NORTH SUMATRA AIRPORT CONSTRUCTION FINALLY BEGINS

UNCLAS SECTION 01 OF 02 JAKARTA 009692 SIPDIS SIPDIS AIDAC DEPARTMENT PASS USTR KATZ DEPARTMENT PLEASE PASS AID USAID FOR ANE/EAA, J. Kunder and R. Cavitt Treasury for IA -- Anna Jewell NSC for Holly Morrow From American Consulate Medan # 27, 2006 E.O. 12958: N/A TAGS: ECON PGOV EAIR EINT ID SUBJECT: NORTH SUMATRA AIRPORT CONSTRUCTION FINALLY BEGINS REFTELS: (A) 05 JAKARTA 11909 (B) 05 JAKARTA 12138 Summary -------------- ¶1. With a June 29 groundbreaking ceremony, work began on the construction of a new airport for North Sumatra at t Kuala Namu, about 30 miles east of Medan. The new airport will become operational in 2009 with one runway 3750 meters long and will eventually expand to two runways of the same length. Traffic volume outgrew Medan Polonia Airport's capability, and Polonia's location in the middle of a densely populated area precluded expansion and raised safety concerns. Construction of a new rail line and highway will facilitate travel to the new airport's location. The new airport should help economic growth in the region and spur additional investment. END SUMMARY. Work Finally Begun -------------- ¶2. Overcoming bureaucratic inertia and funding problems, Indonesia's airport authority finally began serious construction on the long-awaited airport for Medan. Indonesian Vice President Josef Kalla, Transportation Minister Hatta Radjasa, North Sumatra Governor Rudolf Pardede, and other Indonesian and foreign dignitaries attended a June 29 groundbreaking ceremony for Medan's new aiport, to be located at Kuala Namu. Although planned for more than ten years, until the ceremony the only indication of a future airport was a fence around the perimeter and a sign announcing the new airport. ¶3. The new airport, scheduled to be operational by 2009, will be completed in three stages. First stage construction on the fourteen thousand hectare site will build one runway 3,750 meters long and 45 meters wide and a passenger terminal with capacity to handle 5 million travelers each year. Stage two will see the construction of a second runway with the same dimensions and expansion of passenger facilities. The final stage will increase parking areas for aircraft and additional passenger handling capabilities to manage an anticipated 10 million passengers per year. Old Airport Congested and Dangerous -------------- ¶4. The existing airport, Polonia, originally opened in 1928, now sits in the middle of Medan. Wedged between two rivers and hemmed in by residential communities, Polonia has no room to expand beyond its 144 hectares. Designed to accommodate 900 hundred thousand passengers annually, Polonia handled about 4.5 million passengers in 2005. The overcrowding worsened after a February 2006 fire gutted the international arrival terminal. ¶5. The proximity of densely populated areas so close to the airport raised safety concerns. The fiery Air Mandala crash in September 2005 underscored safety concerns of the residents living close to the airport (ref B) and renewed calls for action on the new airport. (NOTE: Consulate Medan is less than one-half mile from the airport, though not in line with the direction of the runway. END NOTE.) JAKARTA 00009692 002 OF 002 The plane barely cleared the runway before crashing into the neighborhood directly adjacent to the airport, killing 44 people on the ground. Access to New Airport -------------- ¶6. Kuala Namu is located nearly 30 miles east of Medan, closer to the Straits of Malacca, just off the main highway between Medan and Tebing Tinggi. Given current traffic patterns and road conditions, the drive from Medan center to Kuala Namu takes over one hour. Additional traffic from airport operations would likely greatly increase travel time. In addition to the construction of the airport facilities, GOI envisages a new rail line connecting Kuala Namu and Medan in a 30 minute journey and a new toll road from Medan to Tebing Tinggi that would reduce traffic congestion on the existing roadway. Not Just Jobs -------------- ¶7. Kuala Namu Airport will be a boon to the economy of Medan and North Sumatra. Vice President Kalla said contracts for the airport would be given to local companies because of bad experiences with foreign contractors during the construction of Soekarno-Hatta Airport in Jakarta. Construction work will employ skilled and unskilled laborers in the region. New jobs will be created from the increased capacity of the new airport. Transportation of goods to and from North Sumatra will be easier when the airport is connected with Medan and the port of Belawan by improved rail and road links. Tourism can benefit from the closer proximity of the airport to Lake Toba, the province's premier tourist attraction. Comment -------------- ¶8. Medan, Indonesia's third largest city, has long suffered with lamentable infrastructure and underdeveloped facilities for travelers. Marriott has begun construction of a new hotel in Medan, which is scheduled for opening in December 2007. The new hotel and airport could mark the beginning of development in improved accommodation for business travelers and tourists, making Medan more attractive to further investments. END COMMENT. Pascoe