East Java and Malaysian Investor Study Integrated Logistics Project Worth Up to US$100 Million

The East Java Provincial Government and Malaysian investor SAEngineersMy Sdn. Bhd. are maturing an investment plan to build an integrated logistics, quarantine, and trade zone in the Puspa Agro area, Jemundo, Sidoarjo Regency. The project follows the signing of a Letter of Intent during the East Java Provincial Government Trade Mission in Kuala Lumpur in April 2026. Based on initial calculations, the investment value for developing the area is estimated to reach US$50 million to US$100 million, or approximately Rp1.75 trillion. East Java Governor Khofifah Indar Parawansa stated that the provincial government is ready to provide accelerated support and regulatory certainty to realise the project. Currently, the Puspa Agro area has 50 hectares of land, with around 5 hectares utilised. “This means that if development is needed, we still have a remaining 45 hectares that is highly potential. This cooperation is important as a new hub, the New Archipelago Gateway, to answer the need for logistics connectivity between Western and Eastern Indonesia,” Khofifah said during a meeting at the Grahadi State Building in Surabaya. According to Khofifah, East Java’s position as a national distribution centre is one of the investment attractions for the project. Of the 41 national sea toll routes, 24 depart from Tanjung Perak Port in Surabaya. Additionally, around 80 per cent of logistics needs for 20 provinces in Eastern Indonesia are supplied from East Java, ranging from foodstuffs, fishery products, agricultural and plantation commodities, to construction materials and automotive spare parts. With this activity base, the integrated logistics and quarantine zone is considered to have significant business prospects, especially to support export-import flows and domestic commodity distribution. East Java Provincial Government data shows the volume of commodity movement in East Java reaches more than 350,000 frequencies of animal, fish, and plant carrier media each year. The potential container traffic that the quarantine installation can serve is estimated at 911,360 TEUs per year, comprising 811,728 TEUs of imports and 99,632 TEUs of exports. However, Khofifah emphasised that the project is still in its early stages and requires more detailed studies, including regarding investment structure, the role of regional-owned enterprises, and regulatory aspects. “This indeed requires more detailed discussion. There must be a master plan and detailed plan, including concerning the position of regional-owned enterprises, investors, and regulatory aspects. Coordination is needed between agencies and institutions at the ministry, the Indonesian Quarantine Agency, Customs, and the port,” she explained. Meanwhile, Executive Chairman of SAEngineersMy Sdn. Bhd. Shaffrudin Alamshah Ismaon said his party is targeting to submit the project proposal and blueprint this month. The document will cover area planning, cash flow projections, and the offered investment structure. “God willing, within this month of June we will prepare the planning, reserve proposal, complete with a cash flow scheme. This is most fundamental so that all parties can review and provide comments to complete any missing information,” he said. He assessed that East Java has investment appeal because it is supported by a large and diverse commodity base, ranging from coffee, shrimp, to coconut which already have markets at the regional level. “The business potential of East Java is very attractive. Because this region has many commodities that can be marketed domestically and some have already been marketed in Malaysia. We are here to try to help as best we can to market East Java commodities to the world,” he said. In the initial plan, the project will be developed through the formation of a special purpose vehicle. Revenue sources are projected to come from several business lines, including land rental, facility rental, warehousing services, and an integrated digital platform for business operators operating in the area. “God willing, within this month of June we will prepare the planning, a complete proposal with cash flow. After the master plan and cash flow information is sent, we will immediately enter the technical stage, but we must see what the focus is, the profit and loss, how the cash flow is, the ROI, IRR, all financial details and from the equity investment side,” he concluded.