Australia: Norton Rose Fulbright advises Indonesia Ports Corporation on crucial infrastructure project
Last Updated: 9 May 2014

The Kalibaru Port Project, one of Indonesia's largest infrastructure projects, will significantly increase port capacity and trading benefits for the country, in a deal drawing on innovative cross-border advice from global legal practice Norton Rose Fulbright.

An Asia-Pacific team from Norton Rose Fulbright is advising Indonesian-Government owned Indonesia Ports Corporation (PT. Pelabuhan Indonesia II) on the development of the project at Tanjung Priok, Jakarta, set to become the country's largest industrial port. The Norton Rose Fulbright team also advised on the recent appointment of Mitsui & Co. Ltd as the operator of the first container terminal at the Kalibaru Port. Agreements between Indonesia Ports Corporation and Mitsui for the joint development of the first container terminal were signed in Jakarta on 19 April 2014.

The Kalibaru Port Project is one of the largest infrastructure projects to be developed in Indonesia and initially involves three container terminals and two product terminals. The project will remove logistical bottlenecks in the country and free up port capacity, which will result in significant trading benefits. The vital infrastructure development employed a specific Presidential Decree to appoint Indonesia Ports Corporation to proceed quickly with development of the project.

Norton Rose Fulbright Australia partner Ross Ramsay said the transaction attracted great interest both in Indonesia and internationally.

"The project represents a new international best practice approach by the Indonesian government to the development of critical infrastructure projects and cooperation with international partners," he said.

According to the Indonesian Logistics Association, Indonesia's logistical costs are between 25 and 30 per cent of its gross domestic product (GDP), among the highest of any South East Asian country. Thailand and Singapore's equivalent costs-to-GDP ratio, for instance, are 16 and 10 per cent respectively.

"The three [container] terminals can reduce logistical costs to 12 per cent if fully operated," said RJ Lino, President Director of Indonesia Ports Corporation.

To manage the size and complexity of the project, Indonesia Ports Corporation appointed an international advisory team, which included Norton Rose Fulbright (together with its Indonesian associate firm Susandarini & Partners) as legal adviser. The team delivered international best practice in contracting and financing structures to support the completion of such a large and complex infrastructure project.

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