East Java and Malaysian Investor Study Integrated Logistics Project Worth Up to US$100 Million
The East Java Provincial Government, in collaboration with Malaysian investor SAEngineersMy Sdn. Bhd., is currently refining investment plans for the development of an integrated logistics, quarantine, and trade zone in the Puspa Agro area, Jemundo, Sidoarjo Regency.
This project follows the signing of a Letter of Intent (LoI) during the East Java Provincial Government’s Trade Mission in Kuala Lumpur in April 2026. Based on preliminary calculations, the investment value for the area’s development is estimated to reach between US$50 million and US$100 million, or approximately Rp1.75 trillion.
Governor of East Java, Khofifah Indar Parawansa, stated that the provincial government is prepared to provide support through accelerated processes and regulatory certainty to realise the project. Currently, the Puspa Agro area comprises 50 hectares of land, with approximately 5 hectares utilised.
“This means that if further development is required, we still have a highly potential remaining 45 hectares. This cooperation is vital as a new hub, a ‘New Gateway to the Archipelago’, to address the need for logistics connectivity between Western and Eastern Indonesia,” Khoflag said during a meeting at the Grahadi State Building, Surabaya.
According to Khofifah, East Java’s position as a national distribution centre is a key investment attraction. Of the 41 national sea toll routes, 24 routes originate from the Port of Tanjung Perak in Surabaya.
Furthermore, approximately 80% of the logistics requirements for 20 provinces in the Eastern Indonesian region are supplied from East Java, ranging from food supplies, fishery products, and agricultural commodities to construction materials and automotive spare parts.
Given this level of activity, the integrated logistics and quarantine zone is considered to have significant business prospects, particularly in supporting export-import flows and the distribution of domestic commodities.
Data from the East Java Provincial Government shows that the volume of commodity movement in the province reaches over 350,000 frequencies of animal, fish, and plant media annually. The potential container traffic that can be served by quarantine installations is estimated to reach 911,360 TEUs per year, consisting of 811,728 TEUs of imports and 99,632 TEUs of exports.
Nevertheless, Khofifah emphasised that the project is still in its early stages and requires more detailed studies, including those regarding investment structures, the role of Regional Owned Enterprises (BUMD), and regulatory aspects.
“However, this does require more detailed discussion. There must be a master plan and a detailed plan, including the position of BUMD, investors, and regulatory aspects. Coordination is required between agencies and institutions within ministries, the Indonesian Quarantine Agency, Customs, and the ports,” she explained.
Meanwhile, the Executive Chairman of SAEngineersMy Sdn. Bhd., Shaffrudin Alamshah Ismaon, stated that they aim to submit the project proposal and blueprint this month. The document will encompass area planning, cash flow projections, and the proposed investment structure.
“God willing, within this June, we will prepare the planning and the reserve proposal, complete with cash flow schemes. This is the most fundamental element so that all parties can review and provide comments to complete any missing information,” he said.
He noted that East Java possesses strong investment appeal due to its large and diverse commodity base, ranging from coffee and prawns to coconut, which already have regional markets.
“The business potential in East Java is very attractive. This region has many commodities that can be marketed domestically, and some are already marketed in Malaysia. We are here to assist as best as we can in marketing East Java’s commodities to the global market,” he added.
In the initial plan, the project will be developed through the formation of a Special Purpose Vehicle (SPV). Revenue streams are projected to originate from several business lines, including land leasing, facility rentals, warehousing services, and an integrated digital platform for businesses operating within the zone.
“God willing, in June, we will prepare the planning and a complete proposal including cash flow. Once the master plan and cash flow are submitted, we will move directly to the technical stage. However, we must examine the focus, the profit and loss, the cash flow, the ROI, the IRR, all financial details, and the equity investment aspect,” he concluded.