DUBAI-HEADQUARTERED DP World is building its presence in the Indonesian market through a 2021 alliance with the Indonesian Investment Authority (INA) which is starting to bear fruit.

Glen Hilton, CEO & managing director, Asia Pacific for DP World, explained: "The partnership will improve the operation of ports, reduce logistics costs, and advance national competitiveness. It will also improve infrastructure quality and connectivity as well as stimulate national economic development.

"With burgeoning domestic consumption and production, we are confident in the country's potential for continued growth, particularly for supply chain businesses to serve both domestic and international markets," Mr Hilton told UK's Seatrade Maritime News.

Through the alliance with INA, DP World is exploring a wide range of opportunities in Indonesia hinterland investments, inland terminals, cargo parks, feeder network systems, landside transport, and industrial zones. It's projected that the partnership will, over the longer-term, reach an economic value of up to US$7.5 billion.

As part of the partnership on the terminal side of the business DP World announced in June it would be investing in the Belawan, the largest port in Sumatra. DP World will be taking over management and operations of Belawan New Container Terminal (BNCT) expanding capacity from 600,000 TEU at present to 1.4 million TEU.

"Investing in Belawan provides DP World an opportunity to expand its footprint in the Indonesian market and grow its network of ports and terminals in the region. Through our partnership with INA and Indonesian government-owned port operator Pelindo, we intend to further strengthen the port's position as a major hub for trade and logistics in Indonesia and Southeast Asia," Mr Hilton said.

The port links directly to the Malacca Straits, one of the world's busiest sealanes.

In 2021 the partnership signed a long-term agreement worth $1.2 billion with Indonesia's Maspion Group, to construct an international container port and industrial logistics park in Gresik, East Java. A joint venture, DP World Maspion East Java, was formed to become the sole operator of 3 million TEU container port. It will also include an integrated industrial and logistics park adjacent to the port with an initial area of 110 hectares.

While DP World is upbeat on the opportunities Indonesia offers Mr Hilton also sees challenges in terms of the country's logistics networks linking some 17,000 islands. Domestic cargo transportation is done by trucking or barging making supply chains complex and prone to inefficiencies.

One of the impacts of this is a high cost of logistics with expenditure some 23.5 per cent of GDP according to PWC Indonesia. This compares to a logistics cost of fifteen per cent and 13 per cent of GDP in neighbouring Thailand and Malaysia, respectively.