Indonesia is a country with an immense potential in maritime development that is largely unrealised. There are over 2,133 ports in Indonesia: 977 general ports and 1,156 special ports.
The SOEs, the various Pelindos, between them operate 111 ports. Two of these ports have the potential to become international hubs, namely Tanjung Priok and Tanjung Perak. The government is planning another port in East Indonesia as another international hub (Bitung in North Sulawesi). The government has also stipulated 25 strategic ports as the main gateway for passenger and cargo traffic.
Table 2. General Sea Ports Source: MOT, Kepmen 53/2002 Not all ports designated as international have the facilities for full container operation.
Kepmen 44/2002 designated 20 international ports, but there are only 9 full container ports and 4 semi-container ports, most of them in Java and Sumatra1. A total of 471 1 MOT, Rencana Kerja 2006 ports should be decentralized to local government, but few are prepared to assume the responsibility for fear that this would put additional strain on their finances2.
While container traffic has increased significantly in the last five years, port capacity in Indonesia has not. Tanjung Priok and Tanjung Perak, the two largest ports, are only able to handle 3 and 1.5 millions TEU respectively, much below the capacity of international trans-shipment ports. The depth of Tanjung Perak basin is only 10 meter LWS, insufficient for ocean-going ships requiring 14-16 meter LWS. Congestion has increased in major ports, especially at container terminals, but little capacity has been added.
Law 21/1992 on Shipping and PP 70/1996 on Port are the governing legislation. The draft law, submitted to Parliament and expected to be passed in the first quarter of 2007, removes the current restriction that PSP can only be undertaken as a joint venture with a Pelindo. Removing this restriction is unlikely to lead to more PSP, unless there is unbundling of the Pelindos’ functions.
There are major PSPs under Pelindo II: the Jakarta International Container Terminal and the Koja Container Terminal.
In 1999, Pelindo III corporatized its container terminal operations. P&O Ports holds a 49% stake in the company. Since then the company has invested over US$60 million in new equipment and facilities.
Table 5. PSP under Pelindo II Source: Pelindo 2 (2006) Bojonegara port has been considered as a potential project. However, private interest in the proposed green-field port has been dampened by the fear that other ports in the vicinity would reduce the viability of Bojonegara.
Land is available at point of tender if the project is located within an existing port.
However, for a green-field port land should be acquired before the project is tendered out.
An assessment of the sector regulatory framework indicates certain important issues: At present, the Pelindos are responsible for project due diligence. However, they are not equipped to do so. Draft law assigns this responsibility to DGST.
As the landlord authority, the Pelindos set the tariff for port basic infrastructure.
This tariff affects the down-stream tariff on port services. It is important that any economic rent in the former is removed, to maximize the utilization of existing basic infrastructure.
On procurement, the current practice shows that it is conducted on the basis of Keppres 80/2003. Perpres 67/2005 must be used, as it is designed specifically for the procurement of the PPP concessionaire, and not on goods and services.
At present there is no specific regulatory body in the port sector. The regulator role is shared between the DGST and Pelindos, the latter determining, for example, the tariff on basic infrastructure.
Like the rail sector, the institutional arrangement is far from the ideal. The Pelindos perform a triple role: as a contracting agency, operator and regulator.
There are two possible arrangements based on the ideal arrangement. The first model assumes a new regulator, taking over the safety and technical regulation from the MOT and the commercial regulation from the Pelindos. The Pelindos retain their contracting role as the landlord/port authority in their designated region, but relinquish their operator role.
The other assumes that the contracting agency would be the landlord/port authority but this would not be the Pelindos, who would be one of the operators competing for PSP projects tendered by the landlord authority. The regulator would be a new entity, as proposed in the first model.
Both proposed arrangements are workable, not only for PSP provision of port services, but also for new i.e. green-field ports, such as Bojonegara. As the provision of port infrastructure is the responsibility of the government, it is assumed that a new port would be commissioned by the landlord/port authority on behalf of the government. It is further assumed that the port, once built, would be assigned to the port authority for management. This would correspond to current practice.
Source: KKPPI, Sector Review 2006