Indonesia's $6 billion airport bid to compete with Singapore raises some eyebrows

[ASEAN NOW Content Team]

 

Local tour operators are concerned about a $6 billion proposal to develop an Indonesian airport into a regional hub rivalling Singapore and Kuala Lumpur, citing concerns about the project's openness and practicality.

With 50 million passengers per year, Indonesia's state-owned airport operator and an Indian-led consortium propose turning Kualanamu International Airport in North Sumatra province into one of the region's busiest airports.

 

According to a plan announced earlier this month by Angkasa Pura II and GMR Airports Consortium, passenger counts at the airport will increase fivefold compared to pre-pandemic levels, putting it on par with Kuala Lumpur International Airport and Changi Airport.

The GMR Airports Consortium, which is made up of the Indian-owned GMR Organization and the French Aeroports de Paris group, has guaranteed an initial investment of IDR 56 trillion ($3.9 billion) as part of a 25-year contract to develop the airport, with the Indonesian side covering the rest.

 

The deal's unexpected announcement, however, has generated debate in North Sumatra's tourism industry, with some stakeholders questioning why they weren't consulted and fearing the airport had been "sold to India."

"I think it's fine to pass it over to foreign management," Mercy Panggabean, the general manager of PT Wesly Tour & Travel in Medan, told Al Jazeera.
"Why weren't tour operators invited to talk about this when they were given the tender?"
There was no news about all of this until we learned that GMR Airports Consortium had won through the media."

 

Local operators were not opposed to the agreement itself, according to Panggabean, but state-owned Angkasa Pura II needed to be more forthcoming about the project's contents.

"Does this imply that direct flights to Kualanamu will be available?"
"What is the goal here?" she inquired.

 

Although he had "not seen another Indonesian firm with the same portfolio" as GMR Airports Consortium when it comes to airport development, Clement Gultom, managing director of Boraspati Tour & Travel in Medan, told Al Jazeera he was shocked by the announcement.

GMR Group runs Indira Gandhi International Airport in Delhi and Hyderabad International Airport in Hyderabad, India, and has contracts to build airports in Greece and the Philippines.
Paris-Charles de Gaulle, Paris-Orly, and Paris-Le Bourget are all owned and operated by Aeroports de Paris in France.

 

Despite local tourism industry concerns, Djamanat Samosir, an expert in Indonesian investment law, told Al Jazeera that there appeared to be little about the deal that gave cause for concern.

"The fact that they went through a tender process demonstrates that this was a fair and transparent procedure," Samosir said.
"They'll have drafted a clear contract between the parties outlining expectations, and there's nothing unusual about that."
We can allege there was something strange about this arrangement if they don't stick to the contract or if there is a subsequent dispute over what was agreed."

 

However, Samosir stated that knowing the particular terms of the project without seeing the contract was impossible.

"The most essential thing we need to figure out is that," he remarked.

GMR Airports Consortium and Angkasa Pura II did not respond to Al Jazeera's requests for comment.

Due to its "extremely strategic location," Kartika Wirjoatmodjo, the deputy minister for state-owned enterprise, said parliament earlier this month that Kualanamu International Airport would be "scaled up to be a world-class airport."

 

GMR Group chairman for energy and international airports Srinivas Bommidala has stated that the corporation plans to "turn the airport into an international centre."