PERSPECTIVES ON THE PORT INVESTMENTS IN
INDONESIA
Henry Sandee
World Bank Indonesia Office
Jakarta, December 2013
THE IMPORTANCE OF PORTS IN RAPIDLY GROWING INDONESIA
The Indonesian economy has been growing 5-6 percent during the last few years
Ports play a key role in facilitating economic growth
The efficiency of international ports has impact on your competitiveness
The efficiency of domestic ports has impact on the inter-island trade flows
FURTHER STRENGTHENING THE ROLE OF INTERNATIONAL AND DOMESTIC PORTS HAS BEEN RECOGNIZED AS PRIORITY ISSUE
Investments in port efficiency, upgrading and extension
Dwell time reduction
National Single Window
Integrated inspection
New terminals
Cold storage facilities
However, it depends also on…the quality of regulations
Various regulations have a negative impact on port efficiency
Some regulations do not facilitate upgrading and extension processes
DOMESTIC (TEUs)
INTERNATIONAL (TEUs)
TOTAL (TEUs)
2012 4.768.192 7.873.150 12.641.342
2030 18.344.644 29.423.403 47.768.047
INDONESIAN CONTAINER THROUGHPUT INCREASING FROM 12 MILLION TEUs IN
2012 BECOME MORE THAN 40 MILLION TEUs IN 2030
THE NUMBER OF IMPORTED AND EXPORTED CONTAINERS IN JAKARTA IS GROWING RAPIDLY
3,689,783 3,984,278
3,804,905
4,612,512
5,649,119
6,600,000
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
2007 2008 2009 2010 2011 2012
Tanjung Priok Throughput (TEU)
nReduce dwell time in ports and making feeder ports more efficient?
nIncrease automation in ports and encouraging 24/7 operations?
nEnsure safe and cost-effective port development and expansion through land reclamation and dredging?
Do you want to:
Then you need to attend Port Planning & Development Indonesia, 01 - 04 December, 2014 -
Shangri-La Hotel Jakarta, Jakarta, Indonesia
Visit our website www.portdevelopmentasia.com to find out more
Critical Project – Fast Track
Tanjung Priok New Container Terminals
Tanjung Perak New Container Terminals
Belawan Extension of Container Terminal
Port projects to be completed in next five year
Banjarmasin New Container Terminal
Pontianak Extension of Container Terminal
Batam Container Terminal
Madura Development of new port area
Cilamaya (West Java) Development of new port area
Palembang General cargo or bulk handling facilities
Kuala Tanjung New Container Terminal
Panjang General cargo or bulk handling facilities
Ambon, Dumai, Teluk Bayur, Makassar, Banjarmasin, Bitung, Tanjung Emas, Probolinggo, Balikpapan/Kariangau, Jayapura, Sorong, Pasean, Maloy, Pelaihari, Sei Gintung, Gorontalo, Pantoloan, Pare-pare.
General Cargo, Container and Bulk Terminal
SOME ISSUES IN PORT DEVELOPMENT
Ships returning from Eastern Indonesia are filled for 15 percent only (backhaul)
Limited commercial interest to invest in ports in Eastern Indonesia
Uncertainty about the Negative Investment List specifying the possible participation of FDI
Cabotage policy as a constraint to port investment?
BACKHAUL PROBLEM IN EASTERN INDONESIA
8
• Low frequency of container transport to Eastern Indonesia • Shipping operators offer up to 70% tariff discounts from Eastern Indonesia.
SEA FREIGHT COSTS TO AND FROM EASTERN INDONESIA
Sorong - Surabaya (Rp 5 million)
Surabaya - Sorong (Rp 15 million)
Sorong - Jakarta (Rp 7.5 million)
Jakarta - Sorong (Rp 17 million)
Surabaya - Makassar (Rp 2 million)
Makassar - Surabaya (Rp 2 million)
Sea freight costs / TEU
PENDULUM AS A SOLUTION TO PROMOTE PORT DEVELOPMENT?
PRELIMINARY ANALYSIS ON THE PENDULUM SUGGESTS
It can be carried out profitably but the leg Makassar-Sorong needs to be subsidized
It may support investments in main and feeder ports in Eastern Indonesia (frequency and reliability)
Bitung as an alternative for Sorong requires further assessment
The role of private sector involvement remains unclear
NUMBER OF DAYS NEEDED TO SHIP GOODS FROM JAKARTA AND SURABAYA TO SORONG
PORT INVESTMENTS ARE TAKING OFF, HOWEVER….THERE ARE SOME ISSUES TO BE SOLVED…
There are three port development strategies….which one is the ‘official one” with full Government endorsement?
PPP tender schemes and the Negative Investment List create uncertainties
Regulations of various departments impact on port efficiency (dwell time) and interest to investment in ports
Reluctance to invest in ports in port efficiency remains a bottleneck
IN SPITE OF ALL EFFORTS AND INVESTMENTS….DWELL TIME IN JAKARTA IS INCREASING………
6.6
6.0 5.5
6.3 6.2
6.3
6.3 6.0 6.2 6.0
6.3 6.4
8.3
7.6
6.8 6.7 7.1
7.8
8.8
10.1
0
2
4
6
8
10
12
DWELL TIME IS ALSO INCREASING IN THE PORT OF SURABAYA…..
Pre-clearance exceed 50% of the import clearance time
Activities carried out included unloading containers, stacking in CY, preparing PIB, and payment of Customs duties
5.48
4.22
1.82
1.50
2.51
2.44
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
January 2013 February 2013
(day
s)
Pre-clearance Customs clearance Post clearance
THERE IS NO CORRELATION BETWEEN DWELL TIME AND NUMBER OF CONTAINERS IMPORTED.. (2012)
WHY IS IT SO DIFFICULT TO IMPROVE PORT EFFICIENCY?
New cranes have been installed, skills of staff has been upgraded, management more professional, etc.
But……
Various departments issue regulations that have a negative impact on port efficiency
There is the danger that they may also impact on the construction of new terminals
EXAMPLE 1 HORTICULTURAL LAW
Government decided that not all ports were well equipped to do the necessary controls for horticultural imports
Surabaya was selected as the main import gateway for Java
Imports subsequently transported by truck to Jakarta
The Law has contributed to increased congestion in selected ports such as Surabaya
EXAMPLE 2 PRE-SHIPMENT VERIFICATION
Government decided that a large number of imported goods need to be checked at the port of origin to avoid illegal imports, wrong specifications, etc.
Inspections to be done under supervision of Indonesian companies
Shipments from ASEAN ports often arrive earlier in the ports of Jakarta and Surabaya than the pre-shipment reports leader to delay in import clearance
EXAMPLE 3 – NEW REGULATION ON IMPORTS THAT ARE BEING PARTLY RESOLD
Many large manufacturers import not only for their own production processes but also to fulfill the needs of e.g. service providers, repair shops, etc.
In this case, they need to set up a new trading company and apply for a new license
These new companies are automatically classified as red lane importers which causes substantial delay in the clearance process
TO CONCLUDE….
Port development will be big business in Indonesia
There remains the need to consolidate expansion plans and synchronize the strategy how to include Eastern Indonesia
Role of foreign is likely to become clearer in the near future
The limited success in improving port efficiency is a concern
More work is needed to understand the impact of laws and regulations on port efficiency and port attractiveness to investors
Do you want to Create Smarter Portswith Enhanced Connectivity ThroughStrategic Investment?
Then you need to attend Port Planning & Development Indonesia, 01 - 04 December, 2014 - Shangri-La Hotel Jakarta, Jakarta, Indonesia
Featuring:nThe Future of the Indonesian Port System and Investment Opportunities: Head of Planning, Ministry of Transportation, IndonesianExamining the Key Challenges and Opportunities for Dredging and Reclamation Works at Indonesian Ports: Director of Port and Dredging, Directorate General of Sea Transport, Ministry of Transportation, IndonesianExpanding the Makassar New Port (MNP) into a hub for Eastern Indonesia: Deputy Director of Port Facilities, Pelindo IV
Visit www.portdevelopmentasia.com to register