News
Indonesia in talks with Indian firms for big-ticket infra investments
Summary
India and Indonesia have previously been in talks to develop the strategic Sabang port in Indonesia, which is located just 710 kilometres away from the Andaman and Nicobar Islands. Sabang port is also just 500 km from the vital Malacca Strait.New Delhi: Indonesia’s government has been in talks with Indian infrastructure firms to develop key projects in the Southeast Asian nation, according to persons aware of the matter. Last year, an Indian infrastructure company expressed interest in participating in the development of Indonesia’s new capital city Nusantra. The proposal has been taken up and is under discussion.
“Last year, there was an offer from an Indian company to participate in the development of Indonesia’s new capital city. The process is still underway," said one of the persons cited above.
Indonesia’s president Joko Widodo announced the new capital development project in 2019. The government has argued that Jakarta, the country’s capital since it became independent in 1949, has become crowded and polluted. Besides environmental and human factors, Jakarta’s business, political and financial clout have led to concerns over regional inequality and underdevelopment in other provinces. The new capital is expected to be ready by 2024.
Indonesia is also in talks with Indian firms to develop new port infrastructure in West Sumatra province, according to the persons cited above.
India and Indonesia have previously been in talks to develop the strategic Sabang port in Indonesia, which is located just 710 kilometres away from the Andaman and Nicobar Islands. Sabang port is also just 500 km from the vital Malacca Strait.
This “strategic chokepoint" connects Asia to Middle-Eastern and European markets and sees around 40% of global trade pass through its waters. In 2018, Luhut Pandjaitan, then-Indonesia’s Minister for Maritime Affairs, stated that the two countries could develop Sabang port for both economic and defence purposes. A number of key Indian firms have experience in building strategic infrastructure of this nature. The Essar Group led a consortium to build the India-finance Sittwe port in Myanmar. JSW Infrastructure inked a pact with the UAE’s Fujairah port for the operations and maintenance of Dibba Bulk Handling Terminal.
A JSW Group spokesperson declined to comment on the firm’s possible involvement in building a port in Myanmar.
New Delhi and Jakarta have also instituted the India-Indonesia infrastructure forum to boost cooperation in this field. The first meeting of this forum took place in 2018. However, the forum has not met since 2019. A joint task force meeting aimed at boosting connectivity between Indonesia’s Aceh province and India’s Andaman and Nicobar Islands took place in December last year.
“Infrastructure should be at the core of the India- Indonesia partnership. When the last president, Susilo Bambang Yudhoyono, came to India in 2011, there were a very large number of infrastructure projects signed, including a port in South Sumatra. But none of those projects ever fructified," said Gurjit Singh, India’s Ambassador to Indonesia from 2012 to 2015.
