Hutama Karya taps Daewoo to build immersed tunnel for IKN
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Hutama Karya gandeng Daewoo bangun terowongan bawah laut IKN
4 December 2023
By: Jayanty Nada Shofa
Jakarta - PT Hutama Karya (Persero) is cooperating with South Korean construction company Daewoon E&C to construct the immersed tunnel in Nusantara Capital City (IKN).
The cooperation is marked by the signing of a Memorandum of Understanding (MoU) at Korea-Indonesia Economic Cooperation Forum in Jakarta on Thursday (30/11/2023). Hutama Karya is currently conducting a study on the immersed tunnel that is predicted to span 2 kilometres long. The immersed tunnel is expected to minimise the ecological impacts of infrastructure projects on the mangrove forest in IKN.
“With the immersed tunnel, we want to minimise the environmental impact of [infrastructure] development, especially when the projects operate. The mangrove area and certain endemic animals must be preserved,” Hutama Karya Operations Director Agung Fajarwanto said after the MoU signing.
Hutama Karya is welcoming the cooperation with Daewoo as the Korean company is experienced with constructing an immersed tunnel. Daewoo has previously built Geoga Bridge spanning 8.2 kilometres that connects Busan City to Geoje Island. The bridge has an immersed tunnel spanning 3.7 kilometres. The immersed tunnel is 48 metres below water level, making it the deepest tunnel in the world.
Agung explained that the study on the immersed tunnel in IKN was still ongoing. The cost of the tunnel is predicted to reach around Rp8 trillion to Rp10 trillion. However, the investment scheme has yet to be determined as it is still waiting for the result of the study. One of the options is public-private partnership (PPP).
“It is expected to be completed in 2-3 months. Only discussions are left as data collection took a long time. The geotechnic data, the shipping data, the tidal data, the wave data, and the environmental data. They have been collected. Now, only discussions between our engineering team and Daewoo’s engineering team are left,” Agung explained.
Agung also hopes that discussions on the project will involve regulators, such as the Public Works and Housing (PUPR) Ministry.
Government provides guarantee
During the occasion, Coordinating Minister for Economic Affairs Airlangga Hartarto said that investing in Indonesia was beneficial, which has been proven by foreign companies that have invested in Indonesia, such as Posco and Daewoo Engineering & Construction from South Korea.
Posco is a steel company from South Korea. Posco with Krakatau Steel in 2010 established a joint venture called Krakatau Posco. Today, Karakatau Posco is currently increasing their production capacity to 10 million tonnes per year. Investor Daily reported that Krakatau Steel logged a profit of US$415 million and a revenue of Rp2.35 billion in 2021.
In 2020, Daewoo announced that the company was contracted to handle the pipeline work at an LNG facility in Tangguh. Currently, Daewoo is cooperating with Hutama Karya to study the immersed tunnel in IKN.
The government logged that South Korea was the seventh-largest foreign investor in Indonesia in 2022. Foreign investments from South Korea reached around $2.3 billion during the year. Meanwhile, investments from Korea reached almost $2 billion from January to September 2023, slightly below Malaysia ($2.4 billion). These foreign investments from Korea from January to September 2023 comprised of 5,215 projects.
“The survey by Jetro (Japan External Trade Organisation) shows that, compared to other countries, Indonesia offers higher profits for corporations,” Airlangga said.
Based on Jetro’s survey (2022), 73.2% of Japanese-affiliated companies in Indonesia made operating profits during the year. It is higher than other ASEAN countries, such as Malaysia (63%) and Thailand (63.8%). However, Indonesia is still below Singapore. As many as 73.5% of Japanese-affiliated companies in Singapore made operating profits in 2022.
Meanwhile, Nusantara Capital City Authority (OIKN) Funding and Investment Deputy Agung Wicaksono said that the capital city relocation to Kalimantan was initially proposed by President Soekarno and later realised by President Joko Widodo.
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