The Jakarta administration is planning to convert the Marunda area in North Jakarta into a special economic zone (SEZ) to serve logistics purposes, according to The Jakarta Post.

"We will call it the `Ali Sadikin Logistics Center'," Jakarta Governor Fauzi Bowo said.

Fauzi said the new SEZ would bear the name of the former governor because Ali represented Jakarta directly.

Logistics would be the primary function of the area, but the administration would reserve space for industrial use, to be developed by Kawasan Berikat Nusantara (KBN).

As part of the zone, estimated to cost US$2 billion to develop, the administration would build an international port to serve as a drop-off point for containers from mother vessels.

While water in the area is not deep enough to harbour mother vessels, intermediary devices are available to deliver containers from the vessels, said Fauzi.

According to the project plan, the port would commence operations within the next three years.

"We hope by then we will have a cash flow," he said.

Former coordinating economic minister Dorodjatun Kuntjoro-Jakti, said investment in the SEZ was relatively affordable because many facilities were already there.

"The city already owns the land [which will help reduce costs]," he said, adding that there would be no need to construct a quay for the mother vessels.

Dorodjatun said some of the budget would be used to finish the long-delayed Cikarang-Tanjung Priok toll road project and an electricity plant.

"If we want power that will not be affected if something happens to the Java-Bali grid, we need a 500 MW plant for the Marunda and Tanjung Priok logistics ports," he said.

He estimated that 1 MW of electricity requiring $1 million would be feasible enough to private investors.

Water in the East Flood Canal could be treated and turned into clean water to supply the area, he said.

Fauzi said the city would not cover the financing of the entire project, as KBN would seek to form joint ventures with other companies during the construction phase.

"In one year our share in PT KBN will reach around 38 percent, but over the next two years the city will become the major stakeholder," he said.

In 2009 the government had 89 percent ownership in the industrial zone operator, while the Jakarta administration held the remainder.

Besides having a power plant and water purification facility, Fauzi said the area would also feature an incinerator to manage the city's garbage, and low-cost apartments for port workers.

"Over the next 10 to 15 years this area could absorb up to one million workers, which we need very much because we cannot rely on conventional ways of creating jobs" he said.

Fauzi said the development of the Ali Sadikin Logistics Centre was an important means to increase the city's income.

"Over the next 10 to 15 years the local government income cannot rely only on tax and retribution like we do now.

Source: Cargonews Asia