PERSPECTIVES ON THE PORT INVESTMENTS IN

INDONESIA

Henry Sandee
World Bank Indonesia Office

Jakarta, December 2013

 THE IMPORTANCE OF PORTS IN RAPIDLY GROWING INDONESIA

The Indonesian economy has been growing 5-6 percent during

the last few years

Ports play a key role in facilitating economic growth

The efficiency of international ports has impact on your

competitiveness

The efficiency of domestic ports has impact on the inter-island

trade flows
 FURTHER STRENGTHENING THE ROLE OF INTERNATIONAL AND
DOMESTIC PORTS HAS BEEN RECOGNIZED AS PRIORITY ISSUE

Investments in port efficiency, upgrading and extension

Dwell time reduction

National Single Window
Integrated inspection
New terminals
Cold storage facilities
However, it depends also onthe quality of regulations

Various regulations have a negative impact on port efficiency

Some regulations do not facilitate upgrading and extension processes
 DOMESTIC INTERNATIONAL TOTAL
(TEUs) (TEUs) (TEUs)
2012 4.768.192 7.873.150 12.641.342
2030 18.344.644 29.423.403 47.768.047
INDONESIAN CONTAINER THROUGHPUT INCREASING FROM 12 MILLION TEUs IN
2012 BECOME MORE THAN 40 MILLION TEUs IN 2030
 THE NUMBER OF IMPORTED AND EXPORTED CONTAINERS IN JAKARTA
IS GROWING RAPIDLY

Tanjung Priok Throughput (TEU)

7,000,000
6,600,000

6,000,000 5,649,119

5,000,000
4,612,512

3,984,278
4,000,000 3,689,783 3,804,905

3,000,000

2,000,000

1,000,000

-
2007 2008 2009 2010 2011 2012
Do you want to:

Reduce dwell time in ports and making feeder ports more efficient?
n
Increase automation in ports and encouraging 24/7 operations?
n
n Ensure safe and cost-effective port development and expansion
through land reclamation and dredging?

Then you need to attend Port Planning & Development Indonesia, 01 - 04 December, 2014 -
Shangri-La Hotel Jakarta, Jakarta, Indonesia

Visit our website www.portdevelopmentasia.com to find out more

 Critical Project Fast Track
Tanjung Priok New Container Terminals
Tanjung Perak New Container Terminals
Belawan Extension of Container Terminal
Port projects to be completed in next five year
Banjarmasin New Container Terminal
Pontianak Extension of Container Terminal
Batam Container Terminal
Madura Development of new port area
Cilamaya (West Java) Development of new port area
Palembang General cargo or bulk handling facilities
Kuala Tanjung New Container Terminal
Panjang General cargo or bulk handling facilities
Ambon, Dumai, Teluk Bayur, Makassar,
Banjarmasin, Bitung, Tanjung Emas, Probolinggo,
Balikpapan/Kariangau, Jayapura, Sorong, Pasean, General Cargo, Container and Bulk Terminal
Maloy, Pelaihari, Sei Gintung, Gorontalo,
Pantoloan, Pare-pare.
 SOME ISSUES IN PORT DEVELOPMENT

Ships returning from Eastern Indonesia are filled for 15

percent only (backhaul)
Limited commercial interest to invest in ports in Eastern
Indonesia

Uncertainty about the Negative Investment List specifying

the possible participation of FDI
Cabotage policy as a constraint to port investment?
BACKHAUL PROBLEM IN EASTERN INDONESIA

Low frequency of container transport to Eastern Indonesia

Shipping operators offer up to 70% tariff discounts from Eastern Indonesia.

8
 SEA FREIGHT COSTS TO AND FROM EASTERN
INDONESIA
Sea freight costs / TEU

Makassar - Surabaya
(Rp 2 million)
Surabaya - Makassar
(Rp 2 million)
Sorong - Surabaya
(Rp 5 million)
Surabaya - Sorong
(Rp 15 million)
Sorong - Jakarta
(Rp 7.5 million)
Jakarta - Sorong
(Rp 17 million)
PENDULUM AS A SOLUTION TO PROMOTE PORT DEVELOPMENT?
 PRELIMINARY ANALYSIS ON THE PENDULUM SUGGESTS

It can be carried out profitably but the leg Makassar-Sorong

needs to be subsidized
It may support investments in main and feeder ports in
Eastern Indonesia (frequency and reliability)

Bitung as an alternative for Sorong requires further

assessment
The role of private sector involvement remains unclear
NUMBER OF DAYS NEEDED TO SHIP GOODS FROM JAKARTA AND SURABAYA TO
SORONG
 PORT INVESTMENTS ARE TAKING OFF, HOWEVER.THERE ARE SOME
ISSUES TO BE SOLVED

There are three port development strategies.which one is

the official one with full Government endorsement?
PPP tender schemes and the Negative Investment List create
uncertainties

Regulations of various departments impact on port

efficiency (dwell time) and interest to investment in ports
Reluctance to invest in ports in port efficiency remains a
bottleneck
IN SPITE OF ALL EFFORTS AND INVESTMENTS.DWELL TIME IN JAKARTA
IS INCREASING
12

10.1
10
8.8
8.3
7.6 7.8
8
6.3 7.1
6.8 6.7
6.6 6.4
6.3 6.2 6.3 6.2 6.3
6.0 6.0 6.0
6 5.5

0
DWELL TIME IS ALSO INCREASING IN THE PORT OF SURABAYA..

Pre-clearance Customs clearance Post clearance

10.00
Pre-clearance exceed 50% of
2.51
9.00
the import clearance time
8.00
2.44 Activities carried out included
7.00
1.82 unloading containers, stacking
6.00 in CY, preparing PIB, and
payment of Customs duties
(days)

5.00 5.48 1.50

4.00
4.22
3.00

2.00

1.00

0.00
January 2013 February 2013
THERE IS NO CORRELATION BETWEEN DWELL TIME AND NUMBER OF
CONTAINERS IMPORTED.. (2012)
 WHY IS IT SO DIFFICULT TO IMPROVE PORT EFFICIENCY?

New cranes have been installed, skills of staff has been

upgraded, management more professional, etc.

But

Various departments issue regulations that have a negative

impact on port efficiency

There is the danger that they may also impact on the

construction of new terminals
 EXAMPLE 1 HORTICULTURAL LAW

Government decided that not all ports were well equipped

to do the necessary controls for horticultural imports

Surabaya was selected as the main import gateway for Java

Imports subsequently transported by truck to Jakarta

The Law has contributed to increased congestion in selected

ports such as Surabaya
 EXAMPLE 2 PRE-SHIPMENT VERIFICATION

Government decided that a large number of imported goods

need to be checked at the port of origin to avoid illegal
imports, wrong specifications, etc.

Inspections to be done under supervision of Indonesian

companies

Shipments from ASEAN ports often arrive earlier in the ports

of Jakarta and Surabaya than the pre-shipment reports
leader to delay in import clearance
EXAMPLE 3 NEW REGULATION ON IMPORTS THAT ARE BEING PARTLY
RESOLD

Many large manufacturers import not only for their own

production processes but also to fulfill the needs of e.g.
service providers, repair shops, etc.

In this case, they need to set up a new trading company and

apply for a new license

These new companies are automatically classified as red

lane importers which causes substantial delay in the
clearance process
 TO CONCLUDE.

Port development will be big business in Indonesia

There remains the need to consolidate expansion plans and

synchronize the strategy how to include Eastern Indonesia

Role of foreign is likely to become clearer in the near future

The limited success in improving port efficiency is a concern

More work is needed to understand the impact of laws and

regulations on port efficiency and port attractiveness to investors
Do you want to Create Smarter Ports
with Enhanced Connectivity Through
Strategic Investment?

Then you need to attend Port Planning & Development Indonesia, 01 - 04 December, 2014 -
Shangri-La Hotel Jakarta, Jakarta, Indonesia

Featuring:
n The Future of the Indonesian Port System and Investment Opportunities: Head of Planning, Ministry of
Transportation, Indonesia
n Examining the Key Challenges and Opportunities for Dredging and Reclamation Works at Indonesian Ports: Director
of Port and Dredging, Directorate General of Sea Transport, Ministry of Transportation, Indonesia
n Expanding the Makassar New Port (MNP) into a hub for Eastern Indonesia: Deputy Director of Port Facilities,
Pelindo IV

Visit www.portdevelopmentasia.com to register