Investors

DP World to exit Indonesian port concession in 2019

The Middle East port operator feels disappointed by the government’s renewal terms and that its contributions in the economy are ‘not fully recognised’.

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Dubai-based port operator DP World has decided not to renew its operating contract for PT Terminal Petikemas Surabaya (TPS) with the regional port authority at the end of the agreement in 2019.

It said it is disappointed by the operating contract renewal terms from the Indonesian authorities. The terms “did not meet its threshold for continued investment”, DP World said, adding that it will transfer the operations according to the terms and conditions of the original contract. 

TPS runs container terminal services for international and domestic trades with a gross capacity of 2.1 million twenty-foot containers, at Port of Tanjung Perak Surabaya, the so-called gateway to Eastern Indonesia. The terminal is 49 percent owned by DP World, with the rest held by PT Pelabuhan Indonesia III, the regional port authority. 

“Over the last 20 years, Surabaya has benefitted from DP World’s productivity-enhancing systems, training and development programmes, as well as the company’s security, safety and environmental best practices, and we are proud of our success there,” said Sultan Ahmed Bin Sulayem, chief executive and chairman of DP World. 

“It is unfortunate that the significant positive contributions made by global terminal operators in Indonesia have not been fully recognised, despite our successful track record,” he added. “Adhering to strict financial discipline has been crucial to the growth of DP World and on that basis, we are not able to renew the agreement beyond 2019.” 

The port operator said it would remain committed to investing in Asia and all geographies that have an appetite for foreign direct investment. Last December, DP World teamed up with Canada’s CDPQ to launch a $3.7 billion investment vehicle to invest in ports around the world. The port operator also agreed in May this year to deploy $1 billion into logistics infrastructure in India under a partnership with the National Investment and Infrastructure Fund, the country’s quasi-sovereign infrastructure vehicle.