the runway to accommodate bigger planes likely to fly directly from countries such as China, Japan and India, and increasing its capacity by more than six-fold to handle 4 million passengers, Transportation Minister Budi Karya Sumadi told a news conference.
The firms are also expected to spend 5.7 trillion rupiah over five years on its operation, while the government will provide a guarantee through a state-owned financial company, Sumadi said.
“This is a start for us to offer other (airports),” Sumadi said.
“I’m asking for your support so we can reduce our dependence on the budget and continue to build infrastructure across the country,” he said.
He listed the Kuala Namu airport on the outskirts of the city of Medan, North Sumatra, the Sam Ratulangi airport in Manado city in North Sulawesi, and an airport in Singkawang, West Kalimantan, as projects the government would offer in 2020.
Investment required at the first two airports amounted to up to 8 trillion rupiah, Sumadi said, adding that they already handle 14 million passengers and would be ideal entry points for tourists from the Middle East, China and India.
“We will also put on offer a railway project in South Sumatra, which has already received interest from South Korean companies,” Sumadi said, adding the project was valued at an estimated 7-10 trillion rupiah.
President Joko Widodo has pledged to continue investing heavily in infrastructure in his second five-year term in office, which began in October.
His cabinet has estimated a total of $430 billion infrastructure investment will be spent between 2019-2024.
(Reporting by Gayatri Suroyo; editing by Jason Neely)