Indonesia is the largest Archipelagic State in the world, has over 17.000 islands, 5 mio Sq KM sea area, and 81.000 Km length of coastal area. The country has rich of natural resources, with population of 270 million. The location is strategic in world logistics and sea transportation, where 45% world ships pass through Indonesian water.
New Global Hub Town Bandar Kayangan (BK) is the largest mega project in the country. It is located in Lombok Island, next to Bali Island. BK is initiated by PT Diamar Mitra Kayangan (PT DMK), a private company, and to be managed by private sector. BK and PT DMK has been supported by government at all levels, local regency. Province of West Nusa Tenggara (NTB), and central government including parliaments and president with ministers. BK has been supported by strong legal bases:
1. Government Regulation (Peraturan Pemerintah) 13/2017, that stipulates BK as “national reliant area”. In Indonesia, PP is the second strongest legal base below Law (Undang-Undang), and above President Regulation.
2. President regulation (Peraturan Presiden) 18/2020 Concerning National Development Planning (RPJMN) 2020-2024, that stipulates BK as strategic priority area for private investment.
3. Minister for Land and Spatial Planning has given Location Permit exclusively to PT DMK to conduct land acquisition and urban development of an area 7373 Hectare.
B. GOALS AND OBJECTIVES
The main goal of BK is to develop a new international town, just like Dubai, Singapore and Hong Kong. Indonesia wants to be “maritime fulcrum”, a global hub of sea transportation, important role in maritime industry (shipping and shipbuilding), and to facilitate world activity in industrial logistics and services.
As a big country, Indonesia wants to reduce dependency on neighbour countries in international trade and sea transportation. Now, around 90% of Indonesian export-import commodity must go first to mainly Singapore, to be carried by large efficient ships, for export to far countries, and vice versa. Indonesia needs a modern deep-sea port in strategic location on the international shipping lanes. This is to conduct export-import directly to/from far countries, particularly on BK catchment area of Eastern Indonesia, as well as to serve international sea transportation.
For the first 5-7 years, development of BK is prioritized on 5 packages of investment. (1) International port and industrial estate. (2) Oil refinery industry. (3) Shipping company with modern fleet to function the international port. (4) Shipyard and shipbuilding industry. (5) Real Estate for CBD, MIX Commercial, and Residential areas. Total area to be developed is 2,400 Hectares.
PACKAGE 1: INTERNATIONAL PORT AND INDUSTRIAL ESTATE
Port of BK in Lombok is designed as an international, modern, and deep sea port. This is to serve, to be a hub port, of a catchment area of Eastern Indonesia. It covers Province of East Jawa, Bali, Southern and Eastern Kalimantan, and all Eastern provinces until Indonesian Papua Island. In the beginning, Port of BK is expected to serve, conservatively, 10% of total export-import of this Eastern Area, which was 10% of 100 million ton, in 2019, and will grow as the country develop the Eastern. To be sure, this 10 % will be conducted by DMK related shipping company itself to operate collecting and distributing commodity from/to domestic Eastern provinces of Indonesia, and transhipment in Port of Lombok, to/from far countries. Gradually, other shipping company is expected to follow serving beyond the 10%. To develop Port of BK is a must, otherwise Indonesia will still be dependent to neighbour countries. Port of BK can be a “sister port” of world important port, such as Rotterdam, Hamburg, and Dubai ports, to serve the world. To develop and make more stable “loading and unloading” in Port of BK, there must be integrated with an industrial estate with Special Economic Zone (SEZ) facilities from government. While supporting the port, renting and selling industrial land is also good business. Package 1 International Port (200 Ha) and Industrial Estate (800) is designed to achieve best synergic investment, not only for mutual enhancing the volumes, but also to make investment on port will be much better. Capital expenditure on the port can be compensated by “big profit” of renting and selling developed land of industrial estate. The total investment needed for Package 1 is 1 bio USD, in first 3 years disbursement. By rolling over investment on step-by-step development of industrial estate, and its revenues of selling and renting, the funds can be paid back in 10 years with grace period of 3 years. Conservative cashflows projection is attached. In accordance with Law on Sea Transportation, foreign investment can only have share a maximum of 49%, in foreign investment company (PT. PMA). However, there can be several solution: 1. The max of 49% can be considered as “on the average” within certain agreed (long term, say 30 years) period. So the investor can still have for sure majority in the half or more of the period. 2. For industrial estate, foreign company can have majority share. 3. The area of industrial estate can be extended up to 1300 hectare. 4. All permits, land clear and clean, public affairs will be handled by DMK in accordance with laws and regulations. 5. DMK would accept a 30% goodwill share, which will be given 10% each for province and regency government.
PACKAGE 2: SHIPPING COMPANY
In order to make Port of BK to function, DMK is intended to integrate shipping liners company by investing mainly in procurement of shipping fleet. To serve 10% of export-import container cargo of catchment area in the Eastern Indonesia, DMK needs 10 ships of 10.000 DWT and 6 ships of 20.000 DWT for serving domestic lines, and 6 Panamax ships of 65.000 DWT to serve abroad. This strategy has been inspired by “ ubai to become airline hub, supported by Emirates connecting from/to every spot in the world. This investment is needed on the one hand is to initiate “direct export-import liners”, on the other hand to help shipbuilding to be initiated too, as the shipping company would be the first buyers for ships. Packages of Port and industrial estate, shipping company, and shipbuilding industry, these are trio generating new economy of BK. The investment needed is 700 mio USD in 5 years disbursement. No financial calculation yet.
PACKAGE 3: SHIPBUILDING INDUSTRY
Indonesia is the largest archipelagic state, and since “cabotage principle” was enacted in 2005, Indonesia domestic ships has increased dramatically, from 6000s ships to 24.000 in 2016. The ships, however, has an average of 10.000 DWT, and too old, they are too small and not efficient to go far abroad. These data shows opportunity to shipyard industry. The ships need maintenance and replacement.
That is why, Indonesia has opportunity to develop shipbuilding industry for some reasons. First, as Indonesia is developing throughout the country, then sea transportation will be needed increasingly, and as a result, domestic demand for shipbuilding and maintenance which is already huge, will increase. Second, as Indonesia is passed by 45% of world ships, then the market for shipyard is even bigger. Third, Indonesia labour cost is much more competitive. Fourth, government of Indonesia supports this strategic industry, because it can generate component and other related industry. In July 2019, DMK and Sungdong Shipyard, one of the biggest in Korea, witnessed by Governor of NTB and Bupati (Regent) of North Lombok signed an MOU. However, covid19 and financial problem faced by Sungdong has resulted in implementation of the investment no to proceed yet. DMK believes to persons of Sungdong, that have created and built such a big modern shipbuilding industry, they can build an even bigger industry in Lombok, next to global hub. That is why, DMK would be willing in any way to cooperate with Sungdong leaders for BK. Investment needed for shipyard is 300 mio USD, in first 3 years disbursement. A preliminary cashflows projection is attached.
PACKAGE 4: OIL REFINERY
Indonesia is still importing oil of 1 million barrels per day. That is why, the government under president Joko Widodo has strong will to develop oil refinery industry in the country. When BK was still in the proposal to government, CEO of PT (Persero) Pertamina, Indonesia state own oil company, gave information to Governor of NTB, at that time, that location adjacent of BK is the best of best location in the country for oil refinery. The criteria includes “geo strategic of international shipping lane” for and marketing, “In the middle of the country” to be hub for Eastern Indonesia, to support new global hub Port of BK, and many other criteria. However, government has no funds for investment and no control on crude oil. Preliminary discussion has been conducted with several companies. But did not continue, due to unconducive climate of this business. But now, as Mr. President stated, oil refinery is a must, and related industries will be strongly supported. Package of Oil Refinery is on the land of 400 hectares, and can be expanded. DMK in would accept even very minor share of goodwill, as long as part of it can be given to province and regency government. The benefit oil refinery investment in BK: 1. Indonesia is still captive market, to fulfil domestic demand. 2. Location in Port of BK has captive market on the port and industrial estate. 3. Government supports strongly for oil refinery, with so much incentives. 4. All permits, land clear and clean, public affairs will be handled by DMK.
PACKAGE 5: CBD, MIX COMMERCIAL, AND RESIDENTIAL AREAS
First 5 year priority is 200 hectare for each, and total of 600 hectare. This would be the best business, if the trio generating economy is Implemented, and will be even better if oil refinery is also implemented. The so-called “ ubai sister city” or “ ubai on reen Indonesia” would be materialized in these areas. DMK and investor partner is to conduct land clear and clean, construction of basic infrastructure, and some 10% sample of iconic buildings. DMK will let other domestic and foreign companies, fulfil the area with buildings. The total investment needed is 1 bio USD, in first two years disbursement. The funds can be paid back in 10 years or even shorter, with grace period of 3 years. It yields a very good NPV and ROI. A cashflows projection is attached. For this business DMK would accept at least 51% share, could be part of it as loan and goodwill share, non delusion. DMK by it self has promised to give profit to province and regency government as will as people who originally owned the land.
We offer companies or individuals who have the potential to invest in the development of a global hub Bandar Kayangasn NTB.
interested in investing by contacting the head of the NTB Investment Office. with full seriousness and attention we will serve the best