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EU ACTIVEPROJECT

INDONESIANPORTSINFRASTRUCTURE

FINALREPORT

October2012

PTGLENDALEPARTNERS

Menara

Global,

23rd

Floor

Jl.

Gatot

Subroto

Kav

27,

Jakarta

12950

Ph: +62215270426,+625270438 Fax;+62215270433


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EXECUTIVE SUMMARY

A project funded by the EU has involved the study of a number of key sectors of theIndonesian economy. One of the sectors chosen for examination has been that of

Indonesias maritime ports. The coordinator of the overall study has been the

Indonesia Netherlands Association (INA), with the ports sector assigned to the

British Chamber of Commerce in Indonesia (BritCham), which in turn engaged one

of its member companies specialising in infrastructure to undertake a desk-study

review of the ports sector in Indonesia. This report is the culmination of that study,

which was carried out over the period February to September 2012 on a part-time

basis.

A short review is made of the impact of the major political changes that took place in

the country following the Asian Economic Crash of 1998, which hit Indonesia hard,

and of the economy, which recovered following this period to achieve the current

growth rate of 6.0-6.5%. The point was made, however, that to sustain or surpass

this level of economic growth in the future significant investment was required in

infrastructure in all areas. That required for ports in the ensuing 5 year period is

estimated to be in the order of US$40 billion, with a high level of private sector

support required over that to be committed by government.

This political and economic review was followed by an overview of the structure of

the industry, particularly following the structural changes that emanated from the

issuing of the new law for the ports and shipping sector in 2008, Law 17/2008.

The hierarchy of the different ports across the country, of which there are some 1900

havens, is shown from the highest category of those publicly administered by the

state-owned operating companies, down to fishing and special purpose ports with

the main differences being addressed.

The main roles of the Ministry, under its Directorate General of Sea Transport, Port

Authorities and the 4 State-owned Port Operating companies, the Pelindos, and their

interacting roles is briefly described before more detail is provided about each of the

Pelindos, numbered I-IV, with each having jurisdictional responsibility for a segment

of the archipelago. Pelindo I is responsible for Northern Sumatra, and Pelindo IV theeastern part of the country, with Pelindos II and III having charge of the segments in

between.

Pelindo II is the largest of the four, based on western Java, the centre of the

industrial heartland of the country, and headquartered in the capital city of Jakarta.

Its operation altogether amounts to almost the combined output of the other three


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operations put together. As part of its increasing international outlook, Pelindo II has

been renamed as the Indonesian Ports Corporation.

A major container port expansion is underway at Tanjung Priok, the Jakarta port, and

this plus two other projects to upgrade container operations, albeit strictly outwith the

jurisdictional area of the IPC, at Batam, off Singapore, and Sorong in Papua, are

briefly described. Mention is also made of other work ongoing in the other Pelindos.

Successful port operations require good hinterland connections, in particular roads.

The study summarises the current status of both road and rail infrastructure across

the country and the need for parallel investment to match that expected in ports.

Logistical costs of transporting goods in Indonesia have been evaluated as among

the highest if not the highest in Asia. The countrys standing worldwide, as measured

in the World Banks Logistics Performance Index is relatively poor, particularly when

compared with its peers. Most of this poor performance is directly related to the poor

condition of much of the road network as well as the result of years of

underinvestment in the ports sector along with underperfomance in operations.

The different types of shipping trade, whether container, bulk or liquid or general

cargo have been discussed, with the expansion over the past few years highlighted

as well as that forecast for the years ahead. The shipping fleet, ferry transport and

the fishing Industry all badly need to be upgraded and expanded, however, and offer

opportunities for investment.

In May 2011 the Government of Indonesia unveiled a detailed plan for the economic

development of the archipelago, the MP3EI, or 6 Corridor Economic Development

Plan. The objectives of this comprehensive approach to accelerate economic growth

across the regions are stated and each of the 6 corridors is then briefly overviewed,with a particular focus on infrastructure and, in turn, that pertaining to ports and their

importance in the delivery of the objectives of the MP3EI. Attention to this plan will

be necessary when focusing on investment across the country.

Finally, a short section is included on financing issues as well as a restatement of

opportunities in summary.


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Contents

Page

EXECUTIVE SUMMARY i

1.0. INTRODUCTION 1

2.0. THE EU ACTIVE PROJECT PORTS AND SHIPPING 2

3.0 OBJECTIVES AND SCOPE OF THE STUDY 2

4.0 POLITICAL AND ECONOMIC OVERVIEW 3

5.0 THE STRUCTURE OF THE PORTS AND SHIPPING INDUSTRY 6

Port Master Plan 8

Port Hierarchy and Profile 8

Non-administered Public Ports 11

Special Purpose Ports 12

Coal Terminals 13

Secondary and Rural Fishing Harbours 14

6.0 CHANGES IN REGULATIONS FOR THE PORT SECTOR 16

7.0 PELINDO RESPONSIBILITIES 17

8.0 PORT AUTHORITIES 18

9.0 PROFILE OF PELINDOS 18

Pelindo I 18

Pelindo II 21

New Priok 24

Batam Transhipment 24

Sorong 25

Pelindo III 29

Pelindo IV 32

10.0 CONTAINER SHIPPING 35

11.0 GENERAL, DRY AND LIQUID BULK CARGOES 41

12.0 FERRY TRANSPORT 45

13.0 COLD STORAGE FACILITIES 47


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LOGISTICS & CONNECTING INFRASTRUCTURE ROAD AND RAIL 48

14.0 GENERAL 48

14.1 ROADS 48

14.2 RAIL 53

14.3 LOGISTICAL ISSUES 55

THE 6 CORRIDOR ECONOMIC DEVELOPMENT PLAN MP3EI 58

15.0 INTRODUCTION AND OBJECTIVES 58

15.1 THE MAIN ECONOMIC ACTIVITIES: PORTS HIGHLIGHT S 59

16.0 FINANCING ISSUES 71

17.0 SUMMARY, CONCLUDING REMARKS & OPPORTUNITIES 73

18.0 ACKNOWLEDGEMENTS 74

19.0 REFERENCES 75

APPENDICES 76

Appendix 1 1st Seminar Agenda 76

Appendix 2 2nd Seminar Agenda 77

Appendix 3 List of Identified Non-Administered Public Ports 78

Appendix 4 List of Identified Special Ports/Harbours 82

Appendix 5 Numbers of Fisheries Ports by Province 84

Appendix 6 Contact details for Ministry and Pelindo Offices 85


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List of Figures

Page

FIGURE 1.1 Main Ports of Indonesia 1

FIGURE 4.1 Current and Forecast Steady Expansion of the GDP Per-Capita,

2010 45 4

FIGURE 4.2 Indonesian Key Natural Resources 5

FIGURE 5.1 Jurisdictional Area of Each of the Pelindos 7

FIGURE 5.2 Six Non-Administered Public Ports 11

FIGURE 5.3 Special Purposes Ports 12

FIGURE 5.4 Coal Anchorages in Indonesia 13

FIGURE 5.5 Coal Production, Exports and Domestic Sales in Indonesia

(2003 2010) 13

FIGURE 5.6 Indonesian Fisheries Ports 14FIGURE 6.1 Changes in Regulations for the Port Sector 16

FIGURE 9.1 Jurisdictional Area of Pelindo 1 18

FIGURE 9.2 Pelindo I Ports 19

FIGURE 9.3 Belawan Port Profile 20

FIGURE 9.4 Jurisdictional Area of Pelindo II 21

FIGURE 9.5 Pelindo II Ports 22

FIGURE 9.6 Tanjung Priok Port (Main Port of Pelindo II) - Profile 23

FIGURE 9.7 New Priok (Kalibaru) Port Master Plan 26

FIGURE 9.8 Transhipment Hub at Batam 27

FIGURE 9.9 Sorong Port Container Terminal 28

FIGURE 9.10 Jurisdictional area of Pelindo III 29

FIGURE 9.11 Pelindo III Ports 30

FIGURE 9.12 Tanjung Perak Port (Main Port of Pelindo III) Profile 31

FIGURE 9.13 Jurisdictional Area of Pelindo IV 32

FIGURE 9.14 Pelindo IV Ports 33

FIGURE 9.15 Makassar Port (Main Port of Pelindo IV) Profile 34

FIGURE 10.1 Port Ranking in the World Container Shipping Lanes 35

FIGURE 10.2 Indonesian Container Traffic Projections from 2010 to 2030

under Alternative Growth Scenarios 36

FIGURE 10.3 2009 Domestic Container Trade Flows in Indonesia 37

FIGURE 10.4 2009 International Container Trade Flows in Indonesia 38


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FIGURE 10.5 Growth of Container Flows within Indonesian Ports

Corporation I-IV 2006-2010 40

FIGURE 10.6 Growth in Number of Ships Calls within Pelindos I-IV, 2006-2010 41

FIGURE 11.1 Forecast of Total Indonesian Cargo Handled under Alternative

Growth Scenarios 41

FIGURE 11.2 2009 Domestic General Cargo Trade Flows in Indonesia 42

FIGURE 11.3 2009 Domestic Dry Bulk Trade Flows in Indonesia 42

FIGURE 11.4 2009 Domestic Liquid Bulk Trade Flows in Indonesia 43

FIGURE 11.5 2009 International General Cargo Trade Flows in Indonesia 43

FIGURE 11.6 2009 International Dry Bulk Trade Flows in Indonesia 44

FIGURE 11.7 2009 International Liquid Bulk Trade Flows in Indonesia 44

FIGURE 12.1 Commercial Ferry Passengers (2006-2010) 45

FIGURE 12.2 Ferry Transport Vessels in Service (2006-2010) 46

FIGURE 13.1 Cold Storage Opportunities 47

FIGURE 14.1 Low Network Density 48

FIGURE 14.2 Nature of Road Network 49

FIGURE 14.3 Java Toll Roads Network 50

FIGURE 14.4 Jabodetabek Toll Roads Network 51

FIGURE 14.5 Condition of Road Network 52

FIGURE 14.6 Main Rail Nework of Java in 2010 54

FIGURE 14.7 World Scale for Logistics Performance 56

FIGURE 14.8 2010 Indonesia Infrastructure Quality 56

FIGURE 15.1 Connectivity of the 6 Economic Development Corridors 58

FIGURE 15.2 22 Main Economic Activities 59

FIGURE 15.3 MP3EI and National Port Master Plan (NPMP) 60

FIGURE 15.4 Corridor 1: Sumatra and Port Highlights 62

FIGURE 15.5 Corridor 2: Java and Port Highlights 64

FIGURE 15.6 Corridor 3: Kalimantan and Port Highlights 66

FIGURE 15.7 Sulawesi and Port Highlights 67

FIGURE 15.8 Corridor 5: Bali and Nusa Tenggara with Port Hightlights 69

FIGURE 15.9. Corridor 6: Papua and Maluku with Port Highlights 70


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List of Tables

Page

Table 5.1 Administered Public Ports under Pelindo I IV 9

Table 5.2 Fishing Harbours 15

Table 10.1 Forecast of Total Indonesian Cargo Demand

under Alternative Growth 36

Table 10.2 Top 50 Ports in Indonesia 39

Table 12.1 Ferry Volumes (2006-2010) 45

Table 13.1 Potential Marine Aquaculture Area Available in Maluku 47

Table 16.1 Infrastructure Quality in Selected Asian Countries 71


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EU ACTIVE PROJECT

A STUDY OF INDONESIAS PORTS

FINAL REPORT

OCTOBER 2012

1.0 INTRODUCTION

After two decades of neglect in terms of investments, Indonesian seaports, the main

ones of which are shown in Figure 1.1, have been attracting increasing attention

following the issuing of a new law (Law 17/2008) for the ports and shipping sector.

Investment and developments are urgently required in the shipping industry, the

primary means of large volume cargo transport, which is absolutely vital for an

archipelagic country. Until some 6 years ago attention to the sector had not been

keeping pace with requirement, and had been increasingly falling behind the

potential and manifest demand for shipping services once the growth in the economy

began to take off. This was effectively from 2005 when Indonesia shrugged off the

slowdown enforced on the country from the 1998 Asian Economic Crisis.

The industry remains inefficient with significantly greater operating costs compared

with neighbouring countries, and failure to expand to meet the increasing trade

demand has shown up the lack of available shipping tonnage as well as the poor

condition of the countrys ports. There was for many years no incentive within the

country to develop the market or to invest.

Urgent steps have had to be taken in recent years to prepare conditions for and

invest in the industry to support the countrys rapidly recovering and expandingeconomy.

Source: MOT

Figure 1.1Main Ports of Indonesia


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Furthermore, it has been recognised that the funding required to meet the large

scale of development in port infrastructure cross the country would need significant

support from the private sector, including international capital markets, for which

pertaining investment conditions have been inadequate.

2.0 THE EU ACTIVE PROJECT PORTS AND SHIPPING

The EU Active project is funded by the EU and coordinated by INA (Indonesia

Netherlands Association), the Dutch Business Chamber in Indonesia. It

encompasses a study of a number of key sectors of the Indonesian economy, all of

interest to EU countries. One of the sectors has concerned seaports, the

responsibility for which was assigned by INA to BritCham (British Chamber of

Commerce in Indonesia), which in turn engaged one of its member companies,

Glendale Partners, a consulting firm specialising in infrastructure to carry out a

comprehensive review of the ports infrastructure in Indonesia.

The project commenced in February 2012, a contract of engagement being signed

on 29th February 2012. The work to be covered in the project would be largely in the

form of a desk study (part-time), complemented by two workshops, which would

highlight some key features of the industry as well as provide an interim statement of

results from the study. The workshops were conducted on 24th May 2012 and again

on 25th September 2012, each held in the Mercantile Athletic Club, World Trade

Center, Jakarta. The agenda of each workshop is given in Appendices 1 and 2.

3.0 OBJECTIVES AND SCOPE OF THE STUDY

To present an in-depth appreciation of the seaport sector in Indonesia, which

would include but not be limited to, where information was available:

- Profile of ports

- Identification of constraints, strengths and weaknesses of current port

management and operations

To present, through overview the importance of land connectivity as

supporting infrastructure to seaport activities in Indonesia

To identify where there may be appropriate opportunities that might be of

interest to the EU along with attendant risks.


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4.0 POLITICAL AND ECONOMIC OVERVIEW

Indonesia was the most badly hit of Asian regional economies in 1998 as a result of

the Asian Economic Crisis, with its GDP crashing that year from a healthy positive

growth position in preceding years to -14% accompanied by a major debasing of the

currency. The economic crash also brought about the end of the autocratic form of

government that had been in place for 32 years and for many of the 20 years before

that, following Independence. The nation consciously decided to adopt a democratic

approach to government, becoming a fully-fledged democracy in a matter of 6 years.

Within 2 years from 1998 the economy had recovered to show a small positive GDP

growth which improved gradually over the ensuing few years before reaching 5% by

the middle of the first decade of the 21st century. From this point it has proceeded

onwards to its present level of 6-6.5%, although it should be noted that the growth

temporarily slowed down to 4% during the 2008 Global Economic Crisis, the effects

of which are still current across the world. This short period of slower growth was

still, however, a significantly better performance than that achieved by many othercountries at this time, due to a robust and expanding consumer market.

From a debt to GDP ratio of about 100% in 2000, strong, careful fiscal policies by the

Ministry of Finance have reduced this figure to an impressive 25%, one of the lowest

in the world.

Having espoused the role to democracy in 1998, the country also adopted a policy of

decentralisation with the passing of the Regional Autonomy Law in 1999 (No.22),

last amended by Law No.32 in 2004, with the objective of strengthening the role of

local governments. These, in turn, would be expected to take increasing

responsibility for steady economic development in their respective areas ofjurisdiction. The impact of this is becoming increasingly obvious with some regions

now performing better than the national average, and thus offering an encouraging

platform the development set out in the 6-Corridor Economic Development Plan, the

MP3EI, which was tabled in 2011 and which is discussed more fully below.

Indonesia has now matured into a politically stable country with a steadily growing

economy. It is the 16th largest economy in the world destined, with continued steady

growth, to become the 7th largest by 2030. It is the dominant growth centre within

ASEAN and comprises 40% of the overall ASEAN economy. Its population is the 4th

largest in the world, currently 245 million with a good demographic structure, and the

country also offers a useful counterbalancing market to the giants of Asia, Chinaand India.

It is now a member of the G20 group of nations and was re-established at

investment grade by world leading rating agencies at the beginning of the year. With

its very important large raw material and energy resources along with a fast-

expanding and maturing consumer market based on its large population and

balanced demographic profile for the foreseeable 30 years, Indonesia is attracting


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considerable investor interest. It will shortly become a trillion dollar economy with

steadily expanding GDP per-capita profile. This is highlighted in Figure 4.1.

Figure 4.1

Current and Forecast Steady Expansion of the GDP Per-Capita, 2010 - 45

While 58% of the population is based on Java, along with 83% of national industry,

and there is rapid urbanization taking place in and around the main cities of Jakarta

(greater Jakarta with 27 million of a population is now the 2nd largest conurbation in

the world), Surabaya, Bandung and Semarang, urbanization is also taking place at

other main population centres across the country. Some of these are expanding on

the back of increasing activities in clean energy developments, particularly in

development of the large geothermal energy resources, as well as in expansion of

commodity and agriculturally based industries and series attracted by these.

Indonesia is one of most important countries worldwide for the production of key

natural resources and this is set out in Figure 4.2. There are also further reserves of

oil yet to be explored.

3,000

5,300

9,000

14,900

22,500

30,400

38,600

46,900

2010 2015 2020 2025 2030 2035 2040 2045

PREPARATION ACCELERATION SUSTAINABILITY

Nominal

GDP

(US$

Billion)

711 1,335 2,416 4,257 6,793 9,706 12,989 16,578

Population(Millionpeople)

237 253 269 286 302 319 336 353

NominalGDPperCapitaUSD


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Figure 4.2

Indonesian Key Natural Resources

However, the rate of development of the country has been and is seriously

hampered by inadequate infrastructure right across the archipelago, very much

including that related directly and indirectly to ports, which is the subject of this study.


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5.0 THE STRUCTURE OF THE PORTS AND SHIPPING INDUSTRY

There are three main players in the structure of the Indonesian ports and shipping

industry. These are (i) the National Government, (ii) Port Authorities, and (iii) the

Pelindo companies, State-Owned port operating companies.

The National Government, through the Ministry of Transport, is responsible fordrawing up the National Ports Master Plan that also addresses the countrys

connectivity needs, Policy matters, Implementing Regulations and International

Relations. Its Key Performance Indicators (KPIs) are (i) measurement of sea freight

costs with the objective of accepting ships that will provide the lowest sea freight

costs, (ii) to facilitate movement in the market by accelerating the service of ships

and reducing delays, and (iii) to assess route costings, with a view to improving

productivity along with much needed training and capacity development and better

information services. Policies are to be focused on stimulating port development in

line with market demand, encouraging private investment and developing

competition between terminals, while maintaining social stability during the period ofneeded change.

The Port Authorities are responsible for Strategic Port Management and Harbour

Master duties, including safety and security issues. Their KPIs concern port capacity,

utilization and competition. (In reality, there becomes an overlap between Port

Authority responsibilities and the operations of the Pelindos, with the latter taking the

dominant role at this time. The functioning of the Port Authorities is yet to be properly

defined).

There are four Pelindo companies, each with responsibilities for operations, the KPIs

being in the efficiency of services, including berthing allocations, and in financialperformance; being a State-Owned Enterprise (SOE), each Pelindo is expected to

show an annual auditable operational profit. The jurisdictional areas of each of the

four Pelindos is shown in Figure 5.1.


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Figure 5.1

Jurisdictional Area of Each of the Pelindos


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As discussed below, there is also a large number of other categories of ports,

altogether some 1900 havens across the archipelago, with most of the smaller

entities not within the jurisdiction of the Pelindos.

Port Master Plan

Each Pelindo port is expected to have its own Master Plan, which will include forboth sea and shore allotments covering work and port interest areas. The Master

Plan should be prepared for

- Long term: 15-20 years, with review and updating every 5 years

- Medium term: 10-15 years

- Short term: 5-10 years

The Master Plan should also be based on the National Port Master Plan, prepared

by Central Government, the Provincial Spatial Plan and the Regency/City Spatial

Plan. It should also take into account other location activities; technical,

environmental and economic feasibility; and safe and secure ship movements withina port area.

Port Hierarchy and Profil e

The ports are divided into three levels of importance:

- Main port: international and domestic

- Collector port:domestic transport and transhipment

- Feeder port:serving main collector ports with limited cargo capacity

There are 111 adminstered public ports, which fall under the aegis of the four

Pelindos, of which 98 are listed in Table 5.1. With reference to Figure 5.1, Pelindo I

is responsible for 31 ports, Pelindo II for 19 ports, including the National Jakarta hub

port of Tanjung Priok, Pelindo III for 27 ports and Pelindo IV, covering Eastern

Indonesia for the remaining 21 ports.


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Table 5.1

Administered Public Ports under Pelindo I IV

PelindoINo.

Province

(Area)

No. Port

1

1.NangroeAcehDarussalam

(Aceh)

1 Sabang

2 2 Malahayati

3

3 Lhok seumawe4 4 Meulaboh

5 5 KualaLangsa

6 6 PangkalanSusu

7

2.NorthSumatra

7 Belawan

8 8 BelawanContainerTerminal

9 9 KualaTanjung

10 10 TanjungBalaiAsahan

11 11 Sibolga

12 12 GunungSitoli

13

3.Riau

13 BaganSiapiapi14 14 Dumai

15 15 Bengkal is

16 16 SeiPakning

17 17 Perawang

18

18 PekanBaru

19 19 SelatPanjang

20 20 Rengat

21 21 Tembilaha n

22 22 KualaEnok

23

4.RiauIslands

23 TanjungBalaiKarimun

24 24 PulauSambu/PulauLumba

25 25 Sekupang(InternasonalSekupang)

26 26 BatuAmpar

27 27 Kabil

28 28 TanjungUban

29 29 TanjungPinang_(SriBintanPura)

30 30 SriPayungBatuAnam

31 31 Kijang

PelindoIINo.

Province

(Area)

No. Port

32 1.WestSumatra 1 TelukBayur

332.Jambi

2 KualaTungkal

34 3 Jambi

35 3.Bengkulu 4 Bengkulu36 4.SouthSumatra 5 SPalembang/BoomBaru

375.BangkaBelitung

6 Muntok

38 7 Pangkalbalam

39 8 TanjungPandan

40 6.Lampung 9 Panjang

41 7.Banten 10 Banten

42

8.DKIJakarta

11 SundaKelal

43

12 TanjungPriok

44 13 JakartaInternatonalContainer

45 14 Kalibaru

46 9.WestJava 15 SCirebon

47

10.WestKalimantan

16 Sintete48 17 Singkawa ng

49 18 Pontianak

50 19 Ketapang


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Pelindo

III

No.

Province

(Area)

No. Port

51

1.CentralKalimantan

1 PangkalanBun

52 2 Kumai

53 3 kualaPembuang

54 4 Sampit

55 5 Samuda

56

6 PulauPisau

572.SouthKalimantan

7 TrisaktiBanjarmasin58 8 Kotabaru

593.CentralJavaand4.

Yogyakarta(0)

9 Tegal

60 10 TanjungIntan

61 11 TanjungEmas

62

5.EastJava

12 PelabuhanGresik

63 13 PelabuhanTanjungPerak

64 14 Probolinggo

65 15 TanjungWangi

66 16 Kalianget

676.Bali

17 CelukanBawang

68 18 Benoa

69

7.NusaTenggaraBarat

19 Lembar

70

20 LabuhanLalar

71 21 LabuhanAlas

72 22 Badas

73 23 Bima

74

8.NusaTenggaraTimur

24 Waingapu

75 25 Ende

76 26 Maumere

77 27 Tenau

PelindoIVNo. Province(Area) No. Port

78

1.EastKalimantan

1 Nunukan

79 2 Samarinda

80 3 Balikpapan

81 2.NorthSulawesi 4 Bitung

82 5 Manado

83 3.Gorontalo 6 Gorontalo

84

4.CentralSulawesi

7 Toli Toli

85 8 Pantoloan

86 9 Luwuk

875.SouthSulawesi

10 PelabuhanNusantaraParepare

88 11 Makassar

89

6.SouthEastSulawesi(Sulawesi

Tenggara) 12 PelabuhanNusantaraKendari

90 7.NorthMaluku 13 AchmadYani Ternate

918.Maluku

14 Ambon

92 15 BandaNaira

93

9.WestPapua

16 Sorong

94 17 FakFak

95 18 Manokwari

96

10.Papua

19 Biak

97 20 Jayapura

98 21 Merauke


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Non-administered Public Ports

The non-administered Public Port is designated as non-commercial, but functions

where there is a lack of port facilities in the area. It does not meet standards that

necessarily accommodate and serve business activities, i.e., for trading and the like.

Indonesia has approximately 614 non-administered public ports of which 166 portshave been identified by location in the listing detailed in Appendix 3.

Figure 5.2, shows six aerial illustrations of identified non-commercial public ports per

six main Indonesian islands:

1.Tanjung Beringin North Sumatera 2. Pangandaran Ciamis West Java

3. Sangkulirang Kutai, East Kalimantan 4. Leok Buol, Central Sulawesi

5. Labuhan Haji, East Lombok, NTB 6. Tobelo, North Halmahera, N.Maluku

Figure 5.2

Six Non-Admin istered Public Ports


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Special Purpose Ports

Special ports are usually established for specific purposes, i.e., for handling coal, oil

and gas, etc. Currently Indonesia has approximately 177 special purpose ports, of

which 27 and 6 other ports are identified by location, with details given in Appendix

4.

Figure 5.3 shows aerial illustrations of 6 special purpose ports;

1.Pertamina Sabang - Sabang, Aceh 2.Kertapati Palembang, S.Sumatera

3.Conoco Kep. Seribu, DKI Jakarta 4.Paiton Energy Probolinggo, E.Java

5.Semen Gresik Tuban, East Java 6.Pupuk Kaltim Bontang, E.Kalimantan

Figure 5.3

Special Purposes Ports


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Coal Terminals

Figure 5.4 shows the locations of the main coal terminals serving the main centres of

coal mining in East and South Kalimantan and Sumatera.

Figure 5.4

Coal Anchorages in Indonesia

Figure 5.5 shows the coal production, exports and domestic sales in Indonesia for

the period of 2003 2010. While 2012 has shown a dip in coal exports as a result of

the global economic slowdown, especially in China, it is expected that expansion indemand should return from late 2013/early 2014.

Source: Indonesian Coal Mining Association (ICMA)

Figure 5.5

Coal Production , Exports and Domestic Sales in Indonesia (2003 2010)

2003 2004 2005 2006 2007 2008 2009 2010

CoalProduction 121.04 130.86 152.86 190.48 221.1 240 283 325

Export 85.3 93.76 110.79 144. 94 158.6 191 230 265

Domestic 35.74 37.1 41.3 45.54 62.5 49 53 60

0

50

100

150

200

250

300

350

MillionTons


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Secondary and Rural Fishing Harbours

Indonesian fish landing places are classified into 3 main categories, Types A, B and

C or classes I, II and III, and are managed by the Directorate General of Fisheries,

Ministry of Marine Affairs and Fisheries. The categories are based on capacity andavailable facilities, as shown in Table 5.2. The list of existing fishing harbours by

province is available in Appendix 4.

There are also Fish Landing Harbours (Pelabuhan Pendaratan Ikan) which are

managed by provincial governments. Figure 5.6 presents an aerial view of four of the

countrys fishing ports.

1.FP. Sibolga Sibolga, S.Sumatera 2.FP.Samudra Besar Sabang, Aceh

3.FP. NizamzachmanN.Jakarta, DKI Jkt 4.FP. Barondong, Lamongan, E. Java

Figure 5.6

Indonesian Fisheries Ports


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Table 5.2

Fishing Harbours

NoFishingHarbours

Criteria

OceanicFishingHarbour

(PPS)

NusantaraDomestic

FishingHarbour(PPN)CoastalFishingHarbour(PPP

1 Category TypeAorClassI TypeBorClassII TypeCorClassIII

2 OperationalArea

TerritorialWaters,

ExclusiveEconomicZone

(EEZ)andInternational

Waters

TerritorialWaters,

ExclusiveEconomicZone

(EEZ)

InnerandInterislandwaters,Territori

ExclusiveEconomicZone(EEZ

3 BerthingFacilities >60GT 30 60GT 10 30GT

4WharfLengthand

Seabeddepth>300mand>3m 150 300mand>3m 100 150mand>2m

5 Capacity

>6000GT(equivalentto

100vesselsof60GT

each)

>2250GT(equivalentto

75vesselsof30GTeach)>300GT(equivalentto30vesselsof1

6

VolumeofFish

Landed

average

60

ton

per

day

average

30

ton

per

day

7 Export Yes Yes No

8 Area >30Ha 15 30Ha 5 15Ha

9

Facilitiesfor

QualityControlof

FishProduction

Available Available/NA NA

10

ZonationofFish

Processingand

Industry

Available Available Available

11 Harbours 6 14 46

12 LocationsBelawan,

Bungus,

Cilacap,Kendari,Nizam

Zachman Jakarta

Ambon,Bitung,Brondong,

Kejawanan,Pelabuhan

Ratu,Pekalongan,

Pemangkat,Prigi,Sibolga,

TanjungPandan,Ternate

andTual

AsemDoyong,Bacan,Bajomulyo,Ban

Bawean,Blanakan,Bondet,Cilautereun

Dagho,Eretan,

Hantipan,

Karanga

Karimunjawa,KidangLor,KotaAgung,

Kwandang,Labuan,LabuhanLombok,

Lekok,Lempasing,Mayangan,Moro

Source: Ministry of Marine Affairs and Fisheries


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6.0 CHANGES IN REGULATIONS FOR THE PORT SECTOR

Figure 6.1. shows diagramatically the impact of changes in shipping and port affairs

and regional autonomy, following on the from the Asian Economic Crisis of 1998.

The first important step was the enactment of Law No 17 in 2008, as referred to

above, followed by the presentation of the ensuing Government Regulation on Port

Affairs, No 61 in 2009. These form the basis of the changes that are slowly taking

place as the industry tries to adjust to overdue modernisation and capability to

manage crucial sea-borne activities.

Figure 6.1

Changes in Regulations for the Port Sector

The law has included the issue of cabotage through an attempt to increasedomestic-based shipping involvement for in country operation and cargos. While this

step is viewed as correct in order to manage investment in the domestic shipping

sector, the main players in the shipping industry are concerned over short-term

operating difficulties that result from enforcement of the law and are seeking

alternative solutions for future operations. The oil industry, which involves significant

shipping services support, has been extremely concerned, since highly specialized

vessels are needed for exploration and production activities and currently only a very

limited number of Indonesian flagged vessels are able to meet such specific

requirements. Solutions are being addressed between the government at Ministerial

level, and the Indonesian Petroleum Association.

LAWNo. 22/1999

on

RegionalAutonomy

LAWNo. 32/2004

on

RegionalAutonomy

LAW No.17/2008

on

Shipping

Gov. RegNo.61/2009

on

PortAffairs

LAWNo. 21/1992

on

Shipping

Gov.Reg.No.69/2001

on

PortAffairs


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7.0 PELINDO RESPONSIBILITIES

Under its operational duties, each Pelindo is responsible for allocating ships to

berths. It can also lease out berths, land and storage areas. It is also responsible for

pilotage and tugs, channel dredging, tariffs and implementing and/or modifying as

necessary the Master Plan.

A main function is the operation of container terminals with the operations at the

important hubs of Makassar (Pel IV), Belawan (Pel I), Bitung and Semarang (Pel III)

being totally under Pelindo control, while most container operations at the key ports

of Tanjung Priok (Jakarta, Pel II) and Tanjung Perak (Surabaya, Pel III) are joint

ventures with global operators. They also take income from special leased out

terminals or anchorages.

Until recently none of the Pelindos have been engaged in major capital projects, the

large expansion of the container facility at Tanjung Priok being the first such project

to be undertaken, although others are being discussed and planned.

There is now a drive to step up and expand the function and operations of the

Pelindos and various options have been under discussion. A key decision seems to

have been taken to focus in a major way on the large potential of the expected

burgeoning container shipping market, both domestic and international. Other

options concern the possibility of extending the range of cargoes handled, certainly

in oil-related products and perhaps in selling small ports to local governments.

Pelindos would appear to be more aware of the need for investment from other

sources as well as from generated income, and balance sheets have been

improving. However, there is a significant need to improve the skills and capability of

Pelindo staff across all aspects of management and operations, and this would nowappear to be receiving some attention.

The policy of privatising State-Owned Enterprises, which was much to the fore five

years ago, has effectively been shelved in more recent years so that SOEs, such as

the Pelindos, will become much more attentive to maximizing earnings and

profitability, perhaps adopting some private sector management principles as part of

the necessary reforms that have to be undertaken in the companies.

One other outstanding issue also relates to proper demarcation of the sometimes

apparently overlapping roles of the Pelindos and Port Authorities, as referred to

above, with the Pelindos currently seeing to port operation duties.

Speed of improvement in operations will be hampered by the poor quality of

hinterland road capacity, and sometimes rail, which is discussed more fully below.

Improvement is also needed through the revitalization of cargo consolidation logistics

operators, more ships and routes offering a plurality of options, and new, more

appropriate types of interisland shipping; most of the domestic shipping fleet is more

than 20 years old and introduction of newer ships is overdue.


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8.0 PORT AUTHORITIES

As discussed above several of the undertakings of Pelindos in other circumstances

could be expected to be carried out by Port Authorities, for instance pilotage and tug

operations. At this juncture, the role of the Port Authorities vis-a-vis the Pelindos

remains unresolved. The Government realises that it will take some time to develop

the role of Port Authorities properly; they have no structure to raise finance and they

need effective procedures with capable staff to implement them. Consequently, it is

expected that Pelindos will take the lead in the immediate term to carry out urgently

needed developments, such as the expansion for Tanjung Priok.

9.0 PROFILE OF PELINDOS

Pelindo I

The main port in the jurisdiction of Pelindo I is Belawan, serving Medan, the capitalof North Sumatra and locations dependent on Medan.

Pelindo I covers the north half of Sumatera, the Provinces within Pelindo I territorial

area being Nangroe Aceh Darussalam/Aceh, North Sumatera, Riau and Riau Islands

with the Special Economic Zone status of Batam of Particular importance. The area

served by Pelindo I has a hinterland well developed with production of CPO, rubber,

oil and gas, agricultural output, mining, and some tourism. Overall, there remains

many areas of mining potential and tourism still to be developed by PT Pelindo I.

Figure 9.1 shows the plan of the Pelindo I area with 31 identified administered public

ports under its territory:

Figure 9.1

Jurisd ictional Area of Pelindo I


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Figure 9.2 presents an aerial view of the layouts of six of the many public ports

administered by Pelindo I.

1.Sabang Sabang City, Aceh 2.Kuala Langsa Langsa City, Aceh

3.Belawan CT Medan, N. Sumatera 4.Dumai Dumai City, Riau

5.Sikupang Int. Batam, Riau Islands 6.Batu Ampar Batam, Riau Islands

Figure 9.2

Pelindo I Ports

The profile of Pelindo Is major port of Belawan is presented in Figure 9.3. The port

has an expansion programme yet to be developed. As can be seen, the LWS depth

of the port area has to be deepened to improve the capacity of the port. There is as

well upgrading of other ports planned, although expansion of Batam as a

transshipment hub is to be undertaken by the International Ports Corporation (the

new appellation for Pelindo II).


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PortCode

Name

Address

Telephone

Fax

Regency/City

Province

Management

ManagementAddress

Coordinate

Function

Class

LogPortGateway

Length

Wide

Depth

PortPond

Wide

Minimum

Depth

MaximumDepth

Figure 9.3

Belawan Port - Profile

Source: MOT, GP recompiled


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Pelindo II

The main port in the jurisdiction of Pelindo II is Tanjung Priok, serving DKI Jakarta,

the capital city of Indonesia and locations dependent on DKI Jakarta and beyond.

Pelindo II covers an area encompassing the southern part of Sumatera, the western

part of Java as well as West Kalimantan. Provinces within Pelindo II territorial watersare: West Sumatera, Jambi, Bengkulu, South Sumatera, Bangka Belitung, Lampung,

Banten, DKI Jakarta, West Java, West Kalimantan. Figure 9.4 shows more details of

the Pelindo II area with 19 identified administered public ports under its territory:

Figure 9.4

Jurisdict ional Area of Pelindo II

Pelindo II, now renamed as the International Ports Corporation (IPC), is significantly

the largest of the four Pelindo entities, having as well as Jakarta many of the larger

port outlets supporting Western Java, Batam and the main ports of Southern

Sumatra. It is Indonesias premier port developer, which needs to raise its standard

to world class by adopting strict commercial principles and be free from politicalinfluence. While the reforms to the industry mooted in 2005 and tabled in the 2007

Law have been adopted, along with the National Plan, the lack of clarity in Pelindos

role vis-a vis the Ministry and that yet to be defined for the Port Authority has

hampered the speed of development. Despite this Pelindo II has been able to clearly

improve its balance sheet.


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Figure 9.5 presents an aerial view of some of the administered public ports under the

jurisdiction of Pelindo II.

1.Teluk BayurPadang C., W. Sumatera 2.Panjang B. Lampung City, Lampung

3.Kalibaru N. Jakarta, DKI Jakarta 4.Cirebon, Cirebon City, West Java

5.Singkawang W.Kalimantan 6.Pontianak W. Kalimantan

Figure 9.5

Pelindo II Ports

The profile of the Main Port of Pelindo II Tanjung Priok Port, is presented in Figure9.6. Improvements planned include widening the entry channel for 2-way ship

movements and deepening the channel for the layer ships that the port is expecting

to handle, especially container vessels.


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PortCode 2

Name T

Address J

J

Telephone 0

Fax 0

Regency/City N

Province D

Management P

(

Management

Address

J

J

Coordinate 0

1

Function I

Class C

LogPortGateway

Length 1

Wide n

Depth 1

PortPond

Wide 4

Minimum

Depth

7

MaximumDepth 7

Figure 9.6

Tanjung Priok Port (Main Port of Pelindo II) - Profile



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Apart from its current operational conditions, as for the other Pelindos, there is a

number of limitations to what Pelindo II can control or undertake. It is unable to

deliver effective inter-island shipping, which requires revitalising cargo consolidation

and logistics operators, more ships and routes offering a plurality of options, or

innovation in the types of ships, tugs and barges that need to be used, or investment

in the demand for this expansion. Furthermore, it has no control over the significantconstraints posed by inadequate hinterland road connections. Hence in parallel with

port upgrading there requires to be investment in shipping and in land connections to

ports for which it should seek partners and co-investors.

To improve productivity it needs an immediate US$100 million of investments in new

cranes, training and dredging works in several of its ports.

It has three strategic projects that it is now pursuing:

New Priok (formerly called Kalibaru) a large container terminal for up to 10.5

m TEU and petroleum products: key details of this devlopment are gIven in

Figure 9.7.

Transhipment hub at Batam, with a focus on north Indonesia, in line with the

National Ports Master Plan (NPMP), and which can be brought on stream

fairly quickly. Features are highlighted in Figure 9.8.

Sorong Port Container Terminal (albeit located in Pelindo IV area) to support

the Papua Economic Development Corridor. See Figure 9.9.

New Priok

Pelindo II (IPC) has been given the mandate by government to develop New Priok.Technical, financial and structural operating arrangements have been proceeding in

parallel for the early development tasks to resolve the position of the full long-term

layout and prepare details for phase I (3 terminals plus petroleum products

terminals) as well as arrangements for the dedicated toll road access. A decision has

been taken that phase I will be carried out by State Owned Construction Company,

PT PP. Discussion are ongoing with prospective terminal operators. It is expected

that the first terminal will be operational in 2016, although the terminal operators will

be taking a considerable interest in the construction proposals since the scope of the

project is demanding.

Batam Transhipment

The IPC is to deliver a container transhipment terminal with a focus on the Malacca

Straits in line the National Port Master Plan. For this IPC is to develop, operate and

expand a container terminal (New Batam) to serve as a transhipment focus for a


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major shipping line and additional container support services, while expecting to

allow for an acceptable return on investment and providing employment and income.

The terminal will service very large ships and require a minimum draft of 16 m. The

preliminary construction cost estimate is US$ 260 million. It is planned that the

terminal will be operational by 2016.

Sorong

The mission for IPC is to develop, operate and expand a container terminal near

Sorong. To serve local container traffic demand and to consolidate container

demand across East Indonesia while expanding the operating envelope of IPC and

providing an investment return for the company.

The initial strategy is a target volume by 2020 of 300,000 to 350,000 TEU, followed

by phased expansions and upgrading. The target start update is 2015, and IPC havebeen seeking minority equity partner (s).


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Figure 9.7

New Priok (Kalibaru) Port Master Plan


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Figure 9.8

Transhipment Hub at Batam


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Figure 9.9

Sorong Port Container Terminal in context of MP3EI corridor 6


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Pelindo III

Tha main port in the jurisdiction of Pelindo III is Tanjung Perak, serving Surabaya,

the city of East Java and locations dependent on Surabaya.

Pelindo III covers some of Kalimantan, central and eastern Java and Nusa

Tenggara. Provinces within the Pelindo III jurisdictional area are: Central Kalimantan,South Kalimantan, Central Java, Yogyakarta, East Java, Bali, West Nusa Tenggara

and East Nusa Tenggara. Figure 9.10 shows an outline of the Pelindo III area and

the 27 identified administered public ports within its territory:

Figure 9.10

Jurisd ictional Area of Pelindo III


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Figure 9.11 presents an aerial view of some of the ports falling under the jurisdiction

of Pelindo III.

1.Tanjung Emas Semarang, C. Java 2.Gresik Gresik, East Java

3.Lembar W. Lombok, NTB 4.Benoa, Denpasar City, Bali

5.Pangkalan BunW.Waringin, C.Kmtan 6.Trisakti Banjarmasin, S Kalimantan

Figure 9.11

Pelindo III Ports

The profile of the Main Port of Tanjung Perak, is presented in Figure 9.12. Pelindo III

is seeking to embark on an upgrading and expansion plan for Tanjung Perak , which

is the largest port in East Java, and serves as a center for the other ports under itsjurisdiction. Upgrading will also allow for large container vessels. Funding support is

required.

Tanjung Emas is the main port outlet for Central Java at Semarang. Upgrading plans

are in hand, but are complicated by a steady problem of ground subsidence, largely

related to near hinterland groundwater abstraction.


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PortCode 4

Name P

Address Jl

Telephone 0Fax 0

Regency/City C

Province E

Management P

(P

Management

Address

Jl

Coordinate 0

1

Function In

Class n

LogPortGateway

Length 2

Wide 1

Depth 9

PortPond

Wide 1

Minimum

Depth

9

MaximumDepth 1

Figure 9.12

Tanjung Perak Port (Main Port of Pelindo III) - Profile

Source: MOT GP recom i led


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Pelindo IV

The main port in the jurisdiction of Pelindo IV is Makassar, serving Makassar, the

capital city of South Sulawesi and locations dependent on the city of Makassar,

especially in East Indonesia.

Pelindo IV covers East Kalimantan, all of Sulawesi, Maluku and Papua. Provinceswithin Pelindo IV territorial water are: East Kalimantan, North Sulawesi, Gorontalo,

Central Sulawesi, South Sulawesi, South East Sulawesi, North Maluku, Maluku,

West Papua and Papua. Figure 9.13 shows an outline of Pelindo IVs territorial area

in East Indonesia and some of the ports within its jurisdiction.

Figure 9.13

Jurisdictional Area of Pelindo IV


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Figure 9.14 presents an aerial view of some the administered public ports under

Pelindo IVs responsibility.

1.Samarinda Samarinda C, E.Klmtan. 2.Balikpapan, Balikpapan, E. Kalimantan

3.Bitung Bitung City, N. Sulawesi 4.Ambon, Ambon City, Maluku

5.Sorong Sorong City, West Papua 6.Jayapura Jayapura City, Papua

Figure 9.14

Pelindo IV Ports

The profile of the Main Port of Makassar is presented in Figure 9.15. The port is

directly connected to the out port by toll road. The Makassar area is expanding

impressively. Bitung in North Sulawesi is a natural deep water harbour and is being

considered for a larger role in overall connectivity issues. Sorong in West Papua is tobe expanded under the responsibility of the IPC, as discussed above.

Karangan container port in East Kalimantan has been expanded to cater for 250,000

TEUs at a cost to Pelindo IV and the provincial government of US$ 75 million. Also

in East Kalimantan, the proposed construction of the Maloy (deep/ water) port and

accompanying 5,300 ha industrial estate, still at planning stage, is estimated to cost

US$ 500 million when built.


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PortCode 7

Name M

Address J

Telephone

0Fax 0

Regency/City M

Province S

Management

P

(

Management

Address J

Coordinate

0

1

Function

InClass M

LogPortGateway

Length 2

Wide 1

Depth 2

PortPond

Wide 1

MinimumDepth

9

MaximumDepth 1

Figure 9.15

Makassar Port (Main Port of Pelindo IV) - Prof ile



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10.0 CONTAINER SHIPPING

In Figure 10.1 is depicted the relative importance of Jakartas Tanjung Priok port in

terms of world container shipping rankings. At this juncture there are many key world

ports that are larger, but the forecast development of the country indicates that

container volumes are set to increase steadily and significantly over the years

ahead.

Figure 10.1

Port Ranking in the World Container Shipping Lanes

Despite the recent short term turn down in world trade, which affected significantly

the container trade volumes as well as the transport of other products, the future

demand growth for Indonesia is very large as shown in Table 10.1. For instance the

growth in demand for container shipping for Indonesia is expected to double

between 2020 and 2030. Figure 10.2 shows the forecast increase in container traffic

under alternative growth scenarios between 2010 and 2030. However, in order for

this expected demand to be accommodated, there needs to be considerable

expansion in the port facilities currently available in Indonesian ports.


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Table 10.1

Forecast of Total Indonesian Cargo Demand under Alternative Growth

2015 - 2030 (000's tons)

TypeofCargo Scenario 2015 2020 2030

GeneralCargo Low 177,256 207,033 249,092Base 185,241 222,160 288,851

High 193,226 237,287 328,609

Container Low 166,360 236,640 421,280

Base 171,545 255,115 495,085

High 176,730 273,590 568,890

DryBulk Low 603,532 647,005 763,230

Base 726,454 835,950 1,078,156

High 849,375 1,024,895 1,393,081

LiquidBulk Low 222,846 265,866 364,496

Base 231,360 285,948 422,963

High 239,873 306,029 481,430Source: Nathan Associates Inc.

Source: Nathan Associates Inc.

Figure 10.2

Indonesian Container Traffic Projections from 2010 to 2030under Alternative Growth Scenarios

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2025

2030

000'sTEU

YEAR

HighGrowth BaseCase LowGrowth


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Figures 10.3 and 10.4 show the major domestic and international container trade

flows in Indonesia, clearly dominated by movements between locations in Java,

Sumatra, Sulawesi (Domestic) and to Singapore (International) as the regional

international hub. The upcoming expansion of Jakartas main port, Tanjung Priok,

will allow berthing of the largest container vessels currently operating and thus offera direct service to a wider range of world markets.

Source: IndII - Academic Paper to Support NPMP Decree

Figure 10.3

2009 Domestic Container Trade Flows in Indonesia


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Source: IndII - Academic Paper to Support NPMP DecreeFigure 10.4

2009 International Container Trade Flows in Indonesia

Accordingly, apart from the stated expansion for Tanjung Priok, the other ports

where upgrading of container terminal activities is to take place are Batam, Sorong

and Kalibaru under the aegis of Pelindo II, and Tanjung Perak and Tanjung Emas of

Pelindo III. Under Pelindo IV an upgrading of the container terminal at Karangan in

East Kalimantan has recently been completed, as mentioned above.

Table 10.2 presents a ranking of the top 50 ports in Indonesia which handle

container traffic. The dominance of the two main Java ports of Tanjung Priok and

Tanjung Perak is clearly shown, with the importance of the main regional outlets of

Belawan (Medan), Tanjung Emas and Panjang and Makassar also highlighted. While

container traffic is expected to expand at these regional ports, the relative

importance of Tanjung Priok and Tanjung Perak and Belawan for northern Sumatra

will continue.


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Table 10.2

Top 50 Ports in IndonesiaForeignTrade DomesticTrade

No Port Imports Exports Subtotal Unloading Loading Subtotal TOTAL

1 Tg.Priok 1,605 1,485 3,090 328 505 833 3,923

2

Tg.

Perak

630

576

1,206

256

282

538

1,744

3 Belawan 302 309 611 180 98 278 889

4 Tg.Emas 291 253 544 17 15 32 576

5 Panjang 137 139 276 14 11 25 301

6 Makassar 2 2 144 104 248 250

7 Banjarmasin 61 57 118 118

8 Pontinak 70 29 99 99

9 Samarinda 50 45 95 95

10 Pekanbaru 11 32 43 16 13 29 72

11 Merak 25 36 61 1 1 2 63

12 Perawang 1 53 54 4 5 9 63

13 Bitung 27 36 63 6314 Palembang 16 16 32 14 15 29 61

15 BatuAmpar 18 29 47 47

16 TelukBayur 20 22 42 42

17 Balikpapan 1 2 3 19 16 35 3818 Batam 1 3 4 15 11 26 30

19 Jayapura 12 15 27 27

20 Buatan 2 26 28 28

21 Kabil 12 15 27 27

22 KualaTungkal 22 22 22

23 Sorong 13 9 22 22

24 Tarakan 9 8 17 17

25 Ambon 7 8 15 1526 BatuLicin 7 7 14 14

27 BauBau 7 4 11 11

28 Biak 7 3 10 10

29 Merauke 6 4 10 10

30 P.Burung 10 10 10

31 TalangDuku 4 5 9 9

32 Palu 5 4 9 9

33 Timika 5 4 9 9

34 Kendari 6 3 9 9

35 S.Guntung 8 8 8

36 FakFak 4 3 7 7

37 Manokwari 4 3 7 738 Nabire 4 3 7 7

39 Benoa 3 3 6 6

40 Benete 2 3 5 5

41 Jambi 2 2 4 4

42 Muntok 2 2 4 4

43 Sampit 2 2 4 4

44 S.Buatan 3 3 3

45

Pantoloan

2

1

3

3

46 PangkalBalam 1 1 2 2

47 Malili 1 1 2 2

48 Tg.Pandan 1 1 2 2

49 Kumai 1 1 2 250 Luwuk 1 1 1

Top50Ports 3,065 3,030 6,095 1,343 1,352 2,695 8,790

Source: DGST - Nathan Associates Inc. recompiled.


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2006 2007 2008 2009 2010

PELINDOI 304,002 319,202 900,623 1,340,337 2,158,333

PELINDOII 3,920,049 4,116,045 4,527,650 4,754,031 5,051,156

PELINDOIII 833,573 1,691,783 1,798,785 1,878,799 2,104,849

PELINDOIV 544,058 571,261 1,031,450 1,185,024 1,280,388

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

ContainersHandled(Teus)

Figure 10.5 gives container flows within each Pelindo jurisdiction, with those for

Pelindo II more or less being equal to the combined flows of the other Pelindos. The

figure also shows the steady growth in traffic over the 5 year period, 2006-2010.It is

also worth noting the volume growth in Pelindos I, III, and IV since 2008, indicating

that the economy in the regions is expanding significantly, with some areas showing

faster growth rates than the national average, a point made recently by McKinsey(2012).

Source: Directorate of Port and Dredging, Directorate General of Sea Transportation - MOT

Figure 10.5

Growth of Container Flows with in Indonesian Ports Corporation I - IV

2006 - 2010

In Figure 10.6 can be seen the number of ship calls handled by each of Pelindos I-IV

over the period 2006-2010. Only Pelindo II is showing a steady upward trend on the

number of calls. Comparing this data with that presented in Figure 10.5, it is clear

that the sizes of vessels handled by Pelindo II, particularly at Tanjung Priok, is

markedly larger than at ports within the remit of the other Pelindos, which relates

also to the depth of water available at respective berths. This issue has to be

addressed in all jurisdictions in order to meet increasing trade demand.


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Source: Directorate of Port and Dredging, Directorate General of Sea Transportation - MOT

Figure 10.6Growth in Number of Ship Calls wi thin Pelindos I IV, 2006 - 2010

11. GENERAL, DRY AND LIQUID BULK CARGOES

While the current Pelindo focus is on improving the capability of the ports to handle

the burgeoning volumes in container trade, steady expansion in the market for

carrying general, dry bulk and liquid bulk cargoes is also expected. This was

indicated earlier in Table 10.1 and is highlighted in Figure 11.1 in terms of projected

tonnage forecast to be handled.

Source: DGST - Nathan Associates Inc.Figure 11.1

Forecast of Total Indonesian Cargo Handledunder Alternative Growth Scenarios

2006 2007 2008 2009 2010

PELINDOI 77,309 75,749 76,164 73,171 69,544

PELINDOII 62,181 64,046 70,451 74,314 79,403

PELINDOIII 70,818 73,277 74,818 72,480 68,963

PELINDOIV 58,160 58,160 55,580 54,964 59,464

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

No

.of

Shipcalls

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Low Base High Low Base High Low Base High Low Base High

GeneralCargo Container DryBulk LiquidBulk

000'stons

2030

2020

2015


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Figures 11.2 to 11.7 show the direction of domestic and international trade flow

(2009) for general, dry bulk and liquid bulk cargoes, respectively. While Java still

features strongly for general cargo volumes, the high commodity development areas

of Kalimantan, specially East Kalimantan, and Sumatra dominate movements in

these areas, with coal and CPO being the main commodities moved. Java also

features for liquid bulk transport.


2009 Domestic General Cargo Trade Flows in Indonesia


2009 Domestic Dry Bulk Trade Flows in Indonesia


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2009 Domestic Liquid Bulk Trade Flows in Indonesia


2009 International General Cargo Trade Flows in Indonesia


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2009 International Dry Bulk Trade Flows in Indonesia


2009 International Liquid Bulk Trade Flows in Indonesia


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12. FERRY TRANSPORT

The multi - island coastline of Indonesia stresses the importance of having a

significant inter - island ferry service. Unfortunately, there has been little investment

in ferries over the past decade, and many ferries are old and the seaworthiness of

some is questionable, especially where there has been lack of maintenance. The

investment deficit in this subsector of sea transportation is both for new vessels, and

improved port - landing facilities and operations.

The numbers of passengers, goods, and vehicles carried by ferries are statistically

presented in Table 12.1. More than 80% of total passengers on commercial ferries

are transported through 3 main ferry routes which are Merak - Bakauheni (34%),

Ujung Kamal (23%), and Ketapang Gilimanuk (24%), as shown in Figure 12.1.

These 3 ferry routes link Java with Sumatra, Madura and Bali, respectively.

Table 12.1

Ferry Volumes (2006 2010)Descript ion 2006 2007 2008 2009 2010

Passangers 27,829,666 40,557,832 46,926,166 61,011,280 39,683,788

Goods 25,422,005 31,936,937 41,079,174 44,068,406 13,511,363

Vehicles 11,889,055 11,874,500 14,224,447 13,885,667 14,769,039

Total 65,140,726 84,369,269 102,229,787 118,965,353 67,964,190

Source: Directorate General of Land Transportation (DGLT) - MOT

Source: Directorate General of Land Transportation (DGLT) - MOTFigure 12.1

Commercial Ferry Passengers (2006 - 2010)

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,00016,000,000

18,000,000

2006 2007 2008 2009 2010

Passengers

YEAR

Merak Bakauni Ujung Kamal Ketapang Gilimanuk Others


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Source: Directorate General of Land Transportation (DGLT) - MOTFigure 12.2

Ferry Transpor t Vessels in Service (2006 - 2010)

Figure 12.2 shows the number of ferry transport vessels in service, highlighting the

significance of Ro-Ro units. However, to reiterate much of the ferry fleet is old and

needs replacement. Investment in ferries has been seriously lacking.

2006 2007 2008 2009 2010

LCT 10 10 10 10 8

Passanger 10 11 11 6 3

TruckAir 5 0 4 5 0

Roro 166 175 171 171 210

0

50

100

150

200

250

Unit

YEAR

Roro TruckAir Passanger LCT


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13. COLD STORAGE FACILITIES

According to the Ministry of Maritime Affairs and Fisheries (KKP), there is large

potential for the fishing industry within the Maluku area in the Banda Sea, the Seram

Sea and the Arafura Sea is considerable. The three potential sites are called the

golden fishing ground. The Ministry of Maritime Affairs and Fisheries intend to

create fishery industry processing nodes in Maluku at Tual, Ambon and Seram.

Figure 13.1 shows the fisheries business locations within Maluku islands, which

covers an area of almost 500 ha (Table 13.1). Having this large potential fishery

business, there is a need for cold store facilities and opportunity for high-fresh quality

fish processing, a new underdeveloped potential export market.

Figure 13.1

Cold Storage Opportunities

Table 13.1

Potential Marine Aquaculture Area Available in Maluku

Descriptions Area(Ha)

WhiteSnapper 31

Grouper

104Seaweed 206

PearlOyster 73

SeaCucumber 28

Lobster 23

Shellfish 29

Total 495


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LOGISTICS & CONNECTING INFRASTRUCTURE ROAD AND RAIL

14.0 GENERAL

Apart from the greater efficiency required in port operations, as discussed above, akey factor in the lack of logistical performance of transport operations overall lies with

the poor quality of land connectivity to the countrys ports, whether major or small. A

study by theAsia Foundation (2009) indicated that road transport costs in Indonesia

were signifcantly the highest in Asia, and rail plays very little part in carrying freight

to and from seaports.

As shown in Figure 14.1 the road density compares unfavourably with other main

Asian countries as a function of land area.

Source: Central Statistics Bureau, GP recompiled

Figure 14.1

Low Network Densit y

14.1 ROADS

The total road network in Indonesia amounts to some 473,000 km, which is deemedas about half that which should be available in order to provide adequate

connectivity across the country to promote regional growth. Of the existing network,

92% is under regional jurisdiction, as shown in Figure 14.2, with national and

provincial roads providing most of the balance.

-

2,000

4,000

6,000

8,000

10,000

12,000

Country

(,000Km)

Area (,000 Km2) Roads* (,000 Km)

Area (,000 Km2) 9,570 2,973 1,905 517 329 300

Roads* (,000 Km) 3,860 3,320 473 212 100 202

China India Indonesia Thailand Malaysia Philippines


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Source: Central Statistics Bureau, GP recompiled

Figure 14.2Nature of Road Network

The current length of toll roads amounts to about 800 km, mostly located within Java.

It is planned to complete the Trans Java Toll Road as quickly as possible, est. 2017-

18, in order to provide a high class highway system across the island, where most of

the nations industry is located. This Trans Java link supplemented by toll road

networks round Jakarta and othe major conurbations, once fully in place, is expected

to considerably facilitate the movement of goods within the Java industrial heartland

and through, as necessary, to the main ports, in particular Tanjung Priok. At the

current time, the lack of road network connecting to Tanjung Priok is a major factor in

the high time costs asociated with the movement of goods in and out of the port.

A key delaying factor in the toll road programme has been the inability to undertake

land acquisition for route rights-of-way over nearly all granted concessions, even

with the establishment by government of a Revolving Fund set up to ease the land

purchase process. A new law was recently drafted to limit the possibility of open-

ended delay, the readings being completed in late 2011 for enactment in January

2012 (Law No. 2/2012), this being followed with a Government Regulation towards

implementation in August 2012. While the new law has yet to be tested, it is

expected that it will beneficially help to accelerate the construction of the links

required.

In Figure 14.3 is depicted the outline of the Trans Java Toll Road links and shows

the status of development. Figure 14.4 shows the network, some of which is

operational, to serve the greater Jakarta area as well as the location of Tanjung

Priok port.

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

2003 2004 2005 2006 2007 2008 2009

KM

YEAR

National Province Regency/Urban


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Source: Jasa MargaFigure 14.3

Java Toll Roads Network


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Figure 14.4

Jabodetabek Toll Roads Network


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While some of the other main ports of the country have toll road standard links

serving some of the accesses required, e g Surabaya, Semarang, Makassar, this is

not the case for most ports, which rely on national or provincial road links. Minor

ports will often only be served by local jurisdictional routes. Apart from there being a

considerable construction programme needed in the regions, there is also the

question of upgrading the existing network. As shown in Figure 14.5, anunacceptable level of the local government network is in a damaged or badly

damaged condition and, while there is a significant central government budget

allocation provided for repair and upgrade the standards of work obtaining in the

regions in order to achieve improvement is often inadequate. Several reasons have

been identified role of site supervision is not taken seriously with a weak

enforcement of professional standards, shortage of experienced and professionally

trained public officials and consultants and the application of unreasonably small

contracts (Ref: Development of Road Infrastructure in Indonesia, Scott

Wilson/Glendale Partners World Bank project, 2011). This naturally impacts on the

logistical costs incurred in carrying goods to and from ports.

Source: Central Statistics Bureau

Figure 14.5

Condition of the Road Network

It is obviously important to ensure that road networks immediately serving the

countrys ports are improved to good workable standard and that action in this regard

is treated as priority, bearing in mind the very significant growths expected in alltypes of shipping cargoes.

0%

20%

40%

60%

80%

100%

National Province Regencyl/Urban

50%

6%

22%

34%

34%

25%

13%

27%31%

3%

33%22%

Percentage(%)

Status

Good Moderate Damaged Badly Damaged


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14.2 RAIL

The rail network, while being linked into key port operations pre-Independence,

today has very little or no impact on the carrying of goods to ports. While there are

plans to provide some re-connections, e g Tanjung Priok, the overall impact on the

volume of freight in Java that will be carried by rail in the foreseeable future will be

minimal.

The infrastructure of the railway is owned by the Indonesian Government and

managed by the Directorate General of Railways. The operator of the railway

network is the State Owned Company, PT Kerata Api. At this juncture there is no

provision in law for private operators.

The current status of the rail network in Java is shown in Figure 14.6, some 75% of

that existing in the 1930s. At that time, albeit international cargo ships weresignificantly smaller than those of today, rail lines came right onto the pier head with

offloading directly from ship to rail. While todays loading arrangements have

advanced and are more sophisticated, rail links no longer enter directly into main

port areas, although reviving this is once more being discussed for Tanjung Priok.

Notwithstanding this, virtually all land links into ports across the archipelago will

continue to be by road.

Current upgrading of the rail sector in Java is focused on double-tracking, especially

on Trans Java urban routes and on improving operational systems, finance usually

being provided through soft loans. The routing of the rail network in the Jakarta area

has little changed from that existing 90 years ago, and is exclusively in use forpassenger movements, as also for the main inter-city routes.

High priority rail projects are those that will provide city centre rail links to the

countrys main airports, eg Soekarno-Hatta for Jakarta and the airports for Surabaya

and Medan.


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Figure 14.6

Main Rail Network of Java in 2010


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The complementary rail link figures for Sumatra are 1,860 km in the 1930s reduced

to 1,348 km in 2010. It is a long term plan to have a continuous modern railway

along the spine of Sumatra, although current upgrading and extensions are being

centred on working out of the main cities, e g Medan. The other main focus is to

construct new lines to take inland commodities, e g coal and iron ore to seaports.

Plans, under PPP arrangement, to build a railway from Bukit Asam coal mine in thewestern region of South Sumatra to a new coal port in Lampung, some 278 km to

the south, are well advanced, although hampered by land acquisition issues. There

are also plans to access coal and iron from inland West Sumatra by rail to the

coastal capital of Padang.

There are other projects on the drawing board for rail lines to take out mined

commodities, mostly coal, from the centre of Kalimantan to dedicated coastal

locations. These are also being thought of in terms of PPP projects, but land

acquisition and appropriate methods of funding remain as difficult unresolved issues.

Prior to 1948, the railways in Indonesia were self-financing, with adequateoperational income being derived from both passenger and freight income. In more

recent times, investment in the rail sector has been carried out under a mix of local

funding, and bilateral or multilateral loans, with Japan providing the largest

component of aid to date. Rail operations have not always been profitable and

certain journey, are subsidised, consider as public service operation. However,

current funding is that railway operations must become profitable.

As a result of lack of financing and investment in the railway sector over the past

decades, the skills to run a financially viable railway network are well below

requirement. Much management time is spent in trouble-shooting rather than in

financially sustainable operations and longer-term growth. As in the case of portoperations, there requires to be very significant investment in human resources

development.

The private sector is examining the potential for investment in the commercial

opportunities that could arise from the upgrading and expansion of mainline city

stations, particularly in Java.

14.3 LOGISTICAL ISSUES

The Government of Indonesia recognises the importance of sound logistics although

the country performance is poor,as shown in Figure 14.7, where it is ranked 75th in

2010 on a world scale for Logistics Performance; this was a drop from the ranking

carried out in 2007. The figure for 2012, however, indicates an improvement from the

2010 assessment, with a current ranking of 59th, a score relating to a little above

that of a lower middle income country.


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Source: International Logistics Performance Index (LPI) - World Bank recompiled

Figure 14.7

World Scale for Logistics Performance

In Figure 14.8 is given a comparison of Indonesias infrastructure quality when

compared with ASEAN and selected other countries. It highlights the relatively poor

condition of Indonesias road and transport sector infrastructure in line with the

discussion above on the road and rail sectors.

Source: International Logistics Performance Index (LPI) - World Bank recompiled

Figure 14.8

2010 Indonesia Infrastructure Quality

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Singapore

Japan

Australia

New

Zealand

KoreaRepublic

China

Malaysia

Thailand

Philippines

India

Vietnam

Indonesia

LaoPDR

Cambodia

Myanmar

Brunei(N/A)

2 7 18 21 23 27 29 35 44 47 53 75 118 129 133 N/A

Index

Score

Country

and

LPI

Index

Rank

G20

average Lower

middle

Income

average

1 2 3 4 5

Telecom&IT

Warehousing/transloading

Rail

Road

Airports

Ports

Score

Infrastructure

ASEAN+6Others Indonesia


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The World Banks LPI (ranking 1-5) helps to identify priorities. The LPI provides

information on international (import-export) connectivity and is a tool to determine

weak links in connectivity and logistics, as well as helping to determine priorites. In

the ports sector attention is being paid to border agencies and dwell time, where lack

of adequate port facilities in Indonesia shows the country comparing badly over this

issue.

In an effort to promote reform, the Government has created an interdepartmental

team focusing on debottlenecking issues and the Ministry of Trade has established a

Directorate for Logistics. The MP3EI, 6 corridor economic development plan,

discussed below, includes a connectivity strategy.


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THE 6 CORRIDOR ECONOMIC DEVELOPMENT PLAN MP3EI

15.0 INTRODUCTION AND OBJECTIVES

In mid 2011, the Government issued a comprehensive plan for sustainable economicdevelopment from Aceh right across to Papua. The key of the plan was the sub-

division of the country into 6 corridors, as shown in Figure 15.1. Naturally there is a

focus on land, air and sea connectivity as a fundamental to the core sectors for

economic development.

Figure 15.1

Connectivity of the 6 Economic Development CorridorsThe six corridors as shown in the figure are:

1. Sumatra

2 Java

3 Kalimantan

4 Sulawesi

5 Bali and Nusatenggara

6 Papua and Maluku

Each corridor provides a quite different focus on development requirements.

The objectives of the MP3EI are to increase connectivity via better infrastructure with

resulting more equitable economic growth and upgrading of the skills in human

capital through improved science and technical education, to be available in each

corridor. This would then provide the basis for the vision of Transforming the

Indonesian economy to establish a developed nation recgonized by the World

Community through high, inclusive and sustainable economic growth.


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Indonesia, being an archipelago, has to rely extensively on sea-based trade and thus

ports will be a major factor in the country improving its domestic and foreign

connectivity. However, success is going to need the active participation of regional

governments and their ability to attract private investment, without recourse to

central government. This will mean, as appropriate, increasing cooperation between

regional governments and private companies. In turn, regionally based privateventures will be seeking more and better port outlets to move their commodities and

other goods.

Much essential work needs to be undertaken to improve human capital to support

the development output required and its sustainability.

15.1 THE MAIN ECONOMIC ACTIVITIES: PORTS HIGHLIGHTS

Figure 15.2 sets out the 22 main economic activities that the Government has

recognised as fundamental to meeting the objectives of sustainable developmentacross the archipelago.

Figure 15.2

22 Main Economic Activi ties


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It was also stated that the National Port Master Plan was to be linked to the 6

corridors economic development plan, the links addressing the issues of national

connectivity, human resources development and logistics. This is shown

diagrammatically in Figure 15.3

Figure 15.3

MP3EI and National Port Master Plan (NPMP)

VISIONOFINDONESIA 2025AselfSufficient,Advanced,Just,

and ProsperousIndonesia

MP3EIAccelerateEconomic

Transformation

NATIONAL CONNECTIVITYECONOMICCORRIDOR

NationalHumanResources

CapabilityandScience

Technology

NationalTransportSystem

(SISTRANAS)

NATIONAL PORTMASTER

PLAN

NationalLogistic System

(SISLOGNAS)

OtherNationalMaster

Plan/BluePrints

IndividualPortMaster

Plan


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Sumatra, Corridor 1, is one of the largest islands of the world. It supports some 24%

of the total population of Indonesia and is subdivided into 10 provinces Aceh, N

Sumatra, W Sumatra, Riau, Jambi, S Sumatra, Bengkulu, Lampung, Riau Islands

and Bangka/Bilitung, with all but the latter two located on the main island. Each

province on the main island has a central urban centre, which is a focus for growth of

its particular province. Of special importance are the cities of Medan, the capital of NSumatra with a population of 4 million, Palembang, the capital of S Sumatra with a

population of 1.6 million, Lampung city for Lampung, Banda Aceh for Aceh province

and Padang (port of Teluk Bayar) for W Sumatra. Each of these also has a port of

significance crucial to support each of the provinces economies, and they are shown

on Figure 15.3. Within Sumatra, there are two Pelindo jurisdictions involved in these

ports, the ports to the north of the island falling under Pelindo I and the southern

ones under Pelindo II.

The island of Sumatra is rich in a wide range of minerals, coal (about 40% of known

national reserves), iron ore and rarer ores, and agricultural output, with CPO, in

particular, and rubber important export commodities. It is also a good source for oiland gas. The lack of good land infrastructure has greatly inhibited the development

of the economy with access to many of the valuable commodities seriously

constrained through lack of road infrastructure or poor quality of what exists. Rail

solutions are being considered for important large volume commodities, e g coal, but

have yet to be implemented, the difficulties mostly associated with land acquisition

issues and financing, as discussed earlier.

The plans for improving both the road and rail infrastructure over the ensuing 5 years

and beyond must be implemented, but it is going to be important that each of the

provinces takes a leadership role in ensuring that what is required in their respective

domains is duly and properly carried out.

The ports being targeted for upgrading in the short term on Sumatra are:

Belawan (Medan) for new or extended container terminal

Dumai (Riau) for common user petroleum products

Panjang (Lampung) for general cargo and bulk handling and

common user petroleum products

Palembang for general cargo or bulk handling

Padang (Teluk Bayar) for common user petroleum products

Jambi (Tanjung Emas) for common user petroleum products


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Source: IndII - Academic Paper to Support NPMP Decree, GP recompiled

Figure 15.4Corridor 1: Sumatra and Port Highlights


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Java, Corridor 2 with 58% of the total population of 245 million, is the industrial

heartland of the country with 83% of industry based on the island, mostly in the

western part of West Java and Banten and the densely populated Grea

glendale partner

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