India continues to offer around US$104 million to develop Sabang Port in Indonesia’s Aceh province into a regional transhipment hub, nearly eight years after the proposal was first submitted. However, the project has yet to move forward, according to Iskandar Zulkarnaen, Head of the Sabang Free Trade Zone and Free Port Management Agency (BPKS).
Iskandar said India had reiterated its proposal five times since 2018, including during high-level bilateral meetings between Indonesian President Prabowo Subianto and Indian Prime Minister Narendra Modi. An Indian consultancy study, conducted in 2021 and completed in 2023, estimated the development investment at US$104 million.
Under the proposed financing arrangement, India would contribute 80–85% of the investment, while Indonesia would fund the remaining 15–20%. The proposal was submitted through Indonesia’s Ministry of Foreign Affairs and the Ministry of National Development Planning (Bappenas).
Despite the offer, development remains stalled, with BPKS urging the central government to establish a clear national strategy for the port. Sabang was envisioned as a strategic free trade and transhipment centre along international shipping routes. Its CT3 container terminal, covering approximately 12 hectares, has already been developed, but its intended transhipment role remains unrealised.
Meanwhile, BPKS is exploring alternative opportunities, including positioning Sabang as a logistics base for oil and gas exploration in the Andaman region. The port requires additional open storage yards and warehouses to support these operations. Its existing warehouse capacity of around 4,000 sq m needs to be expanded to approximately 10,000 sq m.
Cruise tourism is another potential growth area, with vessels carrying up to 2,000 passengers offering opportunities for local businesses. BPKS estimates that an eight-hour tour package priced at US$100 per passenger could generate up to US$200,000 in transactions from a fully participating vessel.
To accelerate infrastructure development, BPKS is also discussing alternative financing mechanisms with Bappenas, including foreign loans and grants, with potential support from the Asian Development Bank (ADB).