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Page 1: Maritime - indonesien.ahk.deindonesien.ahk.de/fileadmin/ahk_indonesien/Publications/EIBN/... · 4.1.2 Law on Shipping Nr. 17 ... Table 16 Development projects by Pelindo II as part

Maritime

EIBN Sector Reports

2017

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EIBN Sector Reports: Maritime

Contents List of figures and tables.................................................................................................................................4

Methodology .................................................................................................................................................5

Executive Summary ........................................................................................................................................6

I. Introduction ................................................................................................................................................7

II. Indonesia in the context of ASEAN ..............................................................................................................8

III. The Maritime Sector in Indonesia ............................................................................................................ 12

3.1 The Global Maritime Axis .............................................................................................................................. 13

3.1.1 Inter-insular pendulum (2012) ............................................................................................................... 14

3.2.2 Sea Toll “Tol Laut”, or the “Maritime Expressway” ................................................................................ 14

3.2 Existing Infrastructure ................................................................................................................................... 15

3.3 Main Players .................................................................................................................................................. 16

3.3.1 Pelindo I Project ...................................................................................................................................... 21

3.3.2 Pelindo II Project ..................................................................................................................................... 23

3.3.3 Pelindo III Project.................................................................................................................................... 26

3.3.4 Pelindo IV Project ................................................................................................................................... 28

3.4 Passenger transportation .............................................................................................................................. 29

3.5 Shipbuilding ................................................................................................................................................... 31

3.5.1 Main Locations for Indonesian Shipbuilding .......................................................................................... 33

3.5.2 Strengths and challenges in the Indonesian Shipbuilding Sector ........................................................... 35

IV. National policies and relevant regulations ............................................................................................... 37

4.1 “Cabotage” .................................................................................................................................................... 37

4.1.1 Presidential Regulation Nr 5/2005 on the strengthening of national shipping ..................................... 37

4.1.2 Law on Shipping Nr. 17/2008 ................................................................................................................. 37

4.1.3 Government Regulation Nr. 20/2010, Nr. 22/2011 and 48/2011 .......................................................... 38

4.1.4 Ministerial Regulations Nr 10/2014, Nr 200/2015 and Nr 100/2016..................................................... 39

4.2 Port Management ......................................................................................................................................... 40

4.2.1 Maritime Shipping Law 17/2008 ............................................................................................................ 40

4.2.2 Presidential Decree Nr 44/2016 (Negative List of Investment).............................................................. 40

V. Opportunities for European companies in the Indonesian maritime sector ................................................ 42

Relevant Contacts ........................................................................................................................................ 42

Trade Fairs in Indonesia ............................................................................................................................... 45

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EIBN Sector Reports: Maritime

Bibliography ................................................................................................................................................ 46

Abbreviations .............................................................................................................................................. 52

About EIBN .................................................................................................................................................. 53

Disclaimer .................................................................................................................................................... 53

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EIBN Sector Reports: Maritime

List of figures and tables Table 1: Selected Basic ASEAN indicators as of August 2016 ...................................................................................8

Table 2 "Ease of Doing Business" in selected ASEAN countries ...............................................................................8

Table 3 "Global Competitiveness Index" of selected ASEAN countries ................................................................ 10

Table 4: Container Port Throughput of Selected ASEAN Countries ...................................................................... 10

Table 5: Volume Growth in Selected ASEAN Countries ......................................................................................... 11

Table 6 Comparative of costs for TEU in selected countries ................................................................................. 16

Table 7 Strategic ports managed by each Pelindo ................................................................................................. 18

Table 8 Cargo performance in selected Strategic Ports managed by Pelindo in 2015 (in 1000s Ton) ................. 18

Table 9 Cargo Composition in the Indonesian Ports (2011) .................................................................................. 19

Table 10 Container Throughput in Pelindo I-IV (Million TEU) ............................................................................... 20

Table 11 Container Throughput in Tanjung Priok and Tanjung Perak .................................................................. 20

Table 12 Major Port Upgrades for the "Tol Laut" .................................................................................................. 21

Table 13 Main features of Pelindo I ....................................................................................................................... 22

Table 14 Main features of Pelindo II ...................................................................................................................... 23

Table 15 Development of New Priok Port ............................................................................................................. 24

Table 16 Development projects by Pelindo II as part of the "Tol Laut" ............................................................... 25

Table 17 Main Features of Pelindo III .................................................................................................................... 27

Table 18 Main features of Pelindo IV ..................................................................................................................... 29

Table 19 Passenger Statistics in Selected Indonesian Ports 2014-15 .................................................................... 29

Table 20 Top 25 Shipbuilding Countries by GT ...................................................................................................... 33

Table 21 Bilateral trade regarding ships, boats and floating structures ............................................................... 36

Table 22 Total trade for ships, boats and floating structures ............................................................................... 37

Figure 1: Indonesia’s the Global Maritime Axis ..................................................................................................... 13

Figure 2: Indonesia’s Sea Toll ................................................................................................................................. 14

Figure 3 Shipping Industry after the "Cabotage" Law ........................................................................................... 31

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EIBN Sector Reports: Maritime

Methodology

This sector report aims to highlight the potential of the Maritime sector in Indonesia. It is an overview of the

business opportunities for European companies and comprises the characteristics of the sector, the structure of

the market, the key players, future trends and existing challenges.

In the preparation of this report, EIBN made use of a variety of sources and methods, which are briefly explained

herein. General information regarding the Maritime sector was retrieved from publicly available sources, such as

the World Bank, the Indonesian Statistics Centre (BPS), the Indonesian Investment Coordinating Board (BKPM),

the Ministry of Trade and Industry of the Republic of Indonesia and the World Trade Organization.

When the latest official data was not yet publicly available, we reverted to the latest data on hand. For example,

for data and figures still unavailable for 2016 and 2017, the data and figures for 2014 and 2015 were used.

Moreover, any data included has been specifically mentioned in the report. Other information provided was

gathered from trade publications.

This report has been developed using data available up to the third quarter of 2017.

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EIBN Sector Reports: Maritime

Executive Summary

The purpose of the following report is to present an overview of the Maritime Sector in Indonesia and to highlight

potential opportunities for European businesses. The maritime market is a complex but incontrovertibly relevant

industry in the Indonesian economy. This important role is reflected in the sector’s substantial contribution to the

economy in terms of employment and GDP, which are intrinsically related to the country’s large population and

its ongoing growth.

Indonesia has over 16,000 islands1, making it the largest archipelago in the world, and two of the most important

maritime trade routes pass through its waters, while most of its domestic and international trade is also handled

via sea routes.

President Joko “Jokowi” Widodo has made a strong commitment into turning Indonesia into the “Global Maritime

Axis,” given the country’s strategic position in global sea trade. Moreover, his administration has pledged to boost

the maritime sector by enhancing east-west connectivity, prioritizing maritime infrastructure, defending

Indonesia’s national sovereignty and strengthening the country’s navy and by maximizing profits from all

economic activities related to the sea, including shipbuilding and fishing.

Indonesia’s high logistics costs, which account for over 24 percent of its GDP, have caused stagnation in its

economy by increasing production costs to an unsustainable rate. According to the World Bank, if Indonesia

manages to reduce its logistics costs to 16 per cent of its GDP that would save its economy over USD 70 billion a

year.

Maritime development has become even more crucial since Indonesia joined the ASEAN Economic Community,

which will only be profitable if Indonesian products can remain competitive in the regional sphere. This can only

be achieved if maritime infrastructure is improved and the merchant fleet is renewed.

Plenty of opportunities will arise for European companies in the next few years, with major port upgrades opening

up the way for Public-Private-Partnerships involving foreign companies, but also through the transfer of

technology in shipbuilding and/or establishing shipyards in the country. A thrilling few years await.

1 Bempah, R.T., Indonesia Daftarkan 16,056 Pulau ke PBB, August 2017, Retrieved from :

http://regional.kompas.com/read/2017/08/21/19455111/indonesia-daftarkan-16.056-pulau-ke-pbb

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EIBN Sector Reports: Maritime

I. Introduction

Living in a global and interconnected world, with fast growing markets and the threat of newly developing

competitors, companies have had little choice other than to adapt in order to survive. Many of them, therefore,

have been looking for new business opportunities overseas, especially in emerging markets that display important

growth potential regarding economy, population, infrastructure and skilled workforce. As international trade

grows year by year, maritime transport is its backbone. Around 70 per cent of global trade by value and 80 per

cent by volume are carried by sea, being handled in ports worldwide2, which highlights the importance of having

a well-developed and functioning maritime sector.

Indonesia is the biggest archipelago in the world with over 13,000 islands, 908 of which are inhabited, and a

coastline of 54,716 kilometres, the second longest in the world3. Therefore the maritime sector became a core

focus of newly elected president Joko “Jokowi” Widodo’s agenda, with his vision to make Indonesia a Global

Maritime Axis, given the country’s strategic position in global sea trade, situated as it is on a crossroads between

the Pacific and Indian Oceans, bridging two continents: Asia and Oceania.

Current estimates put the total population at over 260 million, the world’s fourth largest, 74 million of whom

belong to the Middle-Class and Affluent Consumer (MAC) socioeconomic category in 2013. However, this figure

is expected to increase dramatically to approximately 141 million people by 20204, opening up market

opportunities for European companies, especially in view of an annual average of a 5.29 per cent of GDP growth

during the past 17 years.

In this respect, the main objective of this sector report is to present the Maritime Sector, while highlighting the

market opportunities and challenges for European companies.

2 United Nations Conference on Trade and Development, Review of Maritime Transport 2015. Retrieved from :

http://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=1374 3 Central Intelligence Agency, The CIA World Factbook: Coastline. Retrieved from:

https://www.cia.gov/library/publications/the-world-factbook/fields/2060.html 4 Boston Consulting Group, Indonesia’s Rising Middle-Class and Affluent Consumers, 2013, Retrieved from:

https://www.bcgperspectives.com/content/articles/center_consumer_customer_insight_consumer_products_indonesias_r

ising_middle_class_affluent_consumers/

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II. Indonesia in the context of ASEAN

The Association of Southeast Asian Nations (ASEAN) was established in 1967 and is now composed of 10 member

states: Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand

and Vietnam. Its stated goal is to encompass “One Vision, One Identity, One Community”.

Table 1. Selected Basic ASEAN indicators as of August 2016

Indicators Unit 2012 2013 2014 2015

Total land area km2 4,435,617 4,435,618 4,435,618 4,488,839

Total population thousand 605,801 613,571 621,006 628,937

GDP at current prices US$ million 2,383,403 2,493,421 2,519,416 2,431,969

GDP Growth (ASEAN figure is

estimated using country growth rates and

country share of world GDP valuated in

PPP$ from the IMF WEO Database April

2015)

percent 6.1 5.2 4.7 4.7

GDP per capita at current prices US$ 3,934 4,064 4,057 3,867

International merchandise trade US$ million 2,472,300 2,511,500 2,528,616 2,269,859

Export US$ million 1,253,400 1,271,100 1,292,400 1,181,889

Import US$ million 1,218,900 1,240,400 1,236,216 1,087,970

Foreign direct investments inflow US$ million 117,099 124,865 129,995 119,975

Visitor arrivals thousand 89,225 101,055 105,083 108,846

Source: (ASEANStats, 2016)

As of 2017, the ASEAN economy has a share of 3.3 per cent of the Global Gross Domestic Product at current

prices5, with the world’s 3rd largest population and a 7.6 per cent of the world’s total trade6, accounting for US$2.3

trillion. At US$120 billion, it is the fourth largest recipient of Foreign Direct Investment, 6.6 per cent of the total

worth.7

A cornerstone of this regional integration was the creation of the ASEAN Economic Community (AEC) by the end

of 2015, intended to create a single market and production base where people, capital, investment, goods,

services and skilled labour could flow freely, thus creating a more competitive and resilient ASEAN in the global

market.

5 ASEAN Secretariat, ASEAN Economy Chartbook 2016, October 2016, p. 2. Retrieved from : http://www.aseanstats.org/wp-

content/uploads/2016/11/AEC-Chartbook-2016-1.pdf 6 Ibid p. 5 7 Ibid p. 6

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Table 2. "Ease of Doing Business" in selected ASEAN countries

"Ease of Doing Business" Index

Country 2014-15 2015-16 2016-17

Singapore 1 1 2

Malaysia 18 18 23

Thailand 26 49 46

Vietnam 78 90 82

Indonesia 104 109 91

Philippines 103 95 99

Source: (World Bank Group, 2017)

As seen in Table 2, starting a business in the ASEAN countries (except in Singapore and Malaysia) is a challenging

task, which first and foremost is related to poor infrastructure, complex bureaucracy and widespread corruption,

which has hindered Indonesia’s economy for a long time8. However, with President Jokowi, tackling corruption

has become a major priority, introducing government regulations in lieu of the law 01/2017 on access to financial

information for taxation processes9. This zero tolerance against corruption has already reaped benefits, with

Indonesia seeing a major improvement in the “Ease of Doing Business” ranking.

On the other hand, regional connectivity has been at the top of the agenda to achieve the AEC, so in 2010 a Master

Plan of ASEAN Connectivity was drafted to connect ASEAN through a three-pronged strategy: institutional

connectivity, people-to-people connectivity and physical connectivity through physical infrastructure

development. This third prong includes improved maritime and port infrastructure, which calls for the upgrading

of existing infrastructure and the construction of new infrastructure and logistics facilities amongst ASEAN

countries. The Master Plan, also named the ASEAN Single Shipping Market, is one way to contribute towards the

realization of a single market and production base within the region10. Although this economic integration has not

yet been completed as of 2017, some steps have been taken in order to accelerate and deepen the

Implementation of Trade Facilitation Measures11.

ASEAN has designated 47 ports (14 alone in Indonesia) as the main ports in the trans-ASEAN transport network.

However, these designated ports face numerous challenges, given the varying levels of port infrastructure

development amongst ASEAN countries, such as handling cargo capacity, transport and logistics capacity and

customs and administrative clearance procedures. Indonesia, as the world’s largest archipelago, will be the

country most affected by improved maritime regional connectivity and therefore has the most to gain.

8 Department for External Trade, Doing Business in Indonesia : Indonesia trade and export guide, August 2016. Retrieved

from : https://www.gov.uk/government/publications/exporting-to-indonesia/exporting-to-indonesia 9 Budiman, A. Jokowi: Indonesia’s competitiveness ruined by corruption. August 2017. Retrieved from:

https://en.tempo.co/read/news/2017/08/16/056900517/Jokowi-Indonesias-Competitiveness-Ruined-by-Corruption 10 ASEAN Secretariat, Master Plan on ASEAN Connectivity, December 2010, p. 13. Retrieved from:

http://www.asean.org/storage/images/ASEAN_RTK_2014/4_Master_Plan_on_ASEAN_Connectivity.pdf 11 ASEAN Secretariat, ASEAN Economic Community Blueprint 2025, p 59. Available at :

http://www.asean.org/wp-content/uploads/images/2015/November/aec-page/AEC-Blueprint-2025-FINAL.pdf

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The ASEAN region is a natural transit zone situated at the crossroads of West (India/Europe), East

(Pacific/America), North Asia (China, Japan and Korea) and South Asia (Australia and New Zealand) with nearly

15 % of international container flows and, as of 2016, 8 ports amongst the 50 largest in the world.12

The port of Singapore, ranked second worldwide after Shanghai for its quality port infrastructure and widely

recognized as a maritime hub is facing increasing competition from Malaysian, Thai, Vietnamese and Indonesian

ports.13

Table 3. "Global Competitiveness Index" of selected ASEAN countries

Global Competitiveness Index

Country Overall Score Quality of Port Infrastructure

2015-16 2016-17 2015-16 2016-17

Singapore 5.68 (2) 5.72 (2) 6.7 (2) 6.7 (2)

Malaysia 5.23 (18) 5.16 (25) 5.6 (16) 5.4 (17)

Thailand 4.64 (32) 4.64 (34) 4.5 (52) 4.2 (65)

Indonesia 4.52 (37) 4.52 (41) 3.8 (82) 3.9 (75)

Vietnam 4.30 (56) 4.31 (60) 3.9 (76) 3.8 (77)

Philippines 4.39 (47) 4.36 (57) 3.2 (103) 2.9 (113)

Sources: (Schwab, 2016), (Schwab, 2015)

Remarks: 1= extremely under-developed. 7= efficient according to international standards

Overall Ranking in brackets

ASEAN countries have implemented some port development strategies, yet they face many obstacles. Most of

their maritime infrastructures are still deficient, although a work in progress. As mentioned above, Indonesia

ranked 75th (2016) in port infrastructure, while the Philippines ranked 113th (2016). In this context, Indonesian

and Philippine ports experience bottleneck issues as the rise of living standards indicates an increase in demand

for imported goods, and economic globalisation allows export figures to rise. The latest figures available, as of

November 2016, indicate an increase of 10.8% in the figure of global trade for the ASEAN countries in the period

2014-15.14

Table 4. Container Port Throughput of Selected ASEAN Countries

Country Container Port Throughput (Million TEU) Ranking (2014)

2008 2009 2010 2011 2012 2013 2014 ASEAN Worldwide

Singapore 30.89 26.59 29.18 30.73 32.50 33.52 34.83 1 3

Malaysia 16.09 15.92 18.27 20.14 20.87 21.17 22.72 2 5

Indonesia 7.40 7.26 8.48 8.97 9.64 11.27 11.90 3 12

Vietnam 4.39 4.94 5.58 6.93 7.55 9.14 9.53 4 17

12 World Shipping Council, Top 50 World Container Ports, 2016. Retrieved from : http://www.worldshipping.org/about-the-

industry/global-trade/top-50-world-container-ports 13 World Economic Forum, Global Competitiveness Report 2016-17, 2016, p.250-362 14 ASEAN Secretariat, ASEAN Trade 2014-15, November 2016, p 1. Retrieved from :

http://asean.org/storage/2016/11/Table17_as-of-6-dec-2016.pdf

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Thailand 6.73 5.90 6.65 7.17 7.47 7.70 8.28 5 20

Philippines 4.47 4.31 4.95 5.29 5.69 5.86 5.87 6 26

Source: (United Nations Conference on Trade and Development, 2015)

The port of Jakarta, Tanjung Priok, which handles 70% of total imports and exports, has been seriously overloaded

since 2011, exceeding its maximum capacity of 5 million TEUs per year, including the handling of 7.2 million TEUs

as of 2012, according to FinanceAsia15. However, the new Priok Port is being constructed, which will increase

Jakarta’s existing capacity to 18 million TEUs when the third construction phase will be finished. 16

Table 5. Volume Growth in Selected ASEAN Countries

Country Volume Growth 2008-2014

(% of Million TEU) Average Annual Growth

2008-2014 (%)

Singapore 12.75 2.32

Malaysia 41.21 6.05

Indonesia 60.81 8.44

Vietnam 117.08 13.99

Thailand 23.03 3.83

Philippines 31.32 4.81

Source: (United Nations Conference on Trade and Development, 2015)

As seen above, the potential of ASEAN ports to continue with its growth is still enormous if some investment is

made to improve their facilities.

As seen above, the potential of ASEAN ports to continue their growth is still enormous if some investment is made

to improve their facilities.

In addition, through ATIGA (ASEAN Trade In Goods Agreement), the ASEAN-6 (namely Singapore, Malaysia,

Indonesia, Thailand, Philippines and Brunei) have removed import duties on 99.65 per cent of their tariff lines.

Moreover, Vietnam, Myanmar, Lao PDR and Cambodia have decreased their import duties to less than 5 per cent

on 98.86 per cent of their tariff lines17. This means that Indonesia could be the gateway to a market of over 630

million people, of which 400 million will be categorised as middle class in 2020.18

15 Oxford Business Group, The Report Indonesia 2017, p 163 16 Ibid 17 Invest ASEAN, available at : http://investasean.asean.org/index.php/page/view/asean-free-trade-area-

agreements/view/757/newsid/872/asean-trade-in-goods-agreement.html 18 Nielsen, ASEAN 2015: Seeing around the corner in a new Asian landscape, 2015. Available at:

http://investasean.asean.org/index.php/page/view/asean-free-trade-area-agreements/view/757/newsid/872/asean-trade-

in-goods-agreement.html

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III. The Maritime Sector in Indonesia

Being the world’s largest archipelago, about 45 per cent of global maritime trade by volume is shipped via one of

the maritime routes situated in close range to the Indonesian islands. The busiest of those passes through the

Strait of Malacca, which is only 2.8 km wide at its narrowest point, and hosts two of the world’s busiest sea ports:

Singapore and Port Klang in Malaysia. It connects the Indian and Pacific Oceans, stretching from the Andaman

Sea all the way to Singapore, linking the Indian Subcontinent with Indonesia, the South China Sea, Australia and

the Korean Peninsula. Up to 80,000 ships pass through the Strait every year.19

Despite its maritime economy contributing 20 per cent of its GDP, Indonesia’s main problem remains the lack of

connectivity between its islands, especially those situated on the periphery of the archipelago, such as Papua or

the Moluccas. Yet logistic costs still constitute a heavy burden for Indonesia’s economy, accounting for 26 per cent

of its USD 861 billion economy, compared to Malaysia’s 14 per cent or Singapore’s 9 per cent.20According to the

World Bank’s “Logistics Performance Index 2016”, Indonesia achieved the 63rd position in the ranking, performing

poorly compared to neighbouring countries such as Thailand (45th), or Malaysia (32nd). Notwithstanding that, the

country needs over USD 500 billion invested in its infrastructure over the next 5 years in order to continue growing

at over 5 per cent per annum, which opens the door for private investment, since the government can only cover

under 35 per cent of that sum.21

For example, the cost of a kg of broiler eggs in Papua is IDR 32,000, compared to IDR 14,000-20,000 in Java or

Sumatra. Transportation from either Java or Sumatra to less populated islands remains a challenge, and high

logistics costs are to blame for the low degree of competitiveness of local products, where 15 per cent of operating

costs can be attributed to distribution, consequently increasing prices for the consumer. Hence imported products

can be much cheaper due to bottlenecks and security issues.22

Since Susilo Bambang Yudhoyono’s term of office, one of the top priorities on the political agenda has been to

improve Indonesia’s logistical situation, thus creating the MP3EI, the Masterplan for Acceleration and Expansion

of Indonesia’s Economic Development. The Masterplan (MP3EI) was launched in 2011 after Indonesia slipped

from 43rd to 75th place in the Logistics Performance Index by the World Bank between 2007 and 2010. This was

the foundation from which the Global Maritime Axis envisaged by President Joko Widodo was launched. The

MP3EI established the maritime sector as one of 8 key sectors to be prioritised, with more than USD 12 billion

allocated for the construction and modernisation of ports23.

19 EKONID, Zielmarktanalyse Indonesien 2017: Schiffbau und meerestechnische Industrie 2017, January 2017, Jakarta, p24 20 Diela, T. Indonesia logistics costs can match Asian peers in two decades: Roland Berger, March 2016. Retrieved from:

http://jakartaglobe.id/business/indonesia-logistics-costs-can-match-asian-peers-two-decades-roland-berger/ 21 Diela, T. Indonesia needs $500 bn spent in infrastructure: World Bank President, July 2017. Retrieved from :

http://jakartaglobe.id/business/indonesia-needs-500-billion-spent-infrastructure-world-bank-president/ 22 Susanty, F. & Ribka, S. : RI losing logistics battle, July 2016. Retrieved from:

http://www.thejakartapost.com/news/2016/07/01/ri-losing-logistics-battle.html 23 Coordinating Ministry of Economic Affairs, Masterplan. Acceleration and Expansion of Indonesia Economic Develoment

2011-2025, 2011, Jakarta.

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3.1 The Global Maritime Axis

After the election of 2014, the newly elected President Joko “Jokowi” Widodo quickly underscored the importance

of the Indonesian maritime sector to his administration’s agenda, viewing the sector as a key driver of

development and a crucial opportunity for Indonesia. He announced his intention to develop Indonesia into a

global maritime axis and established a new Coordinating Ministry of Maritime Affairs. According to this vision,

Indonesia should become a hub in the global maritime trade, with more direct access to the busiest shipping trade

routes.

Once elected, Jokowi changed both this vision and the priorities regarding the maritime sector. Some points in

the 2011’s Masterplan for Acceleration and Expansion of Indonesia’s Economic Development (MP3EI) established

by the previous administration were modified in order to re-allocate budget resources and prioritise projects

differently. For instance, the planned Sunda Strait Bridge project connecting Java and Sumatra was placed on the

backburner.24 Instead, Jokowi set infrastructure development and maritime connectivity as the top priorities of

his agenda, to stimulate the economy across the country, expanding the domestic shipbuilding industry and also

reducing logistic costs. Deepwater ports were to be constructed, strengthening logistics, the shipping industry and

tourism activities. One key objective was to enhance inter-island connectivity and upgrade port infrastructure

within the Indonesian Archipelago, particularly in the east, which lags behind in terms of economic development

compared to the west.

At the top of the agenda, there was also to be expansion of the Navy, which was too small for the extensive

Indonesian waters, enabling it to protect the country’s Exclusive Economic Zone (EEZ), as well as preventing border

violations, illegal fishing and human trafficking. Public ferries and the cargo fleet were also to be enlarged, in order

to increase national shipping provision.

Figure 1. Indonesia’s the Global Maritime Axis

Source: (RI President's Office, 2015)

24 Indonesia Investment, Joko Widodo: Construction of Sunda Strait Bridge is no priority, November 2014. Retrieved from:

http://www.indonesia-investments.com/news/todays-headlines/joko-widodo-construction-sunda-strait-bridge-is-no-

priority/item2583

Pillars of the Global Maritime

Axis

Rebuild Indonesia's

maritime culture

Improve Indonesia's

management of ocean resources

Prioritise maritime

infrastructure and connectivity Defend

Indonesia's maritime

sovereignity

Develope maritime defenses

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3.1.1 Inter-insular pendulum (2012)

In 2012, the Indonesian Government realised that many large vessels were only transiting through Indonesian

waters before docking at major hubs in Singapore, Australia or Japan. Connectivity from the far west of the country

to the east was not fully developed. In order to change that, before President Jokowi took office, the

Transportation Ministry had developed the concept of the “Inter-insular Pendulum,” which later became the

“Maritime Expressway.” It consisted of a West-East axis from Belawan to Sorong, with a sea corridor linking

Belawan, Batam, Tanjung Priok, Tanjung Perak, Makassar and Sorong, thus cutting logistics costs by up to 30 per

cent25. A total of 11 major and feeder ports were to be renovated in order to process the increased passenger

traffic between western and eastern parts of Indonesia. The remaining 13 ports were designed to handle cargo.

These investments were considered an incentive for industrial clustering to be established close to these ports.26.

However, that was never fully developed.

3.2.2 Sea Toll “Tol Laut”, or the “Maritime Expressway”

Source: Representation from (Kementerian Koordinator Bidang Kemaritiman Republik Indonesia, 2016)

President Jokowi’s concept also relies on the idea of developing an East-West axis for large ships, connecting both

extremes of the archipelago. It is based on 5 large deep-water ports, namely: Belawan, Tanjung Priok, Tanjung

Perak, Makassar and Sorong, which are currently being renovated. These main ports are to be supported by 19

feeder ports currently being built or upgraded. The aim of this project is to build a high-capacity, low unit cost

container shipping network that will connect the east and west of the country27. This will lead to improved

connectivity between the islands and a big reduction in the huge costs of domestic freight transport. As of 2017,

25Lady, I. New pendulum plan aims to improve Indonesia’s ports. June 2012. Retrieved from:

http://jakartaglobe.id/archive/new-pendulum-plan-aims-to-improve-indonesias-ports/ 26 Coordinating Ministry for Economic Affairs, Master Plan for Acceleration and Expansion of Indonesia Economic Development

2011-2015, 2011 27 Mooney, T. Indonesia port would give alternative to Tanjung Priok, June 2017. Retrieved from :

https://www.joc.com/international-trade-news/infrastructure-news/asia-infrastructure-news/indonesia-port-planned-

bypass-tanjung-priok-congestion_20170622.html

Figure 2: Jokowi’s “Tol Laut”

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IDR 380 billion have already been allocated by the Government for the Sea Toll Program28. This would allow

Indonesia to enter into a competition with Singapore and Malaysia to be the dominant hub in Southeast Asia,

reviving the country’s role in international trade and speeding up the shipment of goods and commodities.

As of September 2016, some of the positive effects by the “Maritime Expressway” were already being seen;

according to the President’s Office29:

• The number of developed maritime routes has increased significantly: from 84 in 2014 to 96 in 2016. Of

these 96, 54 are used by public and 42 by private ships. An additional route is exclusively set aside for the

transport of cattle.

• Prices for goods decreased significantly in outer regions, by 3% - rice and cement - and by 49% - chicken.

By May 2016, however, these prices were evident only in the vicinity of the ports, while the hinterland

had not yet benefited from the changes. Important improvements to the infrastructure in the hinterland

remain to be made here.

• Export routes have been markedly shortened. Thus the shipment time of commodities to China has been

reduced from 24 to 16 days, to Japan from 28 days to 16, and finally from 26 to 17 days to Korea.

• The average dwelling time has been reduced from 6.33 to 3.6 days as of 201730.

The estimated total expenditure on the “Maritime Expressway” is estimated to be about five to USD 6 billion,

which does not include the USD 12 billion that the World Bank has already secured for funding maritime logistics

and connectivity projects for the period 2015-2019. In addition, the Coordinating Ministry for the Economy and

the Indonesian Shipowners’ Association calculate that over IDR 1,600 trillion (USD 120 billion) is needed in order

to achieve a maritime-based economy31.

3.2 Existing Infrastructure

According to the Sea Transportation Directorate General, there are over 2,000 ports in Indonesia, which are

classified into 6 different categories32. Some 108 of them are commercial ports33, and 400 of the total are currently

not being used34.

28 Steffan,B and Wisnu, A. Sorotan Volume XXVI, Maritime Express, p 20. 29 http://kerjanyata.id.kilatstorage.com/pdf/topik_khusus_poros_maritim.pdf 30 The Jakarta Post, Dwell time at ports worsens to 3.5 days, July 2017. Retrieved from:

http://www.thejakartapost.com/news/2017/07/17/dwell-time-at-ports-worsens-to-3-5-days-official.html 31 World Bank, The Tale of Two Ports in Indonesia, May 2015. Retrieved from:

http://www.worldbank.org/en/news/feature/2015/05/26/the-tale-of-two-ports-in-indonesia 32 Ministry of Transportation, Rancangan Kriteria Klasifikasi Pelayanan Pelabuhan. Retrieved from:

http://elibrary.dephub.go.id/elibrary/media/catalog/0010-091500000000003/swf/579/RANC-KRIT_1.pdf 33 Menteri Perhubungan, Statistik Perhubungan 2016 Buku I, May 2017, Jakarta, p 2-9 34 Kabupaten Natuna, Jenis-Jenis Pelabuhan. Retrieved from:

http://dishubkominfo.natunakab.go.id/index.php?option=com_content&view=article&id=104:jenis-jenis-

pelabuhan&catid=1:berita&Itemid=14

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The Ministry of Transportation states that the four national port operators, which are four different state-owned

enterprises named Pelindo (i.e. Pelabuhan Indonesia) I-IV, operated 81 ports at the end of 2016, compared to 70

in the year 201235. The total number of ports managed by the Government accounts for 899, but, as of August

2016, the national Government was planning to hand them over to the four Pelindo, raising concerns among

independent port operators that this will create a monopoly36.

Despite Indonesia having 108 commercial ports, only a small number of those are able to accommodate large

vessels, such as Tanjung Priok (Jakarta) and Tanjung Perak (Surabaya) in Java, Belawan (Medan) in North Sumatra,

Makassar Port in South Sulawesi or the Batam Port (Batam Free Trade Zone) in the Riau Islands37.

Since the island of Java is the main economic hub of the country, two of its ports rank high in the top 100 ports

worldwide compiled by Lloyd’s List Intelligence, namely Tanjung Priok, which handled over 5.2 million TEU during

2015 (27th globally) and Tanjung Perak, with over 3.1 million TEU during the same period of time (46th in the world).

These figures make Jakarta’s port the largest container port in the Southern Hemisphere38.

Table 6. Comparative of costs for TEU in selected countries

Costs/Container Jakarta Surabaya Indonesia Malaysia Singapore East Asia & Pacific

Export costs (USD)

380 437 393 366 372 532

Import costs (USD)

544 556 547 381 266 564

Export Time (Days)

4.50 5.75 4.75 2.42 0.58 5.42

Import time (Days)

8.83 12.67 9.67 3.42 1.58 5.92

Source: (International Bank for Reconstruction and Development / The World Bank, 2017)

Remark: Both time and monetary costs include border compliance and documentary compliance.

As of 2017, Tanjung Priok is able to handle vessels carrying up to 8,238 TEU39, although this is not the norm. The

most recent statistics show that only 11 ports in Indonesia are container ports40 , and most of them are unable to

handle larger container ships. That explains why larger container ships usually transfer their cargos to smaller

ships in Singapore rather than taking them directly to Indonesian ports.

35 Menteri Perhubungan, Statistik Perhubungan 2016 Buku I, May 2017, Jakarta, p 2-7 36 Ships & Ports Ltd., Indonesian Port Operators Association fears Pelindo monopoly, August 2016. Retrieved from:

http://shipsandports.com.ng/indonesian-port-operators-association-fear-pelindo-monopoly/ 37 Germany Trade and Invest, Neuer Präsident Indonesiens plant "maritime Autobahn", October 2014. Retrieved

from:http://www.gtai.de/GTAI/Navigation/DE/Trade/Maerkte/suche,t=neuer-praesident-indonesiens-plant-maritime-

autobahn,did=1104968.html?view=renderPrint 38 World Shipping Council, Top 50 World Container Ports 2015, 2016. Retrieved from: http://www.worldshipping.org/about-

the-industry/global-trade/top-50-world-container-ports 39 Ribka, Stefani, First Jakarta-Los Angeles route launched in Tanjung Priok, The Jakarta Post, April 2017. Retrieved from:

http://www.thejakartapost.com/news/2017/04/23/first-jakarta-los-angeles-cargo-route-launched-in-tanjung-priok.html 40 http://opentoexport.com/article/ports-sector-in-indonesia/

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Regarding the logistics performance of Indonesian ports, the situation has improved in recent years, but it is still

a heavy burden on the country’s economy. While in Singapore the handling of a container can take less than 24

hours, in some major Indonesian ports, they still have dwelling times of more than 3 days. For instance, taking

into account all Indonesian ports, the average waiting time in July 2017 was 3.5 days, with some big ports

averaging six to seven days41. However, in the two major ports, Tanjung Priok and Tanjung Perak, waiting time

stood at 3.2 days in August 2017 due to 24 hour operations by Pelindo II and Pelindo III in these two ports,

improving significantly from the 4.95 days needed in December 201542.

On a general basis, the waiting time at check-in and customs clearance in Indonesian ports takes longer than in

comparable ports abroad, mainly due to the absence of 24 hour working, a lack of tracking systems and deficient

planning. However, the World Bank proposed to improve the country’s main ports with new terminals, where

large ships would unload their containers for distribution, more efficiently, to smaller ports, reducing significantly

the handling time. However, this idea never came to fruition, although Transportation Minister Budi Karya Sumadi

said in September 2016 that the government plan was to transform the entirety of Indonesia’s port system into a

hub-and model, in which some of Indonesia’s large ports, like Tanjung Priok, Tanjung Perak, Belawan, or Makassar

would act as hubs, strengthening Tanjung Priok’s role as a domestic and international hub port, and thus allowing

for an improvement in dwell43.

3.3 Main Players

Indonesia Port Operators

Four state port operators, Pelindo I to IV (nominally Pelabuhan Indonesia) are responsible for the maintenance

and operation of 81 ports, including cargo and container services, in Indonesia, but also for embarkation and

disembarkation of passengers on domestic and international voyages. The individual companies are responsible

for various regions. In most important ports, the Indonesian Port Corporations are both operators and port

authorities, exercising sole control over the most important port services, such as cargo services, towing services,

facilities for cargo handling, electricity and water supply, and the administration of the port area. According to the

“Presidential Regulation of the Republic of Indonesia Number 44 of the year 2016,” all activities related to ports

are subject to a foreign investment limit of 49%44. For instance, the container terminal of the Port of Surabaya is

49% owned by DP World (Dubai Port operator) and 51% by Pelindo III 45.

41 The Jakarta Post, Tanjung Priok sets dwell time benchmark, September 2016, retrieved from:

http://www.thejakartapost.com/news/2016/09/18/tanjung-priok-port-sets-dwell-time-benchmark.html 42 Retrieved from http://dwelling.pelindo.co.id/ and accessed in August 2017 43 Amindoni, Ayomi, Govt to transform port system to hub-and-spoke, The Jakarta Post, September 2016. Retrieved from

http://www.thejakartapost.com/news/2016/09/13/govt-to-transform-port-system-to-hub-and-spoke.html 44 Presidential Regulation of the Republic of Indonesia number 44 of the year 2016 45 http://web.dpworld.com/our-business/marine-terminals/asia-pacific-indian-subcontinent/indonesia-surabaya/

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The four state port operators are limited-liability profit-making corporations, and the central government retains

control of port tariffs. Subject to that authority the major Indonesian seaports run 24 hours a day, seven days a

week, including ship docking, customs and immigration activities.

Table 7. Strategic ports managed by each Pelindo

Port Authority Provinces managed Strategic Ports

Pelindo I Aceh, North Sumatra, Riau and Riau

Islands

Lhokseumawe, Belawan, Dumai, Pekanbaru, Tanjung Pinang and

Batam

Pelindo II

Bangka Belitung, Banten, Bengkulu, Jakarta, Jambi, Lampung, South

Sumatra, West Java, West Kalimantan, West Sumatra

Banten, Tanjung Priok, Panjang, Palembang, Pontianak, Teluk Bayur

Pelindo III Bali, Central Java, Central Kalimantan,

East-Nusa Tenggara, South Kalimantan, West-Nusa Tenggara

Benoa, Tanjung Perak, Tenau, Banjamarsin, Tanjung Emas

Pelindo IV

Central Sulawesi, East Kalimantan, Gorontalo, Maluku, North Kalimantan,

North Sulawesi, Papua, South Sulawesi, South-East Sulawesi, West

Papua, West Sulawesi

Bitung, Makassar, Ambon, Sorong, Jayapura, Biak, Balikpapan,

Samarinda

Source: (Subdirektorat Statistik Transportasi, 2016)

Most of the port activities are conducted in one of the 25 designated strategic ports (mentioned above), which

are located in 21 different provinces. They represent 47.69% and 24.18% of the whole country’s unloading and

loading of domestic cargo, while this percentage reaches 61.70% and 44.82% in respect of international cargo. As

a common denominator, all of them are managed by one of the four Pelindos.

Selected Statistics

Table 8. Cargo performance in selected Strategic Ports managed by Pelindo in 2015 (in 1000s Ton)

Strategic Port Province Domestic Voyage International Voyage

Loading Unloading Loading Unloading

Teluk Bayur West Sumatra 4,246 3,410 3,118 664

Dumai Riau 9,348 3,118 9,113 414

Panjang Lampung 5,684 2,720 6,720 2,870

Tanjung Priok DKI Jakarta 14,553 14,688 3,364 16,359

Banten Banten 6,447 30,791 2,022 20,266

Banjamarsin South

Kalimantan 3,656 51,581 62,129 114

Balikpapan East Kalimantan 17,033 5,884 16,160 3,609

Samarinda East Kalimantan 653 2,753 38,875 33

Belawan North Sumatra 231 3,712 3,403 2,389

Tanjung Perak East Java 1,257 3,806 466 7,772

Makassar South Sulawesi 1,004 876 220 1,353

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Selected Strategic Ports 64,112 123,339 145,590 55,843

Total of All Ports 294,309 296,336 340,001 98,858

Source: (Subdirektorat Statistik Transportasi, 2016)

Indonesia is the world’s biggest archipelago, yet its economic activity is concentrated in the four main islands:

Java, Kalimantan, Sumatra and Sulawesi. Despite recent statistics being difficult to obtain, the most recent reliable

data shows that container traffic only represents a small fraction of all Indonesian trade. It should be noted that

dry bulk constitutes the biggest share of the cargo loaded, especially in Kalimantan and Sumatra, where coal and

timber are produced, but also due to the major oil industries centred in and around South and East Kalimantan.

Table 9. Cargo Composition in the Indonesian Ports (2011)

Source: (OECD , 2012)

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Container Traffic

Table 10. Container Throughput in Pelindo I-IV (Million TEU)

Sources: (PT. Pelabuhan Indonesia I (Persero), 2014), (PT. Pelabuhan Indonesia II (Persero), 2015), (PT.

Pelabuhan Indonesia II (Persero), 2014), (PT. Pelabuhan Indonesia II, 2011), (PT. Pelabuhan Indonesia IV

(Persero), 2010) , (PT. Pelabuhan Indonesia IV (Persero), 2015)

Tanjung Priok and Tanjung Perak are amongst the world’s leading ports in terms of container through-put, and

they represent 87 per cent and 70 per cent respectively of Pelindo II and Pelindo III container traffic, being the

flagships of both enterprises.

Table 11. Container Throughput in Tanjung Priok and Tanjung Perak

Strategic Port Province IPC Volume (Million TEU)

2014 2015

Tanjung Priok DKI Jakarta Pelindo II 5.90 5.20

Tanjung Perak East Java Pelindo III 3.10 3.12

Source: (Lloyd's List, 2016)

Ongoing and Upcoming Projects

By 2019, the east-west axis for large ships, the “maritime expressway” or “Tol Laut” is expected to link the entire

archipelago. In order to achieve such connectivity, both the government and the four Indonesian Port

Corporations (Pelindos) are in the middle of a major upgrade, constructing or modernising 24 major seaports

across the country46. The aforementioned improvements are connected to the current government’s commitment

to improve the country’s maritime infrastructure, which will increase both domestic and external trade.

46 Oxford Business Group, The Report : Indonesia 2017, p. 163

1.11 1.28 1.30 1.34 1.32 1.20

5.11

5.93

6.45 6.59 6.44

5.94

3.24 3.59

3.94 4.13

4.34 4.36

1.27 1.35 1.59 1.71 1.79 1.76

-

1.00

2.00

3.00

4.00

5.00

6.00

7.00

2010 2011 2012 2013 2014 2015

Pelindo I

Pelindo II

Pelindo III

Pelindo IV

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Considering 60 percent of the Indonesian population lives on the Indonesian coasts, but only 20 per cent of its

Gross Domestic Product comes from the maritime sector, there is a massive potential to be tapped. For

comparison, in Japan this figure accounts for 48.5 percent

Table 12. Major Port Upgrades for the "Tol Laut"

Strategic Port Island(s) Earmarked construction

project in IDR Trillion

Banda Aceh Sumatra 1

Belawan Sumatra 3

Dumai Sumatra 1.5

Kuala Tanjung Sumatra 3

Batam Sumatra 3

Padang Sumatra 1.5

Pangkal Pinang Sumatra 1.5

Panjang Sumatra 1.5

Tanjung Priok Java 1.5

Cilacap Java 1.5

Tanjung Perak Java 1.5

Lombok Lombok 1.5

Kupang Timor 1.5

Pontianak Kalimantan 1.5

Palangkaraya Kalimantan 1

Banjamarsin Kalimantan 1.5

Maloy Kalimantan 1

Makassar Sulawesi 1.5

Bitung Sulawesi 3

Halmahera Moluccas 1.5

Ambon Moluccas 1

Sorong New Guinea 1.5

Jayapura New Guinea 1

Merauke New Guinea 1.5

Source: (EKONID, 2017)

3.3.1 Pelindo I Project

The state-owned port corporation, PT Pelabuhan Indonesia I has assets in 4 provinces in the western part of Indonesia, namely: Riau, Riau Islands, Aceh and North Sumatra, and has its headquarters in Medan, North Sumatra.

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Based on its financial statement for 2016, the company had an attributable profit of IDR 726.41 billion, which represents a 1.54 per cent increase compared to IDR 715.33 billion in 2015. This came after posting a profit before tax of IDR 995.84 billion in 2016, after its IDR 846.26 billion profit in 2015. It holds assets worth IDR 7.3 trillion in 2016, which is an increase from IDR 5.49, and as of December 31st 2016, the company’s equity position stood at IDR 4.3 trillion, up from IDR 3.64 trillion registered in 201547.

Table 13. Main features of Pelindo I

Input Unit Year

2013 2014 2015 2016

Total length of Berth m 8,704 8,704 8,806 8,853

Warehouse Storage Facilities square m 135,286 120,284 120,284 120,284

Open Storage Facilities square m 383,350 170,244 170,244 170,244

Cargo Handling Equipment Unit 69 61 61 62

Ship Arrivals Unit 65,016 59,018 70,258 65,626

GT 147,197,227 138,290,131 161,401,955 176,820,002

Containers Handled TEU 1,335,139 1,421,251 1,196,891 1,151,942

Anchoring Services 1000s GT 51,373 47,546 NA NA

Stockpiling services Warehouse 1000s Ton 2,524 2,915 745 1,021

Stockpiling services Open Area 1000s Ton 1,963 1,576 1,864 2,490

Passengers Person 5345594 5,121,332 5,218,553 5,440,151

Source: (Kementerian Koordinator Bidang Kemaritiman Republik Indonesia, 2016)

One of the most ambitious projects undertaken by Pelindo I is the extension of the port of Kuala Tanjung in North

Sumatra, with the aim of making it an international shipping hub and one of the largest ports in the world.

Strategically located on the Strait of Malacca, on the opposite shore from the Malaysian port of Port Klang, it is to

be developed into a gate-way for the adjacent industrial area, with an investment worth USD 1.2 billion.

The 4 phases in which the project is divided are the following:

1- Building of a multipurpose terminal (2015-2017)

2- Building of 3,000 hectares of industrial area (2016-2018)

3- Building of a dedicated terminal, becoming a hub port (2017-2019)

4- Integration of the industrial estate (2021-2023)

The first phase started in January 2015, and should have been completed by the end of 2016. However, it only

started operations in August 2017. As of April 201748, construction progress was already up to 90 per cent. By the

47Tempo News, Laba bersih Pelindo I naik tipis. March 2017 Available at:

https://bisnis.tempo.co/read/news/2017/03/31/090861423/laba-bersih-pelindo-i-naik-tipis 48 News Desk, Kuala Tanjung Port to start operations in July, April 2017, The Jakarta Post . Retrieved from:

http://www.thejakartapost.com/news/2017/04/12/kuala-tanjung-port-to-start-operations-in-july.html

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time it is finished, the multipurpose terminal’s total capacity will take 3.5 million tons of palm oil, 4,000 TEUs of

cargo and 1 million tons of dry bulk49.

Kuala Tanjung port has the potential to become a transit hub for shipments of palm oil and aluminium to Europe.

With regards to its strategic location, Kuala Tanjung could also compete with Singapore in the near future. In order

to accelerate the infrastructure development of Kuala Tanjung, Pelindo I signed a Memorandum of Understanding

(MoU) as well as a Cooperation Agreement with the Port of Rotterdam Authority regarding Port Management

Services in developing the Port of Kuala Tanjung.50

3.3.2 Pelindo II Project

Pelindo II is the biggest and most important of the four Indonesian Port Corporations. More than 70 per cent of

all Indonesian imports and exports go through the port of Tanjung Priok (Jakarta), which was built in the 19th

century by the Dutch colonial power. It is the main hub in the country, meaning that Tanjung Priok receives and

sends goods from/to all over the archipelago. As mentioned before, it had a container throughput of 5.2 million

TEU in 2015, making it one of the largest shipping ports in the world, and also being able to handle vessels carrying

up to 18,000 TEU, although so far the biggest one ever to have docked in the port was only 8,238 TEU51

Table 14. Main features of Pelindo II

Input Unit Year

2013 2014 2015 2016

Total length of Berth m 24,959 26,350 25,931 14,714

Wareohouse Storage Facilities square m 149,098 206,102 127,555 193,513

Open Storage Facilities square m 1,631,330 2,172,041 1,810,468 1,812,480

Cargo Handling Equipment Unit 554 516 501 508

Ship Arrivals Unit 53,366 52,491 43,847 33,370

GT 220,116,560 220,116,560 201,729,502 173,468,382

Containers Handled TEU 6,589,982 6,442,018 5,935,330 6,222,798

Anchoring Services 1000s GT 242,130 223,100 156,246 NA

Stockpiling services Warehouse 1000s Ton 11,686 4,806 3,321 2,906

Stockpiling services Open Area 1000s Ton 25,018 14,890 12,577 7,303

Passengers Person 1,447,013 1,245,541 816,735 707,033

49 Khoirul, Amin. Pelindo has high hopes for Kuala Tanjung. The Jakarta Post, January 2015. Available at:

http://www.thejakartapost.com/news/2015/01/22/pelindo-has-high-hopes-kuala-tanjung.html 50 PT Pelindo I Official Press Release, Kembangkan Pelabuhan Kuala Tanjung, Pelindo I Gandeng Port Of Rotterdam,

Oct 22 2014. Available at:

http://bumn.go.id/pelindo1/berita/8528/Kembangkan.Pelabuhan.Kuala.Tanjung,.Pelindo.I.Gandeng.Port.Of.Rotterdam. 51 Ribka, Stefani, First Jakarta-Los Angeles route launched in Tanjung Priok, The Jakarta Post, April 2017. Retrieved

from:http://www.thejakartapost.com/news/2017/04/23/first-jakarta-los-angeles-cargo-route-launched-in-tanjung-

priok.html

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Source: (Kementerian Koordinator Bidang Kemaritiman Republik Indonesia, 2016)

Tanjung Priok is the flagship of Pelindo II, and, as such, receives much of its investments, the most relevant of

which relates to the opening of the new Kalibaru Port terminal to expand Tanjung Priok in Jakarta. It is an

ambitious project that started in in April 2012 through a Presidential Decree, aimed to reduce the staggering costs

of logistics in Indonesia.

The project consists of two phases:

1. In the first phase, three new terminals will be constructed. The first one, a new USD 912 million container

terminal built by Mitsui & Co, is expected to increase the Tanjung Priok’s capacity in 1.5 million TEU per

year, bypassing its current over-capacity. President Jokowi inaugurated it in September 2017, although it

has been operational since 2016. Two new Petroleum Product Terminals will be constructed as well.

a. Key Features of terminal 1:

i. Indonesia’s largest port terminal

ii. Biggest port infrastructure project at the moment

iii. Terminal capacity: 1.5 million TEU

iv. Project value IDR 12 trillion (USD 912 million)

v. Land area: 32 hectares

vi. Dock length: 450 meters

vii. Draft: 16 meters

viii. Handling of vessels of 150,000 DWT consisting of 15,000 TEUs.

2. In the second phase, expected to be completed by 2027, four new terminals will be added, increasing the

port capacity to 17.5 million TEUs, and being able to accommodate vessels up to 18,000 TEU. The second

phase estimated cost is around USD 1.5 billion.

II 2018-2027

Container Terminal 4

1,5 Mio. TEUs/ year 16m

1.000m

Container Terminal 5

1,5 Mio. TEUs/ year 16m

1.000m

Container Terminal 6

1,5 Mio. TEUs/ year 16m

1.000m

Table 15. Development of New Priok Port

Phase Construction Terminals TEU/ year Draft Docklength Anmerkungen

I 2013-2019

Container Terminal 1

1,5 Mio. TEUs/ year 16m

850m

Terminal 1 is operational since 2016

Container Terminal 2

1,5 Mio. TEUs /year 16m

800m

Container Terminal 3

1,5 Mio. TEUs/ year 16m

800m

Terminal for Petroleum 1

5 Mio. m3/ year 16m

800m

Terminal for Petroleum 2

5 Mio. m3/ year 19m

800m

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Container Terminal 7

1,5 Mio. TEUs/ year 16m

1.000m

10,5 Mio. TEU plus 10 Mio. m3

8.050 m

Source: (PT. Pelabuhan Indonesia II (Persero), 2015)

Other relevant developments by Pelindo are presented below.

Table 16. Development projects by Pelindo II as part of the "Tol Laut"

Port (Region)

Plan Planned

completion Extension Status

Port Kijing (West-Kalimantan)

Construction of a deep sea port with 16m water depth as a hub for the western Indonesian islands; 2016 planned for the design Construction of a special economic zone

2021

Container terminal (1.95 Mio. TEU/year)

Terminal for liquid goods (11.5 Mio. TEU/year)

Terminal for dry goods (11.5 Mio. TEU/year)

Terminal for diverse purposes

(1 Mio. TEU/year)

Feasibility study finished 2015

Sorong (West-Papua)

Extension into a deep sea port as eastern link of Tol Laut; Construction of a special economic zone;

2035 N.N. 2015 in the stage of licensing and discussion of design

Cirebon (West-Java)

126.8 ha land acquisition; creation of a 10m deep entrance lane and construction of a port

2017-2020 2015: preparation of a feasibility study

Tanjung Carat (South-Sumatra)

Construction of a deep sea port

2018-2025

Coal terminal (50 Mio. t/year -15.4m)

Container terminal (500,000 TEU/year, -15.0m)

Multi purpose terminall (-15.0m)

CPO-terminal (15 Mio. t/Jahr, -15.2m)

2015 feasibility study completed; Currently at the stage of licensing; 2016 start of planning phase

Tanjung Lesung (West-Java)

Construction of a cruise ship terminal and a sailing portin the special economic zone Tanjung Lesung (Banten)

N.N.

Expansion of the special economic zone into an international tourism resort with cruise ship terminal; begin of construction planned for early 2016, however no progress made until November 2016

Cikarang-Bekasi (West-Java)

Construction of a 24km channel as linkage between Tanjung Priok and the industrial area Cikarang

2017-2019 Start of planning 2016

Musi-Lematang (South-Sumatra)

Expansion of the Musi and the Lematang rivers into a 280m long channel as a linkage between coal mines in Muara Enim and the city of Palembang

2018-2025 Feasibility study completed in 2015;

Kalibaru (Jakarta)

Creation of an access lane to the Kalibaru port and expansion of the highway linking Cilincing and Cibitung

2018-2021

2015: Creation of a feaibility study under planning; currently the first terminal has been launched

Source: Sorotan Volume XXVI

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The other major project currently handled by Pelindo II is the construction of the Patimban Port, located just 70

km from Jakarta. It offers easy access to various industrial estates in the area, such as Cikarang and Karawang,

only 70 km away, where many Japanese industrial firms are located52. For this USD 751 million project, Japan and

Indonesia signed a bilateral agreement to boost the port’s development. Once the first phase is completed, the

port capacity is expected to reach 1.5 million TEUs in 2019, which will increase to 7.5 million TEU by the time the

second construction phase is finished in 202353. By the time the project is completed, it is expected that it will

alleviate congestion at Tanjung Priok, which currently handles 70 per cent of the country’s imports and exports54.

3.3.3 Pelindo III Project

Along with Tanjung Priok (Jakarta), Belawan (Medan), Makassar (South Sulawesi), and Bitung (North Sulawesi),

Tanjung Perak (Surabaya, East Java) is one of the five main ports that comprise the “Tol Laut” program. With 3.12

million TEU handled in 2015, the port consistently ranks among the busiest 50 Ports in the world (47th) in terms of

containers handled. It is a strategic hub for domestic transport of goods to the eastern Indonesian islands, mainly

Kalimantan and Papua. Surabaya is also where Pelindo III headquarters is located.

Tanjung Perak is situated in Surabaya, the capital of East Java Province. Tanjung Perak is Pelindo III’s largest site

and home to new port development projects, such as Teluk Lamong Terminal and JIIPE / Manyar terminal. With

its strategic position, Tanjung Perak is considered as a gateway to central and eastern Indonesia, due to the port’s

strong maritime connectivity. Currently, Tanjung Perak hosts 13 international shipping lines and 29 domestic

shipping lines, considerably more than Tanjung Priok in Jakarta with its 20 domestic shipping lines.55

Because the population of eastern Indonesia relies on food, clothing and materials that originate from Java,

Tanjung Perak plays an important role in the regional and national economy. Developing the port’s capacity is

essential to revive the trade between Java and the rest of Indonesia, since Tanjung Perak handles not only

containers, but also passengers. The improvement of the port’s facilities is also going to be crucial with regard to

Indonesia’s participation in the AEC and the AFTA.56

52 The Jakarta Post, New Patimban Port to partially operate in 2019. June 2017. Retrieved from :

http://www.thejakartapost.com/news/2017/06/10/patimban-port-to-partially-operate-in-2019.html 53 The Jakarta Post, Japan ready to sign loan agreement for Patimban Port. July 2017. Retrived from :

http://www.thejakartapost.com/news/2017/07/25/japan-ready-to-sign-loan-agreement-for-patimban-port.html 54Reuters, Indonesia port strike hits biggest port operator, August 2017. Retrieved from :

https://www.reuters.com/article/indonesia-port-strike/jakartas-port-strike-hits-biggest-terminal-operator-idUSL4N1KQ1WI 55 Joko Noerhudha, Pelindo III Initiatives: Future Ports Development Project, 2015. Available at :

http://indonesia.nlembassy.org/binaries/content/assets/postenweb/i/indonesie/nederlandse-ambassade-in-

jakarta/import/de_ambassade/afdelingen/economie/building-a-global-maritime-nexus/presentation-joko-noerhuda-

pelindo-iii.pdf. 56 Oxford Business Group. The Report: Indonesia 2014. p. 83. Available at:

http://www.oxfordbusinessgroup.com/indonesia-2014.

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Layout of Tanjung Perak Port Development

Source: Joko Noerhudha, Pelindo III Planning & Progress – Development along Madura Strait, 2014

Teluk Lamong terminal began its first construction phase early in 2010, which consisted of a 500 sq. meter

international yard, a 450 sq. meter domestic yard, a 10-ha dry bulk yard and a 15.86-ha container storage yard.

Pelindo III started operations at the Teluk Lamong Port in East Java in March 2015, featuring some major

improvements like the Automated Stacking Crane and an automatic docking system, provided by the French

logistics company Gaussin Manugistique. Teluk Lamong boasts a capacity of 1.6 million TEUs and 10.3 million tons

of dry bulk, making it amongst the most significant ports in the eastern part of Indonesia57.

Table 17. Main Features of Pelindo III

Input Unit Year

2013 2014 2015 2016

Total length of Berth m 31,905 35,341 35,950 36,167

Wareohouse Storage Facilities square m 172,994 200,722 243,346 252,316

Open Storage Facilities square m 1,287,662 1,564,757 1,506,745 1,542,970

Cargo Handling Equipment Unit 599 696 1,102 1,148

Ship Arrivals Unit 78,189 78,778 66,923 62,091

GT 298,607,157 302,594,028 257,425,419 176,820,002

57 Osman, N. http://www.thejakartapost.com/news/2015/02/06/teluk-lamongs-international-terminal-operate-next-

month.html

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Containers Handled TEU 4,130,874 4,337,555 4,360,669 4,611,262

Anchoring Services 1000s GT 348,629 386,283 249,779 NA

Stockpiling services Warehouse 1000s Ton 4,336 4,496 4,604 5,339

Stockpiling services Open Area 1000s Ton 7,458 7,495 10,054 6,800

Passengers Person 3,365,271 3,408,599 3,238,315 2,920,636

Source: (Kementerian Koordinator Bidang Kemaritiman Republik Indonesia, 2016)

Not only one of the the largest, Teluk Lamong is also designed to be the most advanced port in Indonesia. For

instance, the whole process of lifting containers is managed by a tool called the Ship-To-Shore crane (STS). STS

cranes are connected to the Terminal Operating System (TOS), which identifies each container’s status

information in real time in order to prevent gaps and therefore increase productivity during the clearing process

of the vessels. In addition to the increased capacity, state-owned operator Pelindo III has recently purchased

electrically powered loading and unloading equipment from Finland-based manufacturer Konecranes. This

advanced type of crane includes the latest technology, offering the customer maximum productivity.58

Besides the port expansion project in Surabaya, another development can be witnessed in the neighbouring city

of Gresik. Pelindo III got involved in the construction and development of Java Integrated Industrial and Ports

Estate (JIIPE). With a budget of USD 900 million, the industrial estate will feature a 400-ha deep sea port and the

ability to handle 18,000 TEU vessels. The port is connected directly to an 18000 ha industrial area as well as 800

ha residential estate. Land acquisition is still in progress with 3000 ha already been secured. The development of

Indonesia’s integrated industrial estate system that will be completed in 2023, represents a step to ease the

logistics bottlenecks in East Java and eastern parts of Indonesia.59

3.3.4 Pelindo IV Project

The capacity of the port of Makassar, in South Sulawesi, is 700,000 TEUs. However, this is not sufficient to

accommodate and ship all needed containers to Singapore and other neighboring countries. This makes Surabaya

and Jakarta more attractive hubs whence to export cargo from the eastern islands. This is expected to change with

the expansion of the Makassar Port starting in 2015, which will make the city both a domestic and international

hub, getting back some of its rightful share from the two biggest ports. The project, which is divided into two

phases, was in its first phase in 2015 and had been 20 per cent completed by April 2016. By the year 2030, the

port will have a shipping capacity of 4.2 million TEUs, 2,850m of docks and a storage area of 171 ha60.

58 The Jakarta Post, Pelindo III gets $ US 121m to equip new terminal, Nov 27 2013. Available at:

http://www.thejakartapost.com/news/2013/11/27/pelindo-iii-gets-121m-equip-new-terminal.html. 59 Oxford Business Group, Linking up: Connectivity plans are coming to fruition in East Java, n.d. Available at :

http://www.oxfordbusinessgroup.com/analysis/linking-connectivity-plans-are-coming-fruition-east-java. 60 Marintec Indonesia, Megaproyek Makassar new port dikebut, April 2016. Retrieved from:

http://marintecindonesia.com/megaproyek-makassar-new-port-dikebut/

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Table 18. Main features of Pelindo IV

Input Unit Year

2013 2014 2015 2016

Total length of Berth m 12,696 12,595 11,281 11,281

Wareohouse Storage Facilities

square m 67,964 56,154 56,154 56,154

Open Storage Facilities square

m 523,553 640,976 689,115 682,614

Cargo Handling Equipment Unit 371 400 417 436

Ship Arrivals Unit 76,209 74,047 66,639 54,815

GT 374,403,264 379,400,16

8 318,373,67

5 304,531,35

4

Containers Handled TEU 1,733,207 1,793,574 1,756,422 1,846,420

Anchoring Services 1000s

GT 288,330 285,048 169,307 NA

Stockpiling services Warehouse

1000s Ton 1,447 924 708 297

Stockpiling services Open Area

1000s Ton 3,258 3,079 3,066 3,051

Passengers Person 5,969,047 6,095,979 6,176,783 5,341,925

Source: (Kementerian Koordinator Bidang Kemaritiman Republik Indonesia, 2016)

3.4 Passenger transportation

Passenger transportation in Indonesia is dominated by a state-owned enterprise, PT Pelayaran Nasional Indonesia

(PELNI), which is the national shipping company of Indonesia, and currently holds a monopoly on most passenger

routes. Currently the company operates 28 passenger ships, classified by their capacity (pax): those carrying 3000

pax, 2000 pax, 1000 pax, 500 pax, a Ro-Ro (roll-on roll-off) type and one fast ferry, with a total capacity of 36,913

passengers. In addition, PT Pelni also operates a cargo fleet (4 units) with a total deadweight of 1,200 tons.

According to the regulation of 5th April, 2006 AT55/I/8/DJPL-06, the company operates routes between 91

designated ports, having 47 different branches and approximately 300 travel agents throughout Indonesia61.

Table 19. Passenger Statistics in Selected Indonesian Ports 2014-15

Strategic Port Province Debarked Embarked

2014 2015 2014 2015

Dumai Riau 207,876 208,328 225,820 241,500

Tanjung Pinang Riau Islands 927,127 751,591 989,929 756,843

Batam Riau Islands 3,966,459 4,403,888 3,922,700 4,353,896

Tanjung Priok DKI Jakarta 174,345 158,255 141,904 129,456

Tanjung Emas Central Java 288,684 202,578 304,232 210,199

61 https://www.pelni.co.id/profile/show/11

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Tanjung Perak East Java 384,116 334,417 353,322 321,571

Benoa Bali 255,798 333,964 251,794 334,541

Balikpapan East Kalimantan 162,427 213,320 190,989 201,527

Samarinda East Kalimantan 40,463 85,239 103,057 211,962

Makassar South Sulawesi 442,831 373,519 610,831 482,177

Ambon Maluku 204,142 371,256 215,771 220,838

Sorong West Papua 157,744 175,070 145,989 217,941

Selected Strategic Ports 7,212,012 7,611,425 7,456,338 7,682,451

Total of All Ports 21,998,217 21,831,674 22,377,120 22,285,729

Source: (Subdirektorat Statistik Transportasi, 2016)

Despite some promising statistics and a theoretically great potential for development, the Indonesian passenger

market is not easily accessible to foreign companies. In addition to the monopoly exercised by PELNI, few

initiatives have lived up to their potential. For instance, in April 2017 a Ro-Ro (Roll-on/Roll-off) service was

started between the Philippines city of Davao-General Santos and Bitung in Indonesia with the aim of increasing

passenger and goods trade between the two countries62. The shipping time between the two regions was to be

reduced 50 per cent, boosting imports and exports between the two most populous countries in ASEAN.

However, with a capacity of 500 TEU, it was reported to have become dormant after only two months of service,

having failed to load more than 1 per cent of its intended cargo load63

Merak-Bakauheni route

It is operated by a state-owned enterprise, PT Ferry Transport. The 24km-long ferry connects the 145 million

people living in the island of Java with the 50 million population of Sumatra through the Sunda Strait, and it is

the busiest passenger route within Indonesia64. The waterway is crossed by over 70,000 vessels every year, both

for domestic and international trade65, and since there is no traffic separation scheme, long queues happen at

the busiest times of the year. During Ramadan in 2016, 896,000 people crossed the strait by ferry, and 192,000

cars66.

Batam-Singapore route

Batam is the busiest passenger port in Indonesia, mainly due to its proximity to Singapore and Malaysia. It takes

only 50 minutes to travel to Singapore and 90 minutes to Johor Bahru in Malaysia. However, the most transited

62 http://www.thejakartapost.com/news/2017/03/15/new-ro-ro-route-expected-to-boost-indonesia-philippines-trade.html 63 http://www.mindanews.com/top-stories/2017/07/roro-vessel-to-indonesia-dormant-for-2-months-after-launching/ 64 Nurwahyudik, A. Identification of safety issues in domestic ferry operation based on accident investigation reports on ferry

involved accidents in Indonesian waters, 2003-2013, World Maritime University, 2014 65 Soeriaatmadja, W. Indonesia plans traffic system for busy Sunda Strait, The Straits Times, August 2016. Retrived from:

http://www.straitstimes.com/asia/se-asia/indonesia-plans-traffic-system-for-busy-sunda-strait 66 Sandra Desfika,T. Almost 1m opt for ferry travel across Sunda Strait this holiday season. Jakarta Globe, July 20016. Retrieved

from : http://www.jakartaglobe.beritasatu.com/business/almost-1m-opt-ferry-travel-across-sunda-strait-holiday-season/

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ferry is the one that goes to Singapore. Out of the 1.43 million foreign tourists that visited Batam, over 800,000

came from Singapore, mostly using the existing passenger ferry67.

3.5 Shipbuilding

With the implementation of “Cabotage” law in 2005, and its subsequent revisions, requiring vessels doing business

in Indonesia to sail under the Indonesian flag, the number of Indonesian ships has increased by more than 300 per

cent, while, in the same period, imported vessels have “only” increased by 90 per cent, due to the strengthening

of local shipyards . However, Indonesian shipyards have long been dominated by foreign ownership, especially

those situated in Batam, which are mostly linked to Singaporean companies.

Figure 3. Shipping Industry after the "Cabotage" Law

Source: (Logam, 2017)

67 Badan Pengusahaan Batam, Kunjungan Wisatawan Ke Batam 2016, 2017. Retrieved from:

http://datin.bpbatam.go.id/?p=661

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According to IPERINDO, Indonesia’s commercial fleet is aging, with over 60 per cent of its vessels being older than

10 years old, 30 per cent being more than 20 years old68. In order to counter this, President Jokowi decided that

all government and state-owned-enterprises’ (SOE) vessels procurement would have to be built locally69. Since

strengthening local manufacturers is very high in President Jokowi’s priorities, the Ministry of Transportation has

already ordered more than 150 coastal and transfer ships, while at the same time, the Coordinating Ministry of

Maritime Affairs and the Ministry of Fisheries have already ordered more than 1,000 fishing vessels in 2017.

However, the number of ships ordered by SOEs still remains insignificant70. Moreover, the Ministry of Maritime

Affairs and Fisheries is making important efforts to boost local shipyards’ production, and in order to achieve this,

they have ordered 5,000 fishing boats, which will require expenditure of IDR 4.6 trillion. Moreover, there is an

order for a IDR 600 billion aircraft carrier for the Indonesian Navy from the Ministry of Defense71

According to the Yusof Ishak Institute, there are approximately 250 shipyards in Indonesia, 115 of which are

established in Batam72. Capacity in the domestic shipbuilding industry was 800,000 DWT for ship production, and

about 10,000,000 DWT for ship repairs, in 201473. However, by 2015 that capacity had increased considerably,

and local shipyards were already capable of building 900,000 DWT yearly, with a repair volume of 12,000,000 DWT

a year74.

Despite attempts at developing a national supply industry, shipbuilding processes in Indonesia are still largely

dependent on imports, while design and production are usually done locally. However, between 65 per cent and

80 per cent of components are imported, essentially engines, generators, pumps or navigational systems. Local

components are steel plates, insulation or paint, and one of Indonesia’s main assets is the relatively cheap labor75.

Notwithstanding the lack of a supplier industry, the country remains competitive in the global rankings of

shipbuilding countries.

68 Logam, E K. Challenges and Opportunities in the Indonesian Shipbuilding and Maritime Sector. February 2017. Retrieved

from:http://indonesien.ahk.de/fileadmin/ahk_indonesien/Business_Delegations/maritim/01_IPERINDO_Challenges_and_O

pportunities_in_the_Indonesian_Shipbuilding_and_Maritime_Sector.pdf 69 World Maritime News, Indonesia to ban ordering ships from foreign shipyards. Retrived from :

http://worldmaritimenews.com/archives/164366/indonesia-to-ban-ordering-ships-from-foreign-shipyards/ 70 Ribka, Stefani. State firms urged to buy more locally made ships. March 2017. Retrived from :

http://www.thejakartapost.com/news/2017/03/29/state-firms-urged-to-buy-more-locally-made-ships.html 71 Logam, E K. Challenges and Opportunities in the Indonesian Shipbuilding and Maritime Sector. February 2017. Retrieved

from:http://indonesien.ahk.de/fileadmin/ahk_indonesien/Business_Delegations/maritim/01_IPERINDO_Challenges_and_O

pportunities_in_the_Indonesian_Shipbuilding_and_Maritime_Sector.pdf 72 Negara, S. D. Can the Decline of Batam’s Shipbuilding Industry be Reversed? ISEAS-Yusof Ishak Institue, February 2017. P.4 73 Global Business Guide: Indonesia, Indonesia’s Shipping and Shipyard Industry, 2014. Retrieved from:

http://www.gbgindonesia.com/en/services/article/2014/indonesia_s_shipping_andamp_shipyard_industry.php 74 Marintec Indonesia, Strengthening the potential of the shipyard industry as the main force or Indonesia’s maritime sector,

September 2017Retrived from: http://marintecindonesia.com/strengthening-the-potential-of-the-shipyard-industry-as-the-

main-force-indoneisas-maritime-sector/ 75 Chandra, S. K, Shipbuilding in Indonesia, EIBN

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Table 20. Top 25 Shipbuilding Countries by GT

Position Year 2014 2015 2016

1 Korea, Republic of 21,871,925 23,798,845 25,265,934

2 China 22,851,302 25,007,518 22,178,672

3 Japan 13,392,130 12,794,220 13,348,773

4 Philippines 1,864,658 1,846,418 1,168,357

5 Romania 329,061 402,025 822,010

6 China, Taiwan Province of 574,208 NA 468,038

7 Viet Nam 335,862 552,373 419,189

8 Italy 303,951 219,218 415,711

9 Germany 499,217 383,215 404,996

10 United States 212,113 353,699 344,557

11 France 483 2,444 227,862

12 Brazil 237,708 339,318 218,764

13 Netherlands 130,754 121,748 175,933

14 Norway 248,654 159,284 161,594

15 Finland 101,546 115,054 108,085

16 Turkey 140,240 119226 105645

17 Singapore 79,834 46,830 59,530

18 Spain 31,376 12,815 53,233

19 Russian Federation 44,916 47,238 52,336

20 Indonesia 66,941 91,709 51,439

21 Croatia 37,687 68,247 41,683

b22 Poland 54,822 15,833 36,674

23 India 93,984 27,916 32,184

24 Malaysia 57,513 51,822 29,117

25 Denmark 233 NA 24,937

Source: (UNCTAD, 2017)

3.5.1 Main Locations for Indonesian Shipbuilding

Batam

As of 2017, 115 shipyards are located in Batam, the majority of which are both foreign owned and managed. The

region benefits from a Free Trade Zone scheme, although for goods sold domestically the usual taxation system

applies. Moreover, the following benefits only apply to goods that are re-exported:

Free import duty for goods

No VAT for products sold abroad

No sales tax on luxury goods

Simplified Immigration Procedures

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This makes Batam a heavily export-orientated zone, designed not to compete with other national shipyards or

industrial areas. However, as export markets have been shrinking and the domestic market is closed, most of the

shipyards are facing difficulties. On the other hand, its close proximity with Singapore, just 20 km, makes it

competitive for Singaporean companies willing to reduce costs.

As with most of the domestic shipyards, Batam’s shipbuilders rely heavily on imported components for its vessels,

especially for machinery, electronics and navigation systems, but they are able to remain competitive since they

do not have to pay any import duty. The Singaporean-based Yusof Ishak Institute estimates that more than 70 per

cent of the components are imported76, placing a heavy burden on the local industries that have to compete with

neighbouring countries, like Vietnam or the Philippines. Yet, in a complicated economic context, local shipyards

are facing a worrying problem, with the minimum wage in Batam having more than doubled in the past 8 years.

However, the local force remains, in general, low-skilled and poorly-trained77.

On the other side, Batam benefits from very good infrastructure, including an airport, four international terminals

for passenger ferries, four freight ports, two marina ports and a technical university. Batam is able to ship its

products quickly and efficiently.

Java

As with most economic indicators, Java remains the centre of national shipbuilding for domestic sales, under the

powerful umbrella of IPERINDO, Indonesia’s Shipbuilding and Offshore Industries Association, which lobbies in its

favour78. They benefit greatly from the “Cabotage” principle and Jokowi’s Global Maritime Axis, since Batam is an

export-oriented zone designed not to compete with them79. As an indicator, about 20-25% of national production

takes place in East Java80, which benefits from having Tanjung Perak (Port of Surabaya) as its main logistic hub.

The most significant Indonesian shipyard is state-owned PT PAL, which, according to their own statement, is the

largest shipyard in South East Asia, where they can produce ships of up to 50,000 DWT and repair over 600,000

DWT yearly81. They are based in Surabaya, East Java, where they produce both civilian and military vessels, some

of which they have successfully exported to other countries. For instance, in 2012 the company was awarded the

contract for the construction of two landing platform docks for the Philippines Navy, worth USD 90 million, the

first of which was handed over in 2016 and the second one in 201782. Moreover, they also produce civilian ships,

76 Negara, S. D. Can the Decline of Batam’s Shipbuilding Industry be Reversed? ISEAS-Yusof Ishak Institue, February 2017. P.8 77 Ibid P. 9 78 Logam, E K. Challenges and Opportunities in the Indonesian Shipbuilding and Maritime Sector. February 2017. Retrieved

from:http://indonesien.ahk.de/fileadmin/ahk_indonesien/Business_Delegations/maritim/01_IPERINDO_Challenges_and_O

pportunities_in_the_Indonesian_Shipbuilding_and_Maritime_Sector.pdf 79 Negara, S. D. Can the Decline of Batam’s Shipbuilding Industry be Reversed? ISEAS-Yusof Ishak Institue, February 2017. P.9 80 Hamdani Noer, C. Kebangkitan industry galangan kapal dari timur. Feburary 2015 Retrieved from:

http://www.antarajatim.com/lihat/berita/151210/kebangkitan-industri-galangan-kapal-dari-timur 81 PT. PAL Indonesia (PERSERO), Shipbuilding Industry and General Engineering. Company Profile 82 News Desk, PT PAL receives orders from ASEAN and African countries. The Jakarta Post. July 2017. Retrieved from:

http://www.thejakartapost.com/news/2017/07/14/shipbuilder-pt-pal-receives-orders-from-asean-african-countries.html

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including passenger ships, tankers, bulk carriers or container ships, and even power plant vessels. The state-owned

oil company, Pertamina PT, is one of their major clients. Among other vessels, they can produce83:

Bulk Carrier Ships of up to 50,000 DWT

Container Vessels of up to 2,600 TEUs

Tankers of up to 30,000 DWT

Passenger Vessels to carry up to 500 people

Chemical Tankers up to 30,000 DWT

LPG Carriers up to 5,500 DWT

Following the success of their delivery to the Philippines Navy, PT PAL has received orders for their warships, which

include84:

2 x 60-meter long missile-armed ships (KCR-60) for the Philippines

1 x Strategic Sealift Vessel for Nigeria

1 x Landing Platform Dock for Malaysia

Undisclosed number of KCR-60 ships for Gabon, Senegal and Guinea Bissau

The other main location for shipbuilding is Jakarta’s Special Region, which boasts over 35 shipyards, and uses

Tanjung Priok (Port of Jakarta) as its main base of operations. The leading company in the area is the state-owned

PT Dok dan Perkapalan Kodja Bahari (Persero), which specializes in both shipbuilding and ship repairs.

3.5.2 Strengths and challenges in the Indonesian Shipbuilding Sector

Indonesia has a tremendous potential for its shipbuilding industry, starting with the huge local market and the

strong initiatives taken by the current government to boost Indonesia’s maritime industry. Following president

Jokowi’s vision of making Indonesia the World’s Maritime Axis, an ambitious doctrine has been brought up to

improve domestic connectivity. Thus, the government has shown its commitment to purchase only domestic built

vessels for its state-owned enterprises and ministries, while also enforcing the “Cabotage” regulations.

Furthermore, the number of Indonesian-flagged vessels has increased dramatically, reaching an all-time high in

2016 with over 25,000. Moreover, 50 per cent of them are older than 20 years old, which will mean more orders

for local shipyards, especially in the Oil and Gas Section and the Armed Forces. This will only be possible due to

the massive amount of trainable work forces in the country, 25 million of which are under 29 years old.

83 Embassy of the Republic of Indonesia in Dhaka (Bangladesh), Shipbuilding Industries, Retrieved from:

http://www.indonesia-dhaka.org/shipbuilding-industries/ 84 Ibid

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Table 21. Bilateral trade regarding ships, boats and floating structures

Product code and label Indonesia's imports from EU

'89: Ships, boats and floating structures 2012 2013 2014 2015 2016

Indonesia's imports from EU

105,915,000

93,120,000

63,154,000

180,433,000

169,652,000

% Indonesia's imports from EU

5.86

8.23

5.21

16.29

17.13

Indonesia's imports from Korea

26,369,050

41,319,606

119,323,895

52,383,547

25,498,146

% Indonesia's imports from Korea

1.46

3.65

9.84

4.73

2.57

Indonesia's imports from Japan

192,871,132

71,777,023

170,708,402

135,493,718

183,757,737

% Indonesia's imports from Japan

10.67

6.35

14.08

12.23

18.55

Indonesia's imports from Singapore

508,858,492

312,748,113

327,044,159

359,195,391

278,793,445

% Indonesia's imports from Singapore

28.15

27.65

26.97

32.43

28.15

Indonesia's imports from China

376,221,585

414,330,494

319,759,073

182,488,232

196,875,495

% Indonesia's imports from China

20.81

36.63

26.37

16.48

19.88

Indonesia's imports from the World

1,807,631,000

1,131,030,000

1,212,744,000

1,107,534,000

990,342,000

Source: (United Nations Statistical Comission, 2017)

As seen in the table above, the European share of imports has steadily grown since 2012, accounting for over 17

per cent of all ship imports from Indonesia, which amounted to almost USD 1 billion. European shipbuilders will

have to compete with Singaporean, Japanese and Chinese shipyards, but according to the latest trends, there is

still an important market for them.

However, as noted in the table below, Indonesia’s imports have declined almost 50 per cent from their all-time

high in 2012, mainly due to the improvements in their local shipyards and the implementation of the “Cabotage”

rules. Exports have decreased as well, which can be explained through a steady growth in local demand, fuelled

by the policy in place by which all state-owned vessels have to be built locally85. This opens the door for foreign

shipbuilders to establish shipyards in Indonesia to make up the requirements, taking advantage of Indonesia’s

strategic location and its relatively cheap labour.

85 Logam, E K. Challenges and Opportunities in the Indonesian Shipbuilding and Maritime Sector. February 2017. Retrieved

from:http://indonesien.ahk.de/fileadmin/ahk_indonesien/Business_Delegations/maritim/01_IPERINDO_Challenges_and_O

pportunities_in_the_Indonesian_Shipbuilding_and_Maritime_Sector.pdf

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Table 22. Total trade for ships, boats and floating structures

'89: Ships, boats and floating structures 2012 2013 2014 2015 2016

Indonesia's exports to the World

818,577,342

942,474,406

714,460,834

375,307,498

492,294,853

Indonesia's imports from the World

1,807,631,000

1,131,030,000

1,212,744,000

1,107,534,000

990,342,000

Total trade

2,626,208,342

2,073,504,406

1,927,204,834

1,482,841,498

1,482,636,853

Source: (United Nations Statistical Comission, 2017)

On the other hand, there are a few issues that need to be sorted out for the industry to really take off, especially

regarding the tax policy, with high import duty and corporate income taxes, especially outside the Free Trade

Zones, mainly considering that most equipment needs to be imported86.

Interest loans at 12-14 percent without a competitive interest rate make it difficult for local companies to find

suitable long-term financing, which is still a non-solved challenge87.

IV. National policies and relevant regulations

4.1 “Cabotage”

4.1.1 Presidential Regulation Nr 5/2005 on the strengthening of national shipping

It establishes that all naval activities in the country’s waters are subject to the jurisdiction of the State, entitling

the relevant authorities to restrict the activities of foreign ships in its waters. It introduces the notion of “cabotage”

for the first time, which implies that only ships under the Indonesian flag and manned by an Indonesian crew are

allowed to perform shipping activities in national waters. Moreover, only national shipping companies are allowed

to operate within Indonesian waters88.

4.1.2 Law on Shipping Nr. 17/2008

Although the Maritime Law nr 17/2008 was passed in 2008, it was only put into effect in May 2011. In fact, Article

8 strengtens the restrictions imposed in the Presidential Regulation 05/2005 by stipulating:

1. Domestic sea freight activity must be carried out by national sea transportation companies using

Indonesian-flagged vessels and manned by a crew of Indonesian nationality.

86 Ibid 87 Negara, S. D. Can the Decline of Batam’s Shipbuilding Industry be Reversed? ISEAS-Yusof Ishak Institue, February 2017. P.9 88 The President of the Republic of Indonesia, Instruksi President Republik Indonesia Nomor 5 Tahun 2005 Tentang

Pemberdayaan Industri Pelayaran Nasional, May 2005

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2. Foreign vessels are prohibited from transporting passengers and/or goods between islands or between

ports in Indonesian waters

In the same mold, Article 29 states:

1. In order to obtain a Sea Transportation Business License, an Indonesian corporation must have at least

one Indonesian-flagged vessel of at least 175 GT.

2. An individual Indonesian citizen or business entity may cooperate with a foreign sea transportation

business or foreign individual to form a Joint Venture only if the resulting Joint Venture owns at least one

self-propelled vessel greater than 5,000 GT.

The shipping law leaves considerable scope for interpretation, as the term “ship” is defined only loosely. However,

relevant authorities include all floating structures within the meaning of the term, including storage units, mobile

ocean drilling units or the floating structures that provide technical and repair services at sea. All these floating

structures are also subordinated to the “cabotage” principle, even if not engaged in domestic shipping activities.

As a result of this law, all operators of these structures need to establish an “Indonesia Sea Transportation

Company” located in Indonesia, and with a maximum of 49% ownership for foreign investors. However,

exceptions needed to be made in strategic sectors, especially in the offshore oil and gas sector89.

4.1.3 Government Regulation Nr. 20/2010, Nr. 22/2011 and 48/2011

Since the law 07/2008 proved to be too strict in its regulations against foreign companies’ involvement in the

maritime sector, the Government of Indonesia issued Regulations Nr. 20/201090 and Nr. 22/201191 in order to

ease some of the restrictions laid down in the previous law of 2008 regarding “cabotage”.

Regarding the composition of crews sailing in Indonesian waters, however, the law provides exceptions, under

which Sea Masters and chief engineers may be foreigners, but the rest of the crew must be Indonesian, including

all seafarers.

In addition, the Government Regulation 22/2011 provides an exception for transportation services involving the

offshore oil and gas industry, which still depends on global companies92.

Besides passenger and goods transportation, foreign-flagged ships within Indonesian waters may still carry out

activities which cannot be served by ships or structures travelling under the Indonesian flag. However, these ships

89 The President of the Republic of Indonesia, Undang-Undang Republik Indonesia Nomor 17 Tahun 2008 tentang Pelayaran,

May 2008 90 The President of the Republic of Indonesia, Peraturan Pemerintah Repubik Indonesia Nomor 20 Tahun 2010 tentang

Angkutan di Perairan, February 2010 91 The President of the Republic of Indonesia, Peraturan Pemerintah Republik Indonesia Nomor 22 Tahun 2011 tentang

Perubahan atas Peraturan Pemerintah Nomor 20 Tahun 2010 Tentang Angkutan di Perairan, April 2011 92 Global Business Guide Indonesia, Indonesia’s shipping and shipyard industry, 2014. Retrieved from:

http://www.gbgindonesia.com/en/services/article/2014/indonesia_s_shipping_andamp_shipyard_industry.phpticle/2014/i

ndonesia_s_shipping_andamp_shipyard_industry.php

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require special authorization by the Ministry of Transportation prior to beginning such activities. Some activities

granted exemptions are:

Oil and Gas development

Drilling

Offshore construction and its support

Rescue and underwater construction

4.1.4 Ministerial Regulations Nr 10/2014, Nr 200/2015 and Nr 100/2016

In March 2014 another revision of Law 17/2008 took place, since the “cabotage” was proving to be too ambitious

in certain areas of the maritime sector. Ministerial regulation No 10/2014 further extended the deadlines for

foreign-flagged vessels and floating structures, again regarding the offshore oil and gas industry, which could not

yet be undertaken by national operators. However, a deadline was set for foreign-flagged vessels, namely

December 201593.

Again, in December 2015, another Ministerial Regulation, Nr 200/2015, was issued to extend the operation time

for foreign vessels until the end of 2016, as long as those activities could not be carried out by ships under the

Indonesian flag94.

In November 2016, Ministerial Regulation Nr 100/2016 was adopted. Procedures and requirements are to be

further clarified in order to obtain permits for the use of ships sailing under foreign flags in Indonesian waters,

including those for freight transportation of people or goods. This includes activities in the fields of oil and gas,

drilling and dredging, offshore construction, mining and underwater work. Existing exceptions will be extended

until December 2017. Foreign ships can still carry out offshore activities in Indonesian waters, essentially under

the following conditions95:

Indonesian-flagged vessels are not available for the intended work.

Ships are operated by an Indonesian shipping company with an appropriate valid Sea Transportation

License.

The project is in the national interest.

Ships may only be used for a limited period of time.

93 Minster of Transportation of the Republic of Indonesia, Peraturan Menteri Perhubungan Republik Indonesia Nomor PM 10

Tahun 2014 tentang Tata Cara dan Persyaratan Pemberian Izin Penggunaan Kapal Asing, March 2014 94 Watson Farley & Williams, Ownership, cabotage and flag issues relating to Indonesian maritime assets (Part I), September

2016. Retrieved from: http://www.wfw.com/wp-content/uploads/2016/09/WFW-Indonesia-1.pdf 95 HFW, Indonesia extends the timeline for foreign vessels to operate in its waters , November 2016. Retrieved from:

http://www.hfw.com/Indonesia-extends-the-timeline-for-foreign-vessels-to-operate-in-its-waters-November-2016

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4.2 Port Management

4.2.1 Maritime Shipping Law 17/2008

Law No. 17 of 200896 simplifies regulations on business licenses and port management with the aim of encouraging

competition and private investment. Each of the 355 articles answers questions regarding shipping, navigation,

environmental protection, welfare for seafarers or the coast guard. However, one of its most relevant points is

that it ends the monopoly of the state port operators, Pelindo I-IV, opening the door for private port operators

and service providers to get into the Indonesian market, albeit with a few regulations and under the negative

investment list.

With the passing of this law, the government is thereby represented by the Port Authority, which regulates basic

port infrastructure and its use. However, it became possible for private port enterprises to become Port

Operators, either through concessions or long-term contracts97.

4.2.2 Presidential Decree Nr 44/2016 (Negative List of Investment)

The negative list is essentially a list of sectors that are closed to foreign investment or are restricted to a limited

extend, which is usually 49%. The latest version of this list dates from May 201698, and is basically an updated

version of the corresponding Presidential Regulation of 2014.

Port Management had already been open to foreign investors and operators, since foreign companies were

allowed to operate port facilities for the duration of a concession. However, now, only within the framework of a

PPP, foreign investors are allowed to own up to 95% of the companies, up from the 49% that was previously

allowed.

This new regulation regarding PPP includes buildings, terminals for containers and bulk cargo and Ro-Ro terminals.

However, outside of PPP, the 49% cap remains. Another remarkable feature to attract foreign investment was the

increase in the cap for handling services, up from 49% to 67%, and investors of fellow ASEAN countries are given

further incentives99.

96 The President of the Republic of Indonesia, Undang-Undang Republik Indonesia Nomor 17 Tahun 2008 tentang Pelayaran,

May 2008 97 Ray, David. Indonesian Port Sector reform and the 2008 Shipping Law. Published by USAID in August 2008 and retrieved

from: http://pdf.usaid.gov/pdf_docs/Pnadn188.pdf 98 President of the Republic of Indonesia, Presidential Regulation 44/2016, May 2016. Retrieved from:

http://www.bkpm.go.id/images/uploads/prosedur_investasi/file_upload/Perpres_44_2016.pdf 99 BKPM, List of Business fields closed to investment and Business fields open, with condition, to investment. September 2016.

Retrieved from: http://www.pma-

japan.or.id/bundles/bsibkpm/download/20160906%20-%20Negative%20List%20Revision%20-%20JICA%20-%20Vers%202_

8.pdf

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Finally, some sectors, like rescue services and underwater work, are now fully open to foreign investors and are

no longer subject to the “cabotage” restriction nor to the 49% foreign investment limit. However, they still require

a special license from the Ministry of Transportation.

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V. Opportunities for European companies in the Indonesian maritime sector

Indonesia is the 4th largest populated country in the world, and with over 120 million Indonesians projected to

enter into the rising middle class, its market size can provide countless opportunities for those who actively seek

them. Its stable political situation, steady growth of over 5 per cent a year, massive natural resources and a large

domestic market, make for a good starting point for those companies who might be hesitant about getting into

the Indonesian market. Entering into the Indonesian market can be the gateway to the bigger ASEAN Economic

Community, where most tariffs have been removed, and which has over 600 million potential consumer.

Overall, the current administration led by President Jokowi has established the maritime sector as a priority

pillar in its economic policy, with major investments already committed and many more still to come, especially

for infrastructure development and acquisition of ships.

Due to the strengthening of local shipyards along with the “Cabotage” regulation, and with the present inability

of the local supplier industry to provide the more advanced supplies needed for shipbuilding, European

companies can tap into the market by exporting their components, since the local industry is highly dependent

on foreign imports.

In spite of having a stable political situation, foreign companies should be aware of the ongoing approval of

protectionist policies that might discourage foreign suppliers and investors. However, this provides a good

platform for those companies willing to establish a subsidiary in the country. At the same time, the huge local

demand will benefit the local shipbuilding industry.

With Jokowi’s “Global Maritime Axis”, the Indonesian Navy is looking to establish itself as a regional power, so

national defence projects are being prioritised. The Indonesian government is engaged in the pursuit of

technology transfer measures, opening the doors for European shipyards to sell their ships and their expertise.

As an example of this, the development of the Martadinata Class frigates of the Indonesian Navy was a joint

project between Schelde Naval Shipbuilding from the Netherlands and the state-owned company PT PAL.

The weakening of the Indonesian Rupiah will further lower wage costs for those European companies willing to

produce in the country, but, at the same time, will lead to more expensive imports, which might discourage local

producers.

According to IPERINDO, the standard of infrastructure in the country is hindering development in the eastern

parts of the country, increasing the logistics costs for all projects outside the main islands of Java and Sumatra.

European shipping companies face a challenging task unless infrastructure is further developed. On the other

hand, port upgrades and the construction of new sea ports open the door for successful Private-Public-

Partnerships between European and Indonesian companies in both port construction and port management.

Finally, there are some challenges ahead that must be overcome. Corruption is widespread, which, along with

the complex processes involved in entering the market, is one of the main burdens for the economy. European

companies should note that the most successful way to enter the country is to team up with local companies or

distributors.

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Relevant Contacts

INDONESIAN NATIONAL SHIPOWNERS ASSOCIATION (INSA) Adress: Jl. Tanah Abang III No. 10, Jakarta Pusat

Tel.: +62 21 385 0993

Fax: +62 21 344 7149

E-mail: [email protected]

Website: www.insa.or.id/

IPERINDO - Ikatan Perusahaan Industri Kapal dan Sarana Lepas Pantai Indonesia (Indonesia

Shipbuilding & Offshore Industries Association) Adress: Komplek Griya Inti Sentosa

Jl.Griya Agung No.77

DKI Jakarta 14350 Indonesia

Tel.: +62 21 640 4253

Fax: +62 21 640 4253

E-mail: [email protected]

Website: https://dppiperindo.wordpress.com/about/

Coordinating Ministry for Maritime Affairs Adress : Gedung BPPT I Lt. 3

Jl. MH Thamrin no. 8,

Jakarta 10340

Tel.: +62 21 316 8111

Fax.: +62 21 314 1790

Email: [email protected] Website: www.maritim.go.id

Ministry of Tourism Adress: JL. Medan Merdeka Barat, No. 27,

10110, Indonesia

Tel.: +62 21 383 8102

Website: www.kemenpar.go.id

Ministry of Transportation – Directorate General of Sea Transportation

Adress: JI. Medan Merdeka Barat

No. 8 Gd. Karsa Lt.4,

Jakarta Pusat 10110

Tel.: +62 21 384 2440 Ext.1104

Fax. +62 21 384 5430

Website: www.dephub.go.id

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Indonesia Investment Coordinating Board – BKPM Indonesia’s Investment Coordinating Board (BKPM) is an important government agency acting as the primary

interface between foreign companies interested in investing in Indonesia and the national government. BKPM has

been assigned with a ministerial status, reports directly to the President of the Republic of Indonesia and is

mandated to boost domestic and foreign investment by creating a conducive investment climate. The agency also

plays a crucial role as a matchmaker for investors.

Prior to investing in Indonesia or partnering with an local company, any foreign business must apply for a

registration approval from BKPM, and inform the agency of the nature of the intended investment (investment

source, line of business of the Target Company, production capacity, etc.).

Adress: Jl. Jenderal Gatot Subroto No. 44

Jakarta 12190

Tel.: +62 21 525 2008

Fax.: +62 21 526 4211

Email: [email protected]

Website: www.bkpm.go.id/

KADIN – Indonesian Chamber of Commerce and Industry

Adress : Menara Kadin Indonesia Lt 29

Jalan HR Rasuna Said X-5 Kav 2-3

Jakarta 12950

Tel.: +62 21 527 4484

Fax : +62 21 527 4331 – 527 4332

Email : [email protected]

[email protected]

Website : http://www.kadin-indonesia.or.id

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Trade Fairs in Indonesia

Indonesia Maritime Expo IME 2017 Venue: Jakarta International Expo

Date: 10-12 October 2017

Website : http://www.maritimexpo.co.id/

Indonesia Marine and Offshore Expo 2018 Venue : Batam (Riau) Date: August 2018

Website : http://www.worldmaritimenews.com/

Marintec Indonesia 2017 Venue: Jakarta International Expo Date: 13-16 September 2017

Website : http://marintecindonesia.com/

INAMARINE 2018 Venue: Jakarta International Expo Date: August 2018

Website : http://www.inamarine-exhibition.net

Indonesia Yachts Show 2018 Venue: Jakarta (to be confirmed) Date: 7-8 July 2018

Website : http://www.yachtsexpoasia.com/

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46 46

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hopes-kuala-tanjung.html Amindoni, A. (2016, September 13). Govt to transform port system to hub-and-spoke. Retrieved from

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Abbreviations AEC ASEAN Economic Community

ASEAN Association of South-East Asian Nations

ATIGA ASEAN Trade In Goods Agreement

BAPPENAS Badan Perencanaan dan Pembagunan Nasional

(National Development Planning Agency)

BKPM Badan Koordinasi Penanaman Modal

(Indonesian Investment Coordinating Board)

Bn Billion

DWT Dead Weight Tonnage

EU European Union

FDI Foreign Direct Investment

FTZ Free Trade Zone

GDP Gross Domestic Product

IDR Indonesian Rupiah

INSA Indonesian National Ship Owners Association

IPC Indonesian Port Corporation (Pelindo)

IPERINDO Indonesia Shipbuilding & Offshore Industries Association

(Ikatan Perusahaan Industri Kapal dan Sarana Lepas Pantai Indonesia)

MP3EI Masterplan for Acceleration and Expansion of Indonesia’s Economic

Developmen

Pelindo Pelabuhan Indonesia (Indonesian Port Cooperation)

PPP Public Private Partnership

PT Private Limited (Perseroan Terbatas)

SEZ Special Economic Zone

TEU Twenty-foot Equivalent Unit

tn Trillion

UNCTAD United Nations Conference on Trade and Development

USD United Stated Dollar

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About EIBN The EIBN is a partnership project between five European bilateral chambers of commerce in Indonesia

(BritCham, EKONID, EuroCham, IFCCI, INA) and two counterparts in Europe (EUROCHAMBRES, CCI

Barcelona). The EIBN’s aim is to promote Indonesia and ASEAN as high potential trade and investment

destinations among companies from allEU28 member states – especially SMEs – and support them in their

endeavor to explore the full market potential in Indonesia. The project was initiated and co-founded by

the EU.

Disclaimer

This publication has been produced with the financial assistance of the European Union. The contents of

this document are the sole responsibility of the EIBN and can under no circumstances be regarded as

reflecting the position of the European Union.

The figures in this report correspond to EIBN’s best estimate of value of the corresponding variables.

Although due care was taken in the preparation of this publication, EIBN makes no warranty as to its

accuracy or completeness and is not to be deemed responsible for any errors or loss resulting from its

use. Other organizations quoted herein are in no way responsible for the content of the report or the

consequences of its use.