Ind ii npmp revision final report

TECHNICAL INPUTS FOR

NPMP REVISION

FINAL REPORT

PERKERETAAPIAN INDONESIA KE DEPAN NASKAH ANTARA MENUJU NASKAH AKHIR RENCANA INDUK PERKERETAAPIAN NASIONAL

TECHNICAL INPUTS FOR

NPMP REVISION

FINAL REPORT

July 2011

INDONESIA

INFRASTRUCTURE

INITIATIVE

INDONESIA INFRASTRUCTURE INITIATIVE

This document has been published by the Indonesia Infrastructure Initiative (IndII), an Australian Government funded project designed to promote economic growth in Indonesia by enhancing the relevance, quality and quantum of infrastructure investment.

The views expressed in this report do not necessarily reflect the views of the Australia Indonesia Partnership or the Australian Government. Please direct any comments or questions to the IndII Director, tel. +62 (21) 230-6063, fax +62 (21) 3190-2994. Website: www.indii.co.id.

ACKNOWLEDGEMENTS

This report has been prepared by Nathan Associates Inc., who was engaged under the Indonesia Infrastructure Initiative (IndII), funded by AusAID, as part of the Activity #182.

The support provided by Efi Novara Nefiadi, IndII Sr. Transport Program Officer, is gratefully acknowledged. Any errors of fact or interpretation are solely those of the author.

Paul Kent Nathan Associates Inc. Jakarta, July 22, 2011

© IndII 2011

All original intellectual property contained within this document is the property of the Indonesia

Infrastructure Initiative (IndII). It can be used freely without attribution by consultants and IndII partners in

preparing IndII documents, reports designs and plans; it can also be used freely by other agencies or

organisations, provided attribution is given.

Every attempt has been made to ensure that referenced documents within this publication have been

correctly attributed. However, IndII would value being advised of any corrections required, or advice

concerning source documents and/ or updated data.

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TABLE OF CONTENTS

ACRONYMS ........................................................................................................... IX

EXECUTIVE SUMMARY ............................................................................................ X

CHAPTER 1: INTRODUCTION ..................................................................................... 1

CHAPTER 2: SHIPPING LAW 17 AND EXAMINATION OF IMPLICATIONS FOR INSTITUTIONAL CHANGE ....................................................................... 4

2.1 BACKGROUND ................................................................................. 4

2.2 NATIONAL PORT SYSTEM ................................................................... 5

2.3 PORT MASTER PLANNING .................................................................. 7

2.3.1 National Port Master Plan...................................................... 7 2.3.2 Individual Port Master Plans .................................................. 7

2.4 INSTITUTIONAL FRAMEWORKS/PARTICIPANTS IN THE PORT SYSTEM ............ 9

2.4.1 Legal Status of Port Authorities and Port Management Units ............................................................................................. 10

2.4.2 Institutional Structure of Port Authorities and Port Management Units .............................................................. 11

2.4.3 Proposed Landlord Role of Port Authorities and Port Management Units and the Relationship with Pelindos ..... 13

2.4.4 Functions Assigned (and Not-Assigned) to PAs and PMUs .. 15 2.4.5 The Relationship between PAs, PMUs and the MoT ........... 16

2.5 PORT CONSTRUCTION ..................................................................... 17

2.6 PORT OPERATION .......................................................................... 19

2.7 SPECIAL TERMINALS AND OWN-INTEREST TERMINALS ............................ 20

2.8 TARIFFS ....................................................................................... 23

2.9 DESIGNATION OF PORTS OPEN FOR FOREIGN TRADE .............................. 24

2.10 ROLE OF REGIONAL GOVERNMENTS ................................................... 25

2.11 HARBOUR MASTER ........................................................................ 25

2.12 OVERVIEW OF SECTOR PROBLEMS AND CHALLENGES .............................. 26

CHAPTER 3: ANALYSIS OF PORT TRAFFIC AND CURRENT PERFORMANCE ................. 29

3.1 APPROACH AND DATA SOURCES ........................................................ 29

3.1.1 DGST Shipping Data Sets ...................................................... 30 3.1.2 Pelindo Port Data ................................................................. 31 3.1.3 Data from Other Recent Studies of Indonesian Ports.......... 32 3.1.4 Data Issues ........................................................................... 32

3.2 INDONESIAN PORT TRAFFIC 1999-2009 ............................................. 32

3.2.1 Indonesian Port Traffic in 2009 ............................................ 36

3.3 INDONESIAN TRAFFIC BY CARGO TYPE OR PRINCIPAL COMMODITY ............ 42

3.3.1 Containers ............................................................................ 43

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3.3.2 Other Cargo Types and Commodity/Commodity Groups .... 49

3.4 THE RISK OF INSUFFICIENT CAPACITY .................................................. 49

CHAPTER 4: PORT FACILITIES AND OPERATIONS REVIEW ........................................ 50

4.1 TANJUNG PRIOK CONTAINER TERMINALS............................................. 50

4.1.1 Throughput .......................................................................... 51 4.1.2 Berth Productivity ................................................................ 52 4.1.3 Berth Utilization ................................................................... 53 4.1.4 Container Yard Utilization .................................................... 53 4.1.5 Dwell Time ........................................................................... 54 4.1.6 Ship Waiting Time ................................................................ 54 4.1.7 Truck Waiting ....................................................................... 55 4.1.8 Impact of High Container Yard utilization ............................ 55 4.1.9 Need for Immediate Expansion ........................................... 56 4.1.10 Long-Term Plans................................................................... 56 4.1.11 Short-Term Plans.................................................................. 56

4.2 TANJUNG PERAK ........................................................................... 58

4.2.1 Container Handling Facilities ............................................... 58 4.2.2 Throughput .......................................................................... 59 4.2.3 Productivity and Utilization ................................................. 59 4.2.4 Dwell Time and Ship and Truck Waiting .............................. 59 4.2.5 Need for Immediate Expansion ........................................... 60 4.2.6 Long-Term Expansion Plans ................................................. 60 4.2.7 Short-Term Plans.................................................................. 60

CHAPTER 5: FORECAST OF INDONESIAN PORT TRAFFIC ........................................... 62

5.1 APPROACH ................................................................................... 62

5.2 CONTAINERS ................................................................................. 65

5.2.1 Separation of Port Traffic into International and Domestic Trade Flows .......................................................................... 65

5.2.2 Base Case Forecast of International Container Flows ......... 69 5.2.3 Base Case Forecast of Domestic Container Flows ............... 72 5.2.4 Analysis of Base Case Container Forecasts .......................... 74

5.3 BASE CASE FORECAST FOR OTHER CARGO TYPES AND COMMODITY GROUPS 76

5.3.1 General Cargo ...................................................................... 77 5.3.2 Dry Bulk ................................................................................ 77 5.3.3 Liquid Bulk ............................................................................ 82

5.4 ASSIGNMENT OF TRAFFIC TO SPECIFIC PORT AREAS ................................ 84

5.5 ALTERNATIVE TRAFFIC SCENARIOS ..................................................... 88

5.6 IMPLICATIONS OF INDONESIAN PORT TRAFFIC FORECAST FOR 2009-2030 .. 93

CHAPTER 6: INVESTMENT REQUIREMENTS ............................................................. 95

6.1 APPROACH AND METHODOLOGY ....................................................... 95

6.2 CONTAINER PORT FACILITIES AND CAPACITY ASSESSMENT ....................... 97

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6.2.1 Container and General Cargo Port Facilities ........................ 97 6.2.2 Port Productivity Factors ................................................... 100 6.2.3 Container Capacity and Requirements for Additional

Capacity .............................................................................. 103

6.3 INVESTMENT REQUIREMENTS ......................................................... 109

6.3.1 Unit Investment Costs ........................................................ 109 6.3.2 Container Port Investment Requirements ......................... 112

6.4 SUMMARY OF INVESTMENT REQUIREMENTS ....................................... 113

6.4.1 Investment Requirements for All Cargo Types .................. 113

6.5 SHORT-TERM SOLUTIONS TO CAPACITY CONSTRAINTS .......................... 124

6.5.1 Short-Term Capacity Solutions for Tanjung Priok .............. 124 6.5.2 Short-Term Capacity Solutions for Tanjung Perak ............. 129

CHAPTER 7: LEGAL, REGULATORY AND ADMINISTRATIVE ACTIONS TO IMPLEMENT THE LAW ON SHIPPING ...................................................................... 131

7.1 REVISION OF THE LAW ON SHIPPING ................................................. 132

7.2 SUBSIDIARY REGULATIONS UNDER THE LAW ON SHIPPING ..................... 132

7.3 SUBSIDIARY REGULATIONS REQUIRED UNDER GOVERNMENT REGULATION ON

PORT AFFAIRS ............................................................................. 135

7.3.1 Port Hierarchy .................................................................... 137 7.3.2 Port Planning ...................................................................... 138 7.3.3 Port Concessioning ............................................................. 138 7.3.4 Licensing of Port Services ................................................... 139 7.3.5 Organizational Structure of Port Authorities and Port

Management Units ............................................................ 140 7.3.6 Subsidiary Regulations Identified by Consultants’ Analysis

........................................................................................... 140 7.3.7 Port Competition Regulations ............................................ 141 7.3.8 Tariff Regulations ............................................................... 142 7.3.9 Land Use Management Regulations .................................. 146 7.3.10 Revision of the Regulation on the Organization and Working

Procedures of the Ministry of Transport ........................... 146

7.4 TRANSITION ARRANGEMENTS FOR PORT AUTHORITIES TO ASSUME PELINDO

RESPONSIBILITIES ......................................................................... 146

7.4.1 Resolving the Port Land Question ...................................... 147 7.4.2 Resolving the Conflict between Pelindo Legislation and the

Law on Shipping and its Regulations .................................. 148 7.4.3 Building the Institutional Capacity of Port Authorities ...... 149

CHAPTER 8: PORT SECTOR FINANCING ................................................................. 150

8.1 VEHICLES FOR ATTRACTING PRIVATE SECTOR INVESTMENT ..................... 150

8.1.1 Conditions for Attracting Private Sector Investment in Ports ........................................................................................... 150

8.1.2 Indonesia’s Legal Framework for Private Sector Investment in Ports ............................................................................... 152

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8.1.3 Availability of Long-Term Project Financing ...................... 153

8.2 POSSIBLE SOURCES OF FUNDING FOR PUBLIC SECTOR INVESTMENT .......... 155

ANNEXE 1: INDONESIAN TRAFFIC BY CARGO TYPE IN 2009 .................................... 157

ANNEXE 2: CONTAINER TERMINAL INVESTMENT COSTS BY PORT ........................ 167

ANNEXE 3: REFINEMENT OF DGST PORT TRAFFIC DATA AND REVISIONS TO TRAFFIC FORECASTS AND INVESTMENT REQUIREMENTS ................................. 172

ANNEXE 4: ACTIVITY FINAL COMPLETION REPORT ................................................ 174

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LIST OF TABLES

Table 3-1: Indonesian Port Traffic by Trade Flow and Cargo Type, 1999 and 2009 (000’s tons) .............................................................................................................. 33

Table 3-2: Indonesian General Cargo and Container Traffic by Trade Flow, 1999 and 2009 (000’s tons) .......................................................................................... 35

Table 3-3: Indonesian Port Traffic by Trade Flow and Cargo Type and Principal Commodity, 2009 (000’s tons) ..................................................................... 36

Table 3-4: Indonesian Top 50 Ports for Total Traffic by Trade Flow, 2009 (000’s tons) . 38 Table 3-5: Indonesian Top 50 Ports for Total Traffic by Cargo Type and Principal

Commodity, 2009 (000’s tons) ..................................................................... 42 Table 3-6: Indonesian Top 50 Ports for Container Traffic by Trade Flow, 2009 (000’s

TEU) .............................................................................................................. 44 Table 3-7: Indonesian Main Ports for Container Traffic, 1990-2009 (TEU)..................... 45 Table 3-8: Indonesian Main Ports for Containers, Selected Years, 1990-2009 (TEU) ..... 47 Table 4-1: Tanjung Priok Throughput (TEUs) .................................................................. 51 Table 4-2: Crane and Vessel Handling Productivity at Tanjung Priok (moves/hour) ...... 52 Table 4-3: Tanjung Perak’s Throughput .......................................................................... 59 Table 5-1: Domestic and International Container Traffic at Indonesian Main Ports,

Selected Years, 1990-2009 (TEU) .................................................................. 67 Table 5-2: Estimated Domestic and International Container Traffic at All Indonesian

Ports, 1990-2009 (TEU) ................................................................................. 68 Table 5-3: Regression Equation and Statistics for Forecast of Indonesian International

Container Traffic ........................................................................................... 69 Table 5-4: Projected GDP Growth for Selected Regions and Countries, 2011-2030 ...... 70 Table 5-5: Base Case Forecast of International Container Traffic at Indonesian Ports,

2009-2030 (TEU) ........................................................................................... 71 Table 5-6: Characteristics of Container Traffic at JICT, 2000-2009 ................................. 72 Table 5-7: Regression Equation and Statistics for Forecast of Indonesian Domestic

Container Traffic ........................................................................................... 72 Table 5-8: Base Case Forecast of Domestic Container Traffic at Indonesian Ports, 2009-

2030 (TEU) .................................................................................................... 73 Table 5-9: Characteristics of Container Traffic at Pelindo II Ports excluding JICT, 2000-

2009 .............................................................................................................. 74 Table 5-10: Base Case Forecast of Total Cargo Handled at Indonesian Ports, 2009-2030

(000’s tons) ................................................................................................... 77 Table 5-11. Indonesian Fertilizer Plants and Annual Capacity (000’s ton) ...................... 80 Table 5-12. Main Economic Activity for Each Economic Development Corridor ............ 85 Table 5-13: Indonesia’s Top 50 Ports for Total Traffic by Cargo Type and Principal

Commodity, 2015 (000’s tons) ..................................................................... 86 Table 5-14: Indonesia’s Top 50 Ports for Total Traffic by Cargo Type and Principal

Commodity, 2020 (000’s tons) ..................................................................... 87 Table 5-15: Indonesia’s Top 50 Ports for Total Traffic by Cargo Type and Principal

Commodity, 2030 (000’s tons) ..................................................................... 88 Table 5-16. GDP Growth Assumptions for Alternative Traffic Scenarios, 2010-2030 (%)

...................................................................................................................... 89

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Table 5-17. Indonesian Container Traffic under Alternative Growth Scenario, 2009-2030 (000’s TEU) .................................................................................................... 90

Table 5-18. High Growth Scenario Forecast of Total Cargo Handled at Indonesian Ports, 2009-2030 (000’s tons) ................................................................................. 92

Table 6-1. Container and General Cargo Berth Facilities at Selected Indonesian Ports, 2011 (meters) ............................................................................................. 98

Table 6-2. General Cargo and Container Traffic Forecast at Main Indonesian Container Ports, 2009-2030 ........................................................................................ 100

Table 6-3. Container Terminal Berth Capacity Indicators, 2009-2025 .......................... 102 Table 6-4. Assumed Indonesian Port Productivity Factors by Type of Facility, 2009-2030

.................................................................................................................... 103 Table 6-5. Capacity Analysis for Main Indonesian Container Ports, 2009 .................... 104 Table 6-6. Capacity Analysis for Main Indonesian Container Ports, 2015 .................... 106 Table 6-7. Capacity Analysis for Main Indonesian Container Ports, 2020 .................... 107 Table 6-8. Capacity Analysis for Main Indonesian Container Ports, 2030 .................... 108 Table 6-9. Range of Unit Cost Estimates for Container Terminal Development and

Construction (US$ of 2010) ........................................................................ 110 Table 6 -10. Unit Investment Cost for Indonesian Container ....................................... 111 Table 6-11. Container Port Investments for Main Indonesia Container Ports, 2015-2030

(US$ millions of 2010) ................................................................................. 112 Table 6-12. Investment Requirements for Indonesian Main Ports by Cargo Type, 2011-

2030 (US$ million of 2010) ......................................................................... 115 Table 7-1. Issues and Concerns of Prevailing Law ......................................................... 133 Table 7-2. Scope of Government Regulation No. 61 of 2009 ....................................... 134 Table 7-3. Regulatory Mandates for the Ministry in Shipping Law 17 of 2008 ............ 136 Table 7-4. Tariff Regulation under Shipping Law 17 and Indonesia’s Competition Law

.................................................................................................................... 143 Table 7-5. Redundant Port Authority and Pelindo Functions ....................................... 147 Table 8-1. Indicative Funding Requirements by Private and Public Sector for

Development of Port Facilities, 2011-2030 (US$ millions of 2010) ............ 154 Table A-1: Indonesia’s Top 50 Ports for General Cargo by Trade Flow, 2009 (000’s tons)

.................................................................................................................... 157 Table A-2: Indonesia’s Top 50 Ports for Cement by Trade Flow, 2009 (000’s tons) ..... 158 Table A-3: Indonesia’s Top 50 Ports for Coal by Trade Flow, 2009 (000’s tons) ........... 159 Table A-9: Indonesia’s Top 50 Ports for CPO by Trade Flow, 2009 (000’s tons) ........... 165 Table A-10: Indonesia’s Top 50 Ports for Other Liquid Bulks by Trade Flow, 2009 (000’s

tons) ............................................................................................................ 166

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LIST OF FIGURES

Figure 2-1: Port Authority Structure ............................................................................... 12 Figure 2-2: Structure of Port Management Units (1st Class) .......................................... 12 Figure 3-1: Indonesian Port Traffic by Trade Flow and Cargo Type, 1999 and 2009 (000’s

tons) .............................................................................................................. 34 Figure 3-2: Percentage of Indonesian General Cargo and Container Traffic that is

Containerized by Trade Flow, 1999 and 2009 .............................................. 35 Figure 3-3: Indonesian Port Traffic by Trade Flow and Cargo Type (000’s tons) ............ 37 Figure 3-4. Indonesian Top 50 Ports for Total Traffic by Trade Flow, 2009 (000’s tons) 39 Figure 3-5. Indonesian Top 50 Ports for Total Traffic by Cargo Type, 2009 (000’s tons) 40 Figure 3-6: Indonesian Main Ports for Container Traffic, 1990-2009 (TEU) ................... 46 Figure 3-7: Indonesian Main Ports for Containers, Selected Years, 1990-2009 (TEU) ... 48 Figure 4-1: The Optimization Plan of Tanjung Priok ....................................................... 57 Figure 4-2: TPS Expansion Options.................................................................................. 61 Figure 5-1. Indonesian Economic Development Corridors Established for the MP3EI ... 64 Figure 5-2: Estimated Domestic and International Container Traffic at All Indonesian

Ports, 1990-2009 (TEU) ................................................................................. 68 Figure 5-3: Indonesian Base Case Container Forecast for Domestic and International

Trade, 2009-2030 (000’s TEU) ...................................................................... 75 Figure 5-4. Indonesian Coal Production, Exports and Domestic Consumption, 1996-

2010 (million tons) ........................................................................................ 79 Figure 5 5. Indonesian Urea Plants and Annual Capacity, 2010 (000’s tons) ................. 81 Figure 5-6: Indonesian Crude Oil Production and Consumption, 1999-2009 ................. 82 Figure 5-7. Forecast of Indonesian Total Container Traffic under Alternative Growth

Scenarios, 2015-2030 (000’s TEU) ................................................................ 91 Figure 5-8. Forecast of Total Indonesian Port Traffic by Cargo Type Under Alternative

Growth Scenarios, 2015-2030 (000’s tons) .................................................. 91 Figure 6-1. Investment Requirement Methodology ....................................................... 96 Figure 6-2. Location and Forecasted Container Traffic at Main Indonesian Container

ports, 2009-2030 (TEU) ................................................................................. 99 Figure 6-3. Port Investment Requirements through 2030 by Type of Cargo ................ 113 Figure 6-4. West Kalimantan – No Strategic Ports, regional ports centred around

Pontianak .................................................................................................... 116 Figure 6-5. South Sumatra – no Strategic Ports, regional ports centred around Panjang

and Palembang ........................................................................................... 117 Figure 6-6. East and South Kalimantan – Strategic Ports: Balikpapan, Samarinda and

Banjarmasin ................................................................................................ 118 Figure 6-7. South Sulawesi – Ports & Terminals centred around Makassar, no Strategic

Ports ............................................................................................................ 119 Figure 6-8. Java, South Sumatra – Strategic Ports Regions Jakarta (Tanjung Priok) and

Surabaya (Tanjung Perak) ........................................................................... 120 Figure 6-9. Bali, Lombok, Nusa Tenggara and to the south and east – No strategic ports

.................................................................................................................... 121 Figure 6-10. The East – Strategic Ports: Bitung, Ambon and Sorong ............................ 122

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Figure 6-11. The East – Strategic Ports: Bitung, Ambon and ........................................ 123 Figure 6 -12. Tanjung Priok and Marunda Map ............................................................ 125 Figure 6-13. TPS Expansion Options .............................................................................. 130 Figure 7-1. Pre-PPP (top) and Post-PPP Environment Flow of Charges ........................ 145

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ACRONYMS

ADB Asian Development Bank APPI Asosiasi Produsen Pupuk Indonesia (Indonesian Fertilizer Association) BPS Badan Pusat Statistic ( Statistic Indonesia) COMTRADE Commodity Trade Statistic Database CPO crude palm oil CY container yard DGST Directorate General of Sea Transportation DWA David Wignall Associates DWT dead weight tonnage EIA Energy International Statistic FFB fresh fruit bunches GDP gross domestic product GoI Government of Indonesia GR 16 Government Regulation No. 61 of 2009 HP horsepower ICT Information and Communication Technology IEDC Indonesia Economic Development Corridor IFC International Finance Corporation IMF International Monetary Fund ISPS International Ship and Port Security Code JICA Japan International Cooperation Agency JICT Jakarta International Container Terminal Law Law on Shipping No. 17 of 2008 MENPLAN Ministry os State Administrative Reform MoT Ministry of Transportation MP3EI Masterplan Percepatan dan Perluasan Pembangunan Indonesia (The

Masterplan of Acceleration and Expansion of Indonesia Economic Development)

NPK nitrogen phosphorous and potassium NPMP National Port Master Plan OPEC Organization of Petroleum Exporting Countries PA(s) Port Authority(ies) PBEs Port Business Entities PELINDO Pelabuhan Indonesia (Port Management State Owned Enterprise) PERUMPEL Perusahaan Umum Pelabuhan PMU(s) Port Management Unit(s) PR 67 Presidential Regulation No 67 of 2005 PT IIF PT Indonesia Infrastructure Finance PT SMI PT Sarana Multi Infrastruktur RTG Rubber Tired Gantry Crane SEZ Special Economic Zone SISTRANAS Sistem Transportasi Nasional (National Transport System) TEU twenty foot equivalent units TR Technical Report on Development of National Port Master Plan

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EXECUTIVE SUMMARY

Indonesia has undertaken a number of initiatives in recent years intended to expand economic growth and improve the wellbeing of its citizens. Now, the country has formulated an accelerated growth strategy to transform the country to the level of a developed economy. The Master Plan for the Acceleration and Expansion of Economic Development of Indonesia (MP3EI) consists of a range of strategies designed to usher Indonesia into one of the top 10 economies worldwide by 2025. Success, as the Plan explains, requires a new way of thinking of how business is done, requiring collaboration among stakeholders, local and central governments, state-owned enterprises, and the private sector.

Shipping Law 17 and Implications for Institutional Change

A similar collaboration theme was envisioned two years earlier in the port reform efforts initiated through Shipping Law 17 of 2008. The Law changes the role of the central government in the conduct of port affairs, establishing a framework for landlord port authorities. Local governments play a more prominent role in the port sector, with smaller ports being transferred to local government jurisdiction and the master plans of all ports being subjected to local government approval before they can be implemented. The creation of landlord port authorities by definition means that the private sector will play a greater role in port investment and operation. The Law also indicates the Pelindos will continue to exploit the terminals they had operated prior to the Law’s passage. So the new port system will have a number of port sector “players” whose roles are established in the Law. Unfortunately, even with these established roles, collaboration among the players has not yet been fully implemented, contributing to delays in the Law’s implementation as some of the players resist the changes called for in the Law. The main sector problems and challenges identified by our analysis in the context of institutional and legal frameworks are:

Incomplete and deficient legal framework. The Law on Shipping and subsidiary government and ministerial regulations do not provide a comprehensive legal framework for the ports sector. The Law lacks implementation detail, especially in relation to crucial issues relating to the landlord role of PAs (i.e. transfer of land to PAs, relinquishing of functions to PAs, future control over Pelindo assets, the relationship between Pelindos and PAs, mixed messages regarding the Pelindos’ future monopolies, etc). Subsidiary regulations do not yet adequately fill all gaps. In some areas, e.g. the relationship between the DGST, PAs and Harbour Master, the Law creates the potential for jurisdictional overlap and institutional conflict.

Uncertainty regarding transitional arrangements to achieve landlord status. The Pelindos are the “elephant in the room”, but the Law fails to satisfactorily create a framework for landlord operations. The Law does not adequately address the future role of the Pelindos (except in appearing to provide protection to their established rights). As Pelindos themselves perform various landlord functions, the lack of direction undermines the notion that such functions are now the sole responsibility of PAs. PAs, as newcomers with weak capacity (see below), are not well-placed to assert their authority vis-à-vis the Pelindos. Arriving at sensible

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outcomes is complicated by the fact that Pelindos fall under the Ministry of State-Owned Enterprises, rendering it difficult to include them in the Ministry of Transport’s reform efforts. It appears that a solution must be found at the government level to ensure inter-ministerial collaboration in pursuing a common port reform vision. It is, therefore, to be welcomed that The Masterplan for the Acceleration and Expansion of Indonesia’s Development 2011 – 2025 has specifically identified a need to revise the Law to secure “the separation between regulatory functions (Port Authority) and operating functions (Enterprise)” be accelerated. There is also a need to revisit the role of the DGST and to ensure that its functions are aligned with those of PAs and PMUs.

Weak direction on private sector participation. The Law introduces the concept of private sector participation, but fails to give strong direction to ensure a concerted effort in developing time-bound plans to secure greater private investment. PAs (and PMUs) face a particular challenge to develop capacity to implement private investment programs, especially given their limited capacity, uncertainty about the future role of Pelindos, and lack of clarity about their control over port land. Pelindos need to be restructured to assume the role of PBEs, but the Law fails to spell out how this is to be achieved.

Deficiencies in the institutional design of Port Authorities. PAs have been created using an “off the shelf” institutional structure that has not been specifically tailored to port management. As currently constituted, the PAs lack all the basic features that have made landlord port authorities successful institutional models for ports elsewhere in the world. In fact, the establishment of port authorities as line agencies is a throwback to early port reform efforts promoted by the World Bank that transformed line agencies port entities to the port authority model for port administration.

Mixed messages on encouraging competition. While the Law emphasizes the need for competitiveness and eradicating monopolies, other measures appear to preserve the status quo and hinder new market entrants. Pelindos appear to be given strong rights to continue all current activities, while rules governing special terminals and own-interest terminals contain several restrictive provisions that will hinder any effort to enhance competition.

Lack of a comprehensive framework for competition regulation. At present, the Law only addresses tariff regulation, but is silent on the notion of regulating anti-competitive behavior. As presently worded, the MoT faces the potentially difficult task of approving tariffs for each of the PAs and PMUs. Many costs are unique to individual ports which imply different tariffs levels, which all need to be assessed by the MoT. The need for complicated tariff setting can be avoided if a strategy of enhanced competition is adopted, especially in the case of PBEs whose cost structures are more complex. This would enable the MoT to adopt less intrusive regulation – such as tariff filing and monitoring. With regard to broader competition issues, the Competition Commission has jurisdiction over anti-competitive behavior of port operators and service providers, but for the time being state-owned enterprises such as the Pelindos appear to enjoy important

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exemptions and in practice no cases have ever been brought specifically against Pelindos.

Conflicting government agency objectives. The Ministry of State-Owned Enterprises (MOE) has as one of its main objectives to maximize revenues to the government. In fact, each year the MOE sets financial targets that the Pelindos are expected to meet, so it is difficult to imagine a scenario where port charges would decrease as the ports approach full capacity, as is the current situation for Jakarta. This is contrary to what the Law and MoT hope to achieve in terms of enhancing port competitiveness – that is, minimizing port costs while improving port performance.

Forecast of Port Traffic

As an archipelago, Indonesia relies heavily on its ports to accommodate its extensive foreign trade as well as for vast domestic commerce. In 2009, a total of 968 million tons were handled at Indonesian ports, consisting of 560 million tons of dry bulk cargo (nearly three-quarters of which was coal), 176 million tons of liquid bulk cargo (86 percent of which was petroleum and petroleum products or CPO), 144 million tons of general cargo and 88 million tons of containerized cargo.

Foreign trade accounted for 543 million tons or 56 percent of the total volume of cargo handled at Indonesian ports in 2009. Exports shipments at 425 million tons accounted for more than 80 percent of the foreign trade while imports of 101 million tons accounted for 20 percent of the foreign trade. Indonesian domestic cargo handled at its ports in 2009 totaled 433.3 million tons with dry bulk shipments of 255.9 million tons accounting for 59 percent of total domestic shipments.

In 2009, a total of 8.8 million TEU were handled at Indonesian ports, consisting of 6.1 million TEU for foreign trade (69 percent) and 2.7 million for domestic trade (31 percent). Total container traffic (international and domestic) is forecast to double from 8.8 million TEU in 2009 to 17.2 million TEU in 2015 and to reach nearly 26 million TEU by 2020. This corresponds to an overall annual growth rate of 11.8 percent from 2009 to 2015 and 8.3 percent from 2015 to 2020.

The Indonesian port traffic forecast presented in this report has a number of key implications that need to be considered for the future development of the national port system. These include:

By 2020 Indonesian container traffic will be more than double 2009 volumes and will double again by 2030.

New and expanded container terminals are urgently required in many locations.

Increased container volumes will likely lead to a need for new container hub ports such as in Kuala Tanjung and bulk facilities at Balikpapan/ Maloy. Feasibility of development of new container hub ports needs further study.

Slower growth of dry and liquid bulk traffic means that total cargo tonnage will only increase by 50 percent by 2020 and another 50 percent by 2030.

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Additional bulk port capacity will be needed in some locations and may be undertaken by the private sector.

The high rates of forecast traffic growth should serve as an important opportunity for Indonesia to expand and modernize it ports system to meet the coming demand and to enhance competitiveness with other nations and regions.

Investment Requirements

Many of Indonesia’s main port are approaching the limits of their effective capacity given current productivity factors. For containers, the ports of Belawan, Tanjung Emas, Tanjung Perak, Tanjung Priok are each operating at around 90 percent of effective capacity, while the ports of Pekanbaru and Samarinda, are each operating at around 80 percent of effective capacity.

By 2015, the growth in forecasted container traffic results seven Indonesian port requiring additional capacity. The largest increase is needed for Tanjung Priok that will need to increase capacity by 1.8 million TEU and Tanjung Perak that will need to add 0.8 million TEU of capacity. Belawan/Kuala Tanjung will also require a substantial capacity increase of 0.4 million TEU.

The ports of Tanjung Emas, Banjarmasin and Pekanbaru will also need to add container capacity in 2015; however, it seems likely that this could be accomplished by converting some under-utilized conventional general cargo berths for container operations. This is typically done by demolishing warehouses and sheds on the quay, strengthening the quay for mobile cranes and adding ancillary container handling equipment. It should be noted, that for this report, an engineering assessment of the feasibility of converting general cargo berths for container operations has not been conducted.

By2020, ports of Tanjung Priok, Tanjung Perak, Belawan/Kuala Tanjung and Tanjung Emas will need to bring on-line new container berths. In addition, the ports of Pekanbaru and Balikpapan will each now need to add a new berth of at least 200 m.

By 2030, 16 of Indonesia’s main container ports will need to provide additional capacity. This includes accommodation for 9.4 million TEU at Tanjung Priok, 4.3 million TEU at Tanjung Perak, 1.9 million TEU at Belawan/Kuala Tanjung and 0.9 million TEU at Makassar.

The report presents revised estimates of the total investment cost for Indonesia’s main ports including container, CPO, petroleum and petroleum products, coal and cruise vessels. The estimated total direct investment in port facilities for these elements of port traffic is US$ 19.2 billion, 60 percent is needed for container traffic, 18 percent for petroleum and petroleum products, 13 percent for coal, and 9 percent for CPO.

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It is estimated that about 70-75 percent of the investment in new Indonesian container terminals could be provided by the private sector under long-term concession arrangements. The remaining 25-30 percent of the investment for common port infrastructure such as channel deepening and breakwaters will need to be provided by the public sector.

The investments identified above focus on relatively long-term capacity requirements. However impending capacity constraints will soon affect both Tanjung Priok and Tanjung Perak. We have identified some short-term measures that can help mitigate capacity constraints until new construction/expansion bring additional capacity on line.

Though Tanjung Priok’s terminals are performing to acceptable standards, the berth and yard are operating at close to capacity, particularly for imported boxes in the yard area, where current occupancy has exceeded 100 percent. Yard congestion will ultimately impact berth and gate performance, causing a dramatic increase in both ship and truck waiting time. One immediate option for easing container yard congestion is establishing an Integrated Off-Dock Container Yard Program. The main thrust of the Integrated Off-Dock Program is relocating some of the yard and gate activities from the marine terminals inside Tanjung Priok to off-dock container yards located nearby and outside the port in an effort to expand container yard capacity.

For Tanjung Perak, we recommend allowing mixed storage of import and export containers at TPS’s container yard. Our rough estimate of the impact of this step on storage (and terminal) capacity is about 5 percent. Another immediate measure is demolition of the warehouse which, as we understand, is barely used. Converting this area to a container yard could also add another 5 percent to the capacity. A more substantial addition to the container yard could be generated by fully developing an area of 6 ha located in front of the existing container yard. This could add about 20 percent to the TBS capacity. Hence, overall, terminal capacity could be enhanced by about 30 percent.

Legal, Regulatory and Administrative Actions Needed

Many actions that are identified are intended to overcome vagueness in Shipping Law 17 with regard to its implementation. The GoI has already undertaken various actions to ensure the implementation of the Law. The first was to adopt implementation regulations contained in Government Regulation No.61 of 2009 on Port Affairs (GR 61). Further steps were taken at the end of 2010, when the Minister of Transport adopted a series of regulations setting up port authorities, port management units (PMUs), and harbor masters’ offices.

Legislation needs to be developed to create a framework for tariff regulation (legal), and the regulator needs to regulate tariffs (regulatory) and develop supporting systems and procedures (administrative). Often, there is also a logical progression in these tasks. The adoption of legislation paves the way for regulatory implementation and administrative action. This report proposes implementation actions in relation to specific topical areas, rather than as strict legal, regulatory and administrative subsets.

xv

Finally, the adoption of the National Port Master Plan (NPMP) is itself a legal and administrative action that is required to implement the Law. Amongst others, the NPMP must give policy direction in numerous areas such as the construction of new ports, private sector participation, etc. It is also a prerequisite for various actions required under the Law, such as the preparation of individual port master plans.

Implementation action is required in the following areas:

Revision of the Law on Shipping;

Subsidiary regulations required by the Law on Shipping;

Subsidiary regulations required under Government Regulation on Port Affairs; and

Subsidiary Regulations identified by our analysis.

A range of transition arrangements are required for Port Authorities to assume Pelindo non-operational responsibilities. In practice, the Pelindos currently perform various functions for which they have a statutory mandate, but which have now also been assigned to port authorities. Additionally, there are a number of other functions which Pelindos appear to have assumed by default, but which are also activities that are now entrusted to port authorities. Functions in this category include undertaking master planning and providing port security.

TECHNICAL INPUTS FOR NPMP REVISION FINAL REPORT

1

CHAPTER 1: INTRODUCTION



A similar collaboration theme was envisioned two years earlier in the port reform efforts initiated through Shipping Law 17 of 2008. The Law changes the role of the central government in the conduct of port affairs, establishing a framework for landlord port authorities. Local governments play a more prominent role in the port sector, with smaller ports being transferred to local government jurisdiction and the master plans of all ports being subjected to local government approval before they can be implemented. The creation of landlord port authorities by definition means that the private sector will play a greater role in port investment and operation. The Law also indicates the Pelindos will continue to exploit the terminals they had operated prior to the Law’s passage. So the new port system will have a number of port sector “players” whose roles are established in the Law. Unfortunately, even with these established roles, collaboration among the players has not yet been fully implemented, contributing to delays in the Law’s implementation as some of the players resist the changes called for in the Law.

The MP3EI conveys a very important message. Collaboration is a prerequisite for achieving change, and the Plan’s repeated references to needed improvements in the port sector implies the required collaboration needed within the port sector and between the port sector and the economic players that depend on reliable and efficient port services. In fact, the success of Indonesia’s Logistics Blue Print, its Economic Corridors Initiative, and its National Connectivity Program could all be held hostage to ineffective port performance if needed collaboration fails to materialize.

An important requirement of the Law is the development of a National Port Master Plan (NPMP). The NPMP is the “grand-daddy” of all plans as local port master plans must conform to the vision reflected in the NPMP. The NPMP is intended to set forth national port policy, define market outlook for the port sector and key individual ports, identify improvement and expansion requirements, and a formulate a financing strategy.

As part of its continuing port reform efforts, Indonesia mandated the Directorate General of Sea Transportation (DGST) to prepare a National Ports Master Plan by June 2010. The Plan, the recent draft of which was prepared in September 2010, was supported by a consultant (DWA) retained by IndII. Though DWA submitted a

2 TECHNICAL INPUTS FOR

NPMP REVISION FINAL REPORT

Technical Report accompanied by a series of technical annexes, IndII in the course of its review determined the latest revision failed to meet expectations, as documented in IndII’s Consolidated Comments on the Technical Report of December 10, 2010. Accordingly, IndII retained Nathan Associates to provide assistance to improve upon the work done by the consultant in response in part to the Consolidated Comments. Rather than redo the work that has been done, IndII requested that the team of consultants to review the DWA work, complete data collection and analysis in view of IndII’s Consolidated Comments, and prepare four new Background Papers that consolidate and improve the DWA work along with a summary report. The scope of the four Background Papers included:

1. Baseline

Summary of main provisions of Shipping Law 17/2008 and examination of implications for institutional change;

Brief description of existing institutional arrangements;

Diagnostic of sector problems;

Description of planning procedures, in particular relationship of NPMP to public and private sector plans for port development; and

Compilation of basic data on port infrastructure, operational practices and traffic volumes.

2. Traffic Forecasts

Twenty year projections, by major commodity group, identifying international, domestic and trans-shipment traffic, by major port zone.

3. Investment Requirements

Broad brush estimates of total investment requirements in physical terms for 2011 – 2020 and 2021 - 2030, taking account of existing capacity and the potential for improvements to operational efficiency;

Identification of any need for new ports; and

Estimates of total investment costs, with a clear and justified statement of assumptions for unit costs.

4. Institutional Development and Financing

Identification of the legal, regulatory and administrative actions needed to implement Shipping Law 17/2008 effectively;

Transition arrangements as Port Authorities take over some of the Pelindo responsibilities for port management;

Identification of appropriate vehicles for attracting private sector investment in the port sector;

Examination of the likely scale and possible sources of funding for public sector investment in ports; and

Identification of areas where more detailed study would be appropriate


3


This Final Report Presents a summary of all the analyses, findings and recommendations prepared during the NPMP Revision Study.



CHAPTER 2: SHIPPING LAW 17 AND EXAMINATION OF IMPLICATIONS FOR INSTITUTIONAL CHANGE

This chapter provides a review of the Shipping Law and where relevant also examines how its provisions have been fleshed out further by various implementing regulations (in particular the Government Regulation on Port Affairs No 61 of 2009). The analysis of the law includes a description of institutional arrangements for the ports, as set out in Ministerial Regulations Nos 63 and 64 of 2010, which respectively establish Port Authorities and Port Management Units. A diagnostic of sector problems as they relate to policy, legal and institutional issues forms part of the review as well as a review of planning procedures and the relationship between the NPMP and public and private plans for port development.

2.1 BACKGROUND

The Shipping Law 17 (“the Law”) – enacted on 7 May 2008 – is the “parent” law governing Indonesia’s ports sector. The Law comprises 355 articles divided into 22 chapters. As its title suggests, the bulk of the Law focuses on shipping rather than port topics. The former are matters typically covered in a country’s merchant shipping laws1. For the most part, they are not directly relevant for ports, and address issues such as the regulation of shipping, liability of shipping service providers, ship mortgages, ship seaworthiness, crewing, maritime pollution, wrecks, accidents, search and rescue, human resource development relative to shipping, etc. Port issues are mainly dealt with in Chapter VII (Arts 67 – 115), Chapter XI and in a few scattered provisions elsewhere in the Law.

The main topics covered in Chapter VII of the Law are:

National Port System

Port Master Planning

Institutional Frameworks / Participants in the Port System

Port Construction and Operation

Special Terminals and Own Interest Terminals

1 Compare, for example, the Canada Shipping Act 2001 or the Singapore Merchant Shipping Act

1996. Though several countries and regional governments (e.g. United Arab Emirates’ Abu Dhabi), the majority of countries deal with shipping and port matters in separate laws. This is mainly driven by practical considerations. The regulation of shipping is different from port governance and regulation (for the same reason the regulation of air services, airports and air navigation services is also often treated in different laws). Separating the laws can avoid confusion and misinterpretation.


5


Tariffs

Designation of ports open for foreign trade

Role of regional government

These should be read with Chapter XI, which establishes the office of the Harbour Master and defines its powers and functions.

The Law is supplemented by various Government and Ministerial regulations issued to give effect to specific provisions. The principal regulations governing port institutions, their roles, functions and duties include:

Government Regulation No 61/2009 regarding port affairs;

Government Regulation No 62/2010 on the organization and working procedures of Port Management Units;

Government Regulation No 63/2010 on the organization and working procedures of Port Authorities;

Government Regulation No 64/2010 on the organization and working procedures of the Harbour Master’s Office; and

Government Regulation No 65/2010 on the organization and working procedures of the Batam Port Office.

2.2 NATIONAL PORT SYSTEM

The Law describes the national port system in Art 67 – 70. These provisions mainly contain statements on the desired role of the ports in Indonesia’s foreign and domestic trade and their functions within the overall transport system. As such, they have limited institutional or regulatory implications2 and are presumably intended largely as guidance to policy-makers and regulators in the preparation of the National Port Master Plan (see next section).

Art 70 categorizes Indonesia’s ports into two main types: marine ports; and river and lake ports. The former are placed in the hierarchy of (a) main (b) collector and (c) feeder ports and are defined in Art 1. Their main features are:

Main ports serve domestic and foreign trade, while collector and feeder ports are limited to domestic trade only;

2 By this we mean that the Law does not assign any institutional responsibility or regulatory

authority based on these provisions. In some countries, however, a hierarchy is sometimes done to distinguish ports that can be operated on a commercial basis from those that cannot be; usually in the former case these ports are national or regional commercial gateways while in the latter case ports serve as lifeline service ports, normally requiring subsidies to operate.



Main ports are deemed to handle large cargo volumes, while collector ports and feeder ports handle “medium” and “limited” volumes respectively3; and

All ports also serve as passenger ports and as nodes for inter-provincial ferry services.

The proposed hierarchy of ports is also relevant for the Law’s definition of port authorities (PAs) and port management units (PMUs). Art 81 introduces the concept of “commercial” and “non-commercial” ports, but unfortunately the Law does not define these terms. PAs are established in respect of the former and PMUs for the latter.

The usefulness of stipulating a hierarchy of ports in legislation is uncertain4. At present the Law only provides guidance on the designation of main ports in relation to foreign trade (Art 111), but these are largely self-evident criteria and in practice the decision is taken by the Minister (Art 111(5)). In fact, the whole legislative intent of the proposed port hierarchy as contained in the Law is unclear. This is apparent from the following:

A specific port type is not matched to any institutional structure. For example, there is no guidance that a main port is necessarily to be administered by a PA and a collector or feeder port by a PMU. Moreover, the Law’s provisions on ports serving foreign trade suggest that such a port may be either a commercial or a non-commercial port5.

The sphere or level of government responsible for a specific port type is not clear. Art 82 states that PAs are always formed by the central government represented by the Minister (of Transport). However, it appears that PMUs may be formed by either the central government or by a governor or regent/mayor. The Law is silent on how to determine whether a port falls under central or regional government authority6.

Lastly, it is unclear on what basis ports are to be classified as “commercial” or “non-commercial”. According to its standard definition, “commercial” implies “making or intended to make a profit”. In many ports, there may be examples of viable commercially and non-commercial investments rendering the basis of the classification meaningless. In developing the port master plan, it has been proposed that main ports will always be “commercial”, while a collector port may be either “commercial” or “non-commercial”. Finally, it is suggested that feeder ports will always be non-commercial in nature.

3 The Law also provides no guidance how cargo volumes are to be measured in order to be

categorized as “large”, “medium” or “limited”. 4 See Technical Report on the Development of the National Port Master Plan (“TR”), par 5.6.

5 See Art 111 which states that only “main ports” may be open to foreign trade; Art 150 of GR

61 indicates that the “main port organizer” (i.e. either a PA or a PMU) must apply to the Minister for foreign port status.

6 One way to achieve this is to add a schedule to the Law which lists all ports and matches them

to central government , local government or a regency / mayoralty.


7


Given the lack of guidance in the Law, further criteria to classify ports have been developed as part of the development of the National Port Master Plan7. These criteria provide technical guidance, but they have no binding effect without legislative backing.

2.3 PORT MASTER PLANNING

2.3.1 National Port Master Plan

The provisions of the Law governing port planning are set forth in Arts 71 – 78. A National Port Master Plan (NPMP) must be prepared based on a 20 year planning horizon. It is intended as a guideline on port location, construction, operation and development. The NPMP must contain the (a) national ports policy, (b) port location plans, and (c) a designation of the hierarchy of ports8. Art 71 further stipulates that the preparation of the NPMP must be guided by national, provincial and local spatial layout plans and driven by socio-economic priorities, the natural resource potential of the country and individual regions and strategic environmental considerations (national and international) (Art 71 (2) d).

The GOI has issued further guidance on the preparation of port location plans in regulations (Government Regulation No. 61 of 2009 on Port Affairs, hereinafter cited as GR 61). Separate criteria are stipulated for main, collector, feeder and river/lake ports. These criteria relate mainly to issues such as geographic proximity to markets, availability of shipping services, and topography.

While not stated explicitly, the NPMP must encompass both existing ports and new (planned) ports. With regard to the latter, the proposed port location must be approved by the Minister. GR 61 further stipulates:

A procedure to be followed in approving the location of ports. Approval is granted by the Minister acting on an application from “the Government9” or a regional government; and

The information and data to be provided to the Minister to motivate the application (GR 61 Art 18).

2.3.2 Individual Port Master Plans

In practice, each port is required to have its own port master plan which must include a land and a sea area allotment plan. Individual plans are to be prepared within the

7 See TR par 5.5

8 As stated in the previous section, the hierarchy of ports described in Art 70 is presumably intended to guide policy-makers in preparing the NPMP.

9 Presumably this refers to the DGST or another government department wishing to construct a port.



framework stipulated by the NPMP (Art 71(1)). The former must specify (a) main facilities such as wharves, terminals and warehouses and (b) supporting facilities such as road and rail services, utilities and accommodation. The sea area allotment plan must also specify main “facilities” such as channels and basins and supporting “facilities” such as waters allocated for long term development, shipping trials and abandoned ships.

Feeder port plans are approved by the Governor (regional feeder ports) or the regent/mayor (local feeder ports and river/lake ports)10. The development of port master plans should be coordinated with national, province, and regency/city spatial layout plans (Art 73(2)), and the Minister (Art 76(1)(a) or the Governor, Regent/Mayor (Art 76(1)(b) and Art 76(2), as appropriate, are to approve the plans based on conformity to these spatial layout plans, as recommended by the relevant governors, regents, and mayors (Art 76(1)(a)).

Each port master plan must also be accompanied by a description of the “port working area” and “port interest area”. The port working area is to be defined based on geographic co-ordinates and largely overlaps with the areas taken up by the main and supporting facilities described in the land and sea area allotment plan11. The port interest area appears to refer to land and sea areas on the outer limits of the port which may be developed to become part of the port complex. The definition of both these areas requires the approval of the Minister for main and collector ports and the governor or regent/mayor for feeder ports (Art 76).

There is no express provision in the Law or GR 61 relating to the inclusion of special terminals or own interest terminals in a port master plan. As own interest terminals fall within the port working area, it seems implied that they are part of the “main facilities” that should be referenced in the plan. In practice, operators of own interest terminals – as PBEs – would need to define their needs and interests to ensure that PAs (or PMUs) accurately reflect these in the plan. Special terminals fall outside the port working area and interest area which would suggest that they do not need to be taken into account during the preparation of port master plans. However, Art 103 states that special terminals are “stipulated as part of the nearest port”. This phrase is not clarified further, but could be interpreted as meaning that they are part of the nearest port for planning purposes.12 This conclusion is strengthened by the fact that when a

10

This provision implicitly suggests that main and collector ports fall under central government and feeder ports under regional governments. However, there is no explicit statement to this effect in the Law. See previous discussion on “National Port System”.

11 In fact, the drafters of the Law appear to have confused a port infrastructure and facilities plan (the so-called land and sea area allotment plan) and a definition or description of port limits (or boundaries) which accords with the port working area and port interest area. These provisions of the Law would benefit from review to clarify these terms.

12 In fact, from a planning point of view, special terminals should be considered in determining physical capacity requirements. The law implicitly recognizes this, as special terminals can only be built if the nearest port cannot accommodate the cargo to be handled by the Terminal or the Special Terminal is shown to be more effective than any facilities available in the port (Art 111(a) and (b)).


9


special terminal is converted to a port this may only occur if it conforms to the NPMP (Art 107).

The preparation of an NPMP and individual port master plans was not previously required under Indonesian law13, although it is an established feature of the port landscape, especially in the large ports. At present there is no recognition in the Law that there are numerous existing port master plans which have been variously prepared by the Pelindos and other government agencies. A further relevant issue is the time scale for the preparation of individual port master plans and the NPMP. Given the size of Indonesia’s port sector, this is a massive undertaking. It would, therefore, be better if the Law had introduced a phased process to progressively build the NPMP starting with the priority (or “strategic”) ports.

Separately, the institutional capacity to prepare master plans is a critical issue. The NPMP is to be issued by the Minister as a ministerial regulation. The Law allocates no specific responsibility in this regard, but it is implicit that the preparation of the NPMP is the task of the DGST14. In turn, individual port master plans must be prepared by PAs and PMUs.

2.4 INSTITUTIONAL FRAMEWORKS/PARTICIPANTS IN THE PORT SYSTEM

Arts 79 – 95 set out an institutional framework for Indonesia’s port system. The key participants in the port system are identified as: (a) port operators (PAs or PMUs), and (b) Port Business Entities (PBEs). The Law defines “port business entities” as entities undertaking the business of exploiting a terminal or other port facilities. The Law also defines “business entities”. These are described as state-owned business entities (such as the Pelindos), regionally-owned business entities and “Indonesian” business entities15.

As mentioned earlier, PAs are formed by the Minister for commercial ports. The Minister also sets up PMUs for non-commercial ports under central government

13

See Law No 21 of 1992 on Maritime Transportation (now repealed). 14

In order to coordinate and manage the implementation of the plan, one proposal is that a secretariat be formed in the MoT headed by the senior officer reporting to the Director-General (see TR 8.2.1).

15 The reference to “Indonesian” business entities appears to be an oblique reference to the so-called “negative investment list”, whereby foreign capital ownership in a range of port-related business activities may not exceed 49 percent . The business activities include: container transportation, general cargo transportation, dangerous cargo transportation, special cargo transportation, domestic sea transportation, river and lake transport, port facilities such as pier buildings, container holding terminals, liquid bulk terminals, dry bulk terminals, Ro-Ro terminals, port facilities such as waste storage, salvage services and or underwater work, and terminal support services (see Presidential Regulation No. 36 of 2010).



control. Governors or regents/mayors set up PMUs for regional ports. Both entities are described as being staffed by “state civil servants”16.

The functions assigned to PAs and PMUs are virtually identical. Both are required to (a) provide and maintain breakwaters, port basins, shipping channels and road networks, (b) aids to navigation, (c) ensure port order and security, (d) ensure and maintain the preservation of the environment, (e) compile port master plans (and define the port working area and port interest area), and (f) ensure the smooth flow of goods.

Functions exclusively assigned to PAs are: (a) to provide land and water areas for the port, (b) regulate and supervise the use of port land and water areas, (c) supervise the port working area and port interest area, (d) regulate pilotage, and (e) stipulate standards of operational performance of port services. The only function exclusively assigned to PMUs is “to provide port facilities”. While not included in the list of functions, both PAs and PMUs are also required to “act as Government representatives to provide concessions and other forms (sic) to PBEs to carry out exploitation activities in ports” (Art 82(4)).

The features of the institutional framework for ports that require further analysis are:

The legal status of PAs and PMUs;

Institutional structure of PAs and PMUs;

The proposed landlord role of PAs and PMUs and the relationship with the Pelindos;

Functions assigned and not assigned to PAs and PMUs;

The relationship between PAs, PMUs and the MoT.

2.4.1 Legal Status of Port Authorities and Port Management Units

The Law declares PAs to be government agencies (Art 1(26)), but no such declaration is made for PMUs, and the Law does not expressly define where PAs and PMUs are positioned in the government (e.g. specifically within the MOT). The statement that they are to be staffed by civil servants appears to have been interpreted to mean that PAs and PMUs are to remain part of the MoT structure. In practice, this has led to the creation of PAs and PMUs as “technical executing units” under the MoT. Technical executing units answer to the MoT through the DGST. They are funded through government appropriations based on budgets approved by the Minister. They do not retain any of their revenues which must be paid over to the GoI as “non tax revenue”. Technical executing units have a standard organizational structure governed by

16

Effect has been given to this provision by establishing PAs and PMUs as technical executing units under the MoT.


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regulations issued by the Ministry of State Administrative Reform (MENPAN)17. Amongst others, the MENPAN regulations:

Prescribe the ranks (seniority) of the principal officers leading and managing the port authorities (and PMUs);

Prescribe a basic organization structure consisting of a maximum of 2 divisions. These divisions may be supplemented by an administrative/secretarial department.

2.4.2 Institutional Structure of Port Authorities and Port Management Units

Based on the MENPAN regulations, all 4 port authorities set up to date have the same organizational structure18. Each port authority is headed by an official classified in echelon II.b (Director) supported by a senior management comprising 3 officials in echelon III b and 9 officials in echelon IV.b. For example, Port Authority II (which is responsible amongst others for Tanjung Priok) has a total staffing of 136 officials. The DGST is, however, planning to ultimately establish 96 port authorities which will be divided into 5 classes depending on the size, commercial and strategic relevance of the port and other factors19. Government Regulation 62/2010 also prescribes the basic organizational structure of the port authority, as shown in Figure 2-1.

17

Ministerial Regulation No Per/18/MPAN/11/2008. 18

PA I (Belawan), PA II (Tanjung Priok), PA III (Tanjung Perak), and PA IV (Makassar). 19

DGST’s proposes to establish 9 class 1 authorities, 15 class 2 authorities, 16 class 3 authorities, 16 class 4 authorities and 40 class 5 authorities.



Figure 2-1: Port Authority Structure

Figure 2-2: Structure of Port Management Units (1st Class)

The 186 Port Management Units are classified in three classes (first, second and third class) and their organizational structure differs accordingly. There are 5 units in the first class, 20 in the second class and 161 in the third class. First class units are headed


13


by an official in echelon IV.b.20 Second class units are headed by a class IV.a official and third class units by a class IV.b official. The organizational structure of the Port Management Units prescribed by Government Regulation No 62/2010 is presented in Figure 2-2 (2nd and 3rd class units have a more simplified structure).

By adopting the technical unit structure for PAs and PMUs, their organizational structure has been pre-determined without reference to the functions they must perform nor to the operational and physical environments in which the port operate. This approach runs contrary to accepted good practice in institutional design. As we discuss elsewhere, as presently conceived Indonesia’s port authorities lack many of the critical features that characterize successful landlord ports worldwide21. In initiating these institutional reforms, the GoI has not only foregone the opportunity to adopt international good practice, but has selected an organizational form which provides minimal flexibility in terms of structuring PAs and PMUs so that they can perform effectively.

It is an accepted tenet of institutional design that “form” follows or comes after “function”. This implies that an organizational structure is developed only after the functions that the organization is to perform has been decided. In Indonesia’s case, this approach was not followed, but an “off the shelf” structure was chosen which serves as a template for a variety of government agencies across all sectors.

2.4.3 Proposed Landlord Role of Port Authorities and Port Management Units and the Relationship with Pelindos

The term “landlord port authority” does not occur in the Law. There is an implicit assumption that PAs and PMUs will assume this role by virtue of Art 82(4), which requires PAs and PMUs to represent the GoI in granting concessions to PBEs to undertake “exploitation activities”. Exploitation activities are defined in Art 90(1). They include many of the port operations typically undertaken by private firms under concessions or licensing arrangements22.

The Law fails to address a number of issues critical to the performance of a landlord role:

20

This information is based on the English translation of the MENPAN document. However, it is presumed to be incorrect as this would imply that an official of lower rank heads a class 1 unit compared to a class 2 unit. The correct designation is probably a class III,b official.

21 Such as managerial and financial autonomy, private sector-led boards and market-driven compensation schemes and employment conditions.

22 E.g. stevedoring, container terminal services, mooring, bunkering, etc.



Provisions regarding the land rights of PAs and PMUs are vague. PAs have a duty to “provide land areas for the port”, but the law fails to indicate how they are to acquire such rights in the first place23.

The Law contains no transitional provisions relating to port land presently under the control of other state entities such as Pelindos. Most valuable port land is under Pelindo control. The Law provides no guidance on the future status of such land.

Provisions in GR 61 suggest that while the eradication of monopolies is an objective24, the monopolies of the Pelindos are preserved. Art 344(3) retains the right of Pelindos to continue “exploitation activities”, which entails providing port- and port-related services.

There is no express duty imposed on PAs or PMUs to advance a concession program (and other forms of private sector participation) within a specific timeframe. The Law could be interpreted as allowing an individual authority the discretion whether or not to grant specific concessions. Lastly, the Law does not resolve conflicts between the landlord role of PAs and similar landlord functions performed by Pelindos under their founding legislation.

The problem of land ownership is recognized25 and the DGST has elaborated four options to resolve it. These are: (a) The purchase of land rights by PAs, (b) a revision of the Law, (c) Reform of the Pelindo with support from the MSOE, or (d) an exchange of land rights for the right of Pelindos to act as concessionaires. Each option has pros or cons. Option (a) has been described as impractical in view of the expense26, while options (a), (c) and (d) all require the co-operation of the Pelindos and the MSOE whose support is uncertain. An amendment of the law (Option B) provides the greatest clarity and legal certainty, but may take a long time to achieve and face various political hurdles.

One reading of the Law, however, would suggest the PAs and PMUs are assigned land management rights in the same manner the Pelindos originally received them, without regard for land ownership. The Pelindos were established in 1991 by Government Regulations No. 56, 57, 58, and 59 as limited companies owned by the government. These regulations were intended to change the status of port entities, which had been established as Public Port Companies (Perusahaan Umum Pelabuhan) under prior law, when they had been referred to as Perumpels. Shipping Law No. 21 of 1992 stated in part that the management of state ports could be delegated to state owned

23

Art 85 states that PAs and PMUs have rights to the management of land and utilization of waters “in accordance with the provision of statutory regulations”. This statement is essentially meaningless.

24 The Elucidation of GR 61 indicates the following: The enactment of Law 17 of 2008 calls for “. . . regulation of port affairs including provision of monopolistic eradication. . .”

25 See TR par 7.5.

26 Although the counter argument is that a transaction may effectively be self-financing as the funds to purchase land would be provided by the GoI which would receive the monies back by way of revenues earned by Pelindos and paid to the GoI as dividends.


15


enterprises that are established for the purpose of providing port services (Art 26(1)). This was followed by Government Regulation No. 69 of 2001, which further addressed the status, role, and function of the Pelindos. The regulation in part gave the authority to the Pelindos to manage the land and water areas of the port (Art 19) and to provide land for building and storage, roads and bridges, parking areas, cargo handling terminals, among others (Art 37(2)).

Based on the above, land ownership was never assigned to the Pelindos. Lands were entrusted to them to manage and use. This authority was then given to the Port Authorities (and Port Management Units) by virtue of Shipping Law No. 17 of 2008, which grants Port Authorities the right to provide land and water areas for the port (Art 83(1)(a)); regulate and supervise the use of port land and water areas (Art 84(a)); supervise the use of port Work and Interest Environment Areas (Art 84(b); manage land and utilization of waters in accordance with statutory regulations (Art 85); and prepare Port Master Plans and Port Work and Interest Environment Areas (Art 83(1)(f)). These rights do not conflict even with Shipping Law 17’s Article 344, which retains the right of the Pelindos to continue exploitation activities (Art 344(3)). Recall that exploitation is defined in Shipping Law 17 as providing port and port-related services (Art 90(1)). Though the language would seem to indicate that Port Authorities have the clear right to manage lands, undoubtedly those who disagree would point to GR 61, where land management rights are granted to government, regional governments, or state-owned enterprises (Art 1(27)).27

Irrespective of the landownership option chosen, a further constraint is that the exact boundaries of port land and of registered rights in such land is not known. State agencies have not always been required to register their land titles. Such titles may be held by Pelindos, other state-owned corporations, local and regional governments and private individuals or firms. A comprehensive register of port land, its classification and associated ownership or use rights is needed. This need has been recognized in GR 61, which provides for a transitional period of three years, which is intended to assist government to undertake an evaluation and audit of Pelindo assets. Thereafter, GR 61 requires that such activities must be “adjusted” to be aligned with the new regime. However, it appears that little or no progress has been made during the transitional period to audit and evaluate the Pelindo’s assets.

2.4.4 Functions Assigned (and Not-Assigned) to PAs and PMUs

The Law does not assign the full spectrum of functions normally associated with landlord port authorities to PAs and PMUs. Moreover, the scope of the functions for which they are responsible is not always clear. This creates some confusion as to the

27

As if to complicate matters further, the Transport Minister recently issued a letter (No. Hk 003/1/1 Phb/2011 of 6 May 2011) informing all of the Pelindos that they retain the right to manage the land area of the port, contradicting Shipping Law 17’s provision that Port Authorities shall manage land and utilization of waters in accordance with statutory regulations (Art 85).



roles and inter-relationships between PAs (and PMUs), the MoT and harbour masters (also see discussion on Harbour Masters below). It also leaves open the question of the extent of the residual authority which the GoI will continue to exercise over the ports sector.

Functions associated with landlord authorities which have not been expressly assigned to PAs and PMUs include port marketing and promotion and oversight of concessionaires (and other private sector service providers)28. Other ancillary functions which many port authorities perform include: managing a port performance database, promoting research and development and collaborating with educational institutions, and managing human resource development programs. The role of the PA (or PMU) to act as default port operator and service provider is also implied rather than expressly stated.29

2.4.5 The Relationship between PAs, PMUs and the MoT

Hierarchically, PAs answer to the Minister, while PMUs answer either to the Minister or a regional or local government. The Minister manages this relationship through the DGST of the MoT. Notwithstanding the functions entrusted to PAs and PMUs, it appears that the Minister – acting through the DGST – retains significant executive authority over day-to-day port operations30. Within the DGST, this authority is exercised primarily through the Directorate of Ports and Dredging (DPD). In terms of current legislation31, the DPD is responsible for:

Formulating government policy on ports and dredging;

Formulating technical and administrative guidance and directions on how PAs and PMUs are to perform their functions;

Assisting in resolving problems encountered in the port system;

Evaluating individual port master plans;

Issuing approvals and licenses for the location of new ports, port construction, port operation, special terminals (outside the port interest area) and own-account terminals (within port working areas); and

28

It could be argued that this function is implicit in the role of PAs (and PMUs) to “represent the GoI in providing concessions” and in stipulating ‘standards for port services”. However, it is clearly preferable for this function to be explicitly imposed, as it underlines the need for ongoing supervision and monitoring of port productivity, investment levels, etc by the PA.

29 Art 110 indicates the possibility that PAs may operate facilities or provide services by according them the right to set tariffs for such facilities and services in consultation with the Minister. Further, Art 83(2) compels the PAs to perform provide services not yet provided by PBEs.

30 This finding underscores the earlier conclusion that the PAs and PMUs lack the managerial autonomy typically associated with port authorities elsewhere.

31 Decision of the Minister of Transport on the organization of the DGST (in Indonesian).


17


Assessing port tariffs.

In addition to the above, it can be assumed that the DPD will also fulfill the following functions (this is inferred from the fact that they are functions assigned to the Minister which the DPD will assist in executing):

Licensing of PBEs in main and collector ports32; and

Approval of concessioning plans, supervision of bid procedures, approval of shortlisted bidders, supervision of contract negotiations and approval of concessioning contracts33.

The ministerial regulations governing the organization of the MoT (and DGST) have not been updated since the adoption of the regulations establishing the PAs and PMUs. There is a need to review the former to ensure that they are aligned to reflect the assumption of certain functions by PAs (and PMUs). As part of this process, it is necessary to reflect on how the relationship between the MoT (and more particularly the DGST and DPD) and the PAs and PMUs is to be structured.

2.5 PORT CONSTRUCTION

Construction of main and collector ports is regulated and may only occur under license issued by the Minister (Art 96(1) of the Law and GR 61 Art 80) and in accordance with the NPMP and the individual port master plan (GR 61 Art 79). Similar requirements apply to feeder ports (licensed by the Governor) and local feeder ports and river and lake ports (licensed by the regent/mayor)( Art 96(1) and 98 of the Law and GR Art 80 and 81). As discussed in the previous section, the application for a license will in practice be evaluated by the DPD who will submit a recommendation to the Minister (although as also suggested in the previous section one would logically expect that the PA would play a role in reviewing the license application and submitting a recommendation on approval or rejection).

Regulations further specify the preconditions to be met prior to a license application being submitted. These include (a) a feasibility study (covering technical as well as financial/economic feasibility), (b) technical design (GR 61 Art 82), and an environmental impact assessment (GR 61 Art 83). The regulating authority (Minister, governor, regent/mayor) must review and assess the application within 30 working

32

And by the governor for regional feeder ports and the regent/mayor for local feeder ports (Art 71(2) of GR 61).

33This conclusion is based on the wording of the Law which states that PAs and PMUs act as “Government representatives” in granting concessions. This implies they have no original authority and may act only within the bounds of the mandate given them by Government.



days. Construction must be completed no longer than 2 years after the license is issued (GR 61 Art 87(3))34.

Responsibility for construction rests with a PA in the case of a commercial port and a PMU in the case of a non-commercial port (GR 61 Art 87). However, construction can also be undertaken by a PBE in terms of a concession agreement or other grant of rights.

The Law’s provisions on construction appear to refer only to the construction of new ports. Art 96 refers to the “construction of sea ports”, but does not mention expansion or redevelopment of existing ports. It appears that this oversight has been recognized and there is an attempt to rectify it as GR 61 includes a section on “port development” (GR 61 Art 89 – 93). The Law itself contains no reference to the latter.

According to GR 61, “port development” must undergo a similar approval and licensing process as “construction of sea ports”. Once again, the regulations provide no definition of what is to be understood under “port development”. Nor do the regulations contain provisions on implementing port development, unlike the provisions on construction which assign responsibility to PAs, PMUs or PBEs.

The existing legislation governing port construction and development contains several gaps. The following deficiencies must be noted:

While it is a legal requirement that port construction must occur based on the NPMP and individual plans, there is no requirement for regional and local governments to consult the central government in granting licenses for port construction and port development (though as earlier noted local government approval of master plans is required). Unless the NPMP contains very clear and robust directions on the future development of new ports, there is a potential for haphazard expansion of the port system. It is possible, for example, that regional or local governments may permit port developments which are driven by local political and other considerations that conflict with national needs. The question then arises whether central government can, for example, veto a decision by a regional or local government to approve the construction of a new port or expansion of an existing one. To avoid a conflict scenario, additional institutional mechanisms must be introduced, preferably anchored in legislation, to enforce prior consultations between levels of government and to resolve differences of opinion that may arise.

The approval process is premised on the existence of an NPMP and individual port master plans. However, it is clear that the development of port master plans for all ports may take several years. The law is unclear how port construction and development is to be guided where no approved master plan exists.

34

The English translation states that construction must be “implemented” within 2 years. This

could also be interpreted to mean “must have commenced”.


19


The Law does not refer to any port construction or development which is currently underway. The question arises whether such initiatives are deemed to be licensed or whether PAs and PMUs must apply for approvals and licenses after the fact.

The law is also silent regarding any construction or development currently being undertaken by Pelindos. The Law contains no direct reference to the Pelindos, apart from an indirect reference that PBEs may undertake construction “based on a concession or other rights” granted by a PA (GR 61 Art 87(2)). The similar question therefore arises whether such developments are deemed to be licensed or whether Pelindos must now apply for approvals through PAs. If so, the further question is whether PAs are then, in turn, required to apply for licenses from the Minister.

Lastly, it is worthwhile noting that the requirement for a PA or PMU to obtain a license to construct or develop a port is unusual given that they are units within the MoT and enjoy no real managerial autonomy. It is hard to imagine that a PA will embark on new port construction without consulting the MoT. Investment in port development such as infrastructure will be treated in the same way. In practice, there will be ongoing and in-depth planning and consultation between the DPD and a PA during the entire process before construction starts and after it is completed. Against this background, the additional requirement of a license appears to be a bureaucratic measure with little regulatory value.

2.6 PORT OPERATION

Once port construction is completed, a further license is required before such port may enter into operation. The responsibility for operational licenses is allocated in the same way as construction/development licenses.

The government regulations list the various requirements that must be met in the license application (GR 61 Art 94(3)). Based on this list, it appears that only new ports need an operational license, as one requirement is that the port construction must have been implemented according to the terms of the construction license.

The provisions governing operations licenses suffer from similar defects to those relating to port construction and development. An important oversight is that there are no transitional provisions relating to existing ports. It is, therefore, not clear whether existing ports are deemed to be licensed or need to undergo a new licensing procedure. In the latter case, it would also be necessary to specify a transitional period within which existing ports are required to obtain such a license.

The list of requirements for a license suggests that the main aim is to ensure that the port is (a) operated safely and securely, (b) has operational systems and procedures in place, and (c) is staffed by suitably trained personnel. In reality, a license is no guarantee that these conditions will persist in a port. At best it confirms that, at the time the license was issued, these conditions were met. There are no provisions



governing a suspension or withdrawal of licenses. As a regulatory instrument, they are likely to have little practical effect35. Having said this, Port Authorities are charged with regulating the use of port lands and water areas and setting operational performance standards (Art 84 of the Law). According to GR 61, this means they have the responsibility for establishing operational rules governing port operations and harbour areas in their jurisdictions (Art 62). Both Port Authorities and Port Management Units are also required to arrange systems and procedures in accord with the Minister’s guidelines (Art 62(a)) and maintain smoothness and orderliness of vessel and cargo services (Art 62(b)). Therefore, the terms for issuing the license, at least as they relate to private sector operation of ports or terminals, could be incorporated as part of the operational regulations, though the Law and GR 61 is silent on sanctions imposed for failing to adhere to operational regulations.

For the reasons discussed in the previous section, the requirement for PAs and PMUs to obtain an operational license from the MoT can also be regarded as unusual. The MoT has a duty to ensure that PAs comply with minimum standards, especially where the public interest is affected. But the whole aim of setting up a port authority is to create an agency which has the mission and commercial incentive to ensure that ports operate efficiently and safely. Requiring a license for PAs or PMUs is unlikely to advance this objective.

2.7 SPECIAL TERMINALS AND OWN-INTEREST TERMINALS

The Law allows the construction of special terminals (Art 102(1)), which are defined as terminals serving their own business located outside the port working area or port interest area of a specific port (Art 1(21)). A separate category of own interest terminals, which are located within the port working area and port interest area, are also permitted (Art 102 (2)). Special terminals can be managed by central, provincial or local government or as a private business (GR 61 Art 113).

According to the Law, a special terminal is “stipulated as part of the nearest port” (Art 103(a)). This suggests that the special terminal falls under the jurisdiction of the PA or PMU in charge of the nearest port. However, this interpretation is contradicted by Art 107, which prescribes how the status of a special terminal is changed to a port. When this occurs, the relevant PA or PMU assumes responsibility for the port land and water areas, breakwaters, port basin, channels, and aids to navigation. The special terminal operator is held responsible for the port land and water areas, breakwaters, port basin, channels, and aids to navigation until the port is “handed over to the Government” (Art 107).

A special terminal may only be built and operated under license issued by the Minister, which is issued for a maximum period of 5 years, though it can be extended (Art 104(3)

35

Art 104 provides that Ministerial regulations may be issued governing the licensing procedure. Presumably, such regulations could rectify these omissions.


21


of the Law). There is no reference to any role played by the relevant PA or PMU in assessing or advising the Minister with regard to a permit application. License requirements are stipulated in GR 61. The Law only addresses the situation in respect of new special terminals. In practice, two licenses are required, one for construction and the second for the terminal to enter into operation36.

Special Terminals are not permitted to handle third-party cargoes except in emergencies and with a permit issued by the Minister (Art 105 of the Law). Additionally, a Special Terminal can only be built if the nearest port cannot accommodate the cargo to be handled by the Terminal or the Special Terminal is shown to be more effective than any facilities available in the port (Art 111(a) and (b)).37 Even if a Special Terminal met these requirements, one has to wonder if the private sector would even take the investment risk; a license for a Special Terminal is granted for only 5 years (Art 122). Though the license can be extended (Art 104(3)), according to GR 61, it is only extended if it meets the requirements elsewhere in the Regulation; this may refer to the port have insufficient capacity38 or is operating inefficiently and ineffectively (GR 61 Art 122(1) and GR 61 Art 111(a) and (b))39. So if the port expands capacity or becomes more effective and efficient, then the Special Terminal’s license would not be extended.

A special terminal can convert its status to a “port”. This implies that it can handle non-proprietary cargoes. A conversion is only possible if a number of requirements are met (Art 107):

Compliance with the NPMP;

Economic feasibility;

Technically operational;

A PBE has been formed to operate the terminal;

36

It is worth noting that the licensing requirements in Art 117 (3) of GR 61 assume that the special terminal operator is always a private entity as it requires the submission of proof of incorporation, tax payer registration, and a business license. The licensing requirements do not cover a scenario where a government entity manages the terminal as foreseen in Art 113.

37 Presumably, available capacity in a port would be provided by a private sector operator, a Pelindo, or a joint venture operation of both. Thus, this requirement only serves to increase the market dominance of the other operators.

38 Capacity, or the determination of capacity, is not defined in the law. Obviously, developing a new terminal when capacity in existing ones is already at 100 percent means that it is already too late to begin planning and development of additional capacity. A trigger mechanism should be developed that is related to projected demand, current berth utilization, and the terminal’s operational configuration.

39 The determination of whether a terminal is efficient or effective is not defined, but should likely be related to the performance standards established by the Port Authorities or Port Management Units. As noted earlier, Port Authorities and Port Management Units are responsible for setting operational performance standards, as provided in Shipping Law 17 of 2008 (Art 84).



The PA has granted a concession;

Compliance with safety and security standards; and

Compliance with environment standards.

The provisions of the Law (and GR 61) appear to only address the construction of new special terminals. There is no recognition that several such terminals currently exist. The Law does not state whether their existing licenses are deemed to remain in force or whether they are required to re-apply for licenses within a certain time period.

As noted above, there is also a gap in the licensing requirements, which refer only to private business entities as special terminal operators, despite the fact that government entities are also permitted to operate such terminals.

As noted in earlier reports40, the Law appears to suggest that special terminals are a mechanism whereby greater competition can be induced in Indonesia’s port system. However, several restrictive and inflexible provisions are likely to discourage private investors from investing in special terminals. These include:

The short validity period of a special terminal permit. As earlier suggested, five years is too short for investors to recoup investments of this magnitude, especially given the risk that a permit may not be renewed (for whatever reason). This risk is exacerbated by the fact that the legislation does not stipulate the specific grounds permits will not be renewed or provide for a transparent review procedure.

The ban on handling non-proprietary cargoes.

Large up-front investment in planning and preparation costs to obtain a construction license. The potential investor is required to invest in preparing engineering drawings for both land and water side facilities, construction plans, an environmental impact assessment and related documents without any guarantee that the license application will be favorably considered.

Inflexible provisions governing construction. Art 119 (GR 61) obliges the special terminal operator to complete construction no longer than one year after the license is issued. This may well not be feasible in the case of many terminals.

Constraints on operational flexibility. The operator must seek the Minister’s approval to embark on 24 hour operations (GR 61 Art 126).

Proprietary cargo handling is authorized for Own Interest Terminals (GR 61 Art 139(1)), but cargo handling can be extended to third party cargoes only after obtaining a concession from the Port Authority or Port Management Unit (GR 61 Art 140(1)). But the concession cannot be awarded unless it is shown additional capacity is needed (GR

40

Indonesia Infrastructure Initiative (INDII), Port Authority and Port Management Unit Scoping Study: Policy and Procedures Report, Nathan Associates Inc., May 2011.


23


61 Art 140(2)(a)), among other requirements. However, this avenue could be a solution to enhancing competition as long as the Law regarding Pelindo jurisdiction is clarified.41

2.8 TARIFFS

Art 109 and 110 of the Law deal with port tariffs. These provisions are accompanied with various articles in GR 61 regarding the approvals and setting of port tariffs. Under the Law, each PA determines its tariff in consultation with the Minister (Art 110(1) and GR 61 Art 42(2)(g).42 Tariffs for government-managed non-commercial ports are determined by government regulation (GR 61 Art 147(3)), while tariffs of ports under provincial governments or regents/mayors are determined by the regional authority (Art 110(4)).

Surprisingly, Port Business Entities set their own tariffs as long as they comply with the type, structure, and category of tariff (e.g. not tariff levels) determined by the government (Art 110(2) and GR 61 Art 147(2)). This suggests that even monopoly operators, including the Pelindos (which are Port Business Entities as defined in the Law), have the ability to set their own tariffs.

The current provisions of the Law (and GR 61) relating to tariffs are rudimentary. The Law does not provide any policy guidance with regard to tariff policy or tariff setting. This is illustrated by the following:

Given the scale of Indonesia’s port system, port pricing (and differences in port prices) can significantly impact market developments. There is no indication whether the GOI intends to pursue a policy of competitive neutrality between ports or whether it will permit variations in port tariffs so as to encourage traffic diversion (say to outlying ports or underdeveloped areas).

The MoT potentially faces a difficult task to review and approve tariffs for each of the Port Authorities and non-commercial ports under government control. Port Authority and PMU costs are unique to the conditions of each of the ports. The costs and extent of channel maintenance, navigation aids, maintenance requirements of common use areas, and personnel requirements are all unique to each port and therefore imply different tariff levels, all of which need to be assessed by the Ministry. The cost structures of Port Business Entities are even more complex given the scope and scale of activity in which they are engaged. If

41

The position of the Pelindos on this issue is perhaps characterized by one Pelindo principal’s

comment, in referring to the plan for a new terminal, that competition can be accomplished if

terminals compete only on the basis of service, as opposed to both cost and service. In fact,

competing on only one or the other does not promote competition and attempts to justify

monopoly pricing. Additionally, by definition, a monopoly operator has monopoly control over

information provided to regulators. Applications for tariff increases can be justified on the basis

of information provided by the operator, but regulators are hard-pressed to determine the

accuracy of the information provided. 42

According to interviews, “consultation” really means approval by the Ministry.



Indonesia does not apply a strategy of enhanced competition, then it will be necessary to employ a much more complex undertaking of tariff setting, assuming the monopoly Port Business Entities (Pelindos) are pulled within the tariff regulation fold.

Enhancing competition would allow the MoT to apply less intrusive regulation -- such as tariff filing and monitoring -- and avoid the more burdensome task of tariff determination43, thereby freeing resources within the MoT to focus on the more complex task of regulating tariffs where there are no options for introducing competition and hence there is a real threat of anticompetitive pricing.

2.9 DESIGNATION OF PORTS OPEN FOR FOREIGN TRADE

The Law deals with the designation of ports and special terminals open for foreign trade in Art 149 – 153. Foreign port status is granted by the Minister acting on an application of the PA or PMU44. The Law lists the requirements that a port must meet. First, the Minister is required to consider broader economic and strategic issues such as the port’s role in national economic development, its geographical position, and role in the national port hierarchy (Art 149(2)). Once an application is made, the Minister must be satisfied that the port is economically and technically suited to handle foreign trade and meets ship safety and security requirements. An important related requirement is that there must be adequate facilities for customs, immigration and quarantine (plant and animal health).

GR 61 reiterates these requirements and provides further guidance on the procedure to be followed. The Minister is required to conduct an assessment of the port within 30 days after having received an application.

The need for a procedure to designate foreign trade ports is not clear. Worldwide, the tendency is to permit ports to handle foreign cargoes provided they meet international security standards (ISPS) and are served by government customs, immigration and quarantine facilities. The decision is a practical one, rather than one depending on formal bureaucratic “approval”. It is also a business imperative for shipping lines that a port be ISPS compliant. Irrespective of how a port is designated by government, shipping lines will – as a rule – not provide an international service unless a port meets ISPS standards.

43

The World Bank’s Port Reform Toolkit’s Regulatory Module shows that only in the rarest circumstances would tariff setting be required. See Module 6 Port Regulation, p. 22 (Box 11) at this link:http://siteresources.worldbank.org/INTPRAL/Resources/338897-1164990391106/06_TOOLKIT_Module6.pdf

44 Art 150 read with Art 152 of GR 61 suggest that both a commercial and non-commercial port

may be open to foreign trade.

http://siteresources.worldbank.org/INTPRAL/Resources/338897-1164990391106/06_TOOLKIT_Module6.pdf

http://siteresources.worldbank.org/INTPRAL/Resources/338897-1164990391106/06_TOOLKIT_Module6.pdf


25


2.10 ROLE OF REGIONAL GOVERNMENTS

Arts 114 – 115 of the Law elaborate the role of regional governments in the port system. Elsewhere in the Law, regional governments are given a strong role in relation to ports, including appointing PMUs and approving individual port master plans. This strong role is not reflected in Arts 114 – 115, which is concerned with ancillary activities that regional governments may undertake in order to secure economic benefits from port activities. Hence, it is envisaged that regional governments will develop trade and industrial zones, provide and maintain infrastructure connecting such zones to ports, and provide construction permits for buildings on port land. Regional governments also have a duty to assist in controlling and preserving the environment in and around ports and to participate in ensuring port safety and security. As noted above, this is also a function of PAs and the Harbour Master and one that will have to be carefully coordinated to avoid overlaps in jurisdiction.

2.11 HARBOUR MASTER

Art 207 creates the office of the Harbour Master, who is given wide authority to supervise safety and security in relation to both shipping and port affairs. Institutionally, the Harbour Master’s Office has the same status as a PA, namely as a “technical executing unit” under the DGST. Since the adoption of the work and organization procedures of harbour master offices in terms of Ministerial Regulation No. 64 of 2010, there are now 100 such offices in 5 classes. It is noteworthy that the principal offices for large ports such as Tanjung Priok are headed by officers with higher seniority than the heads of the port authorities45.

Harbour Masters are appointed as the most senior authority in the port responsible for coordinating customs, immigration, quarantine and “other government activities” (Art 211(1)). While the functions of the Harbour Master are mostly safety-related, the Law indicates they also touch on PA (and PMU) functions in several areas; for example:

Harbour Masters are responsible for “supervising pilotage”, while PA (and PMUS) must provide pilotage services and “regulate ship traffic to and from the port using pilotage” (Art 84(c), Art 198(3), and Art 208(f)); and

Harbour masters are made responsible for “supervising dredging and reclamation” (Art 208(1)(j)) and “supervising construction of port facilities” (Art 208(1)(k), while PAs are required to provide and maintain navigation channels (Art 83(1)(b) and regulate the use of port land (Art 84(a)).

With regard to port security, there is a direct conflict in the Law. Both the Harbour Master and the PA are made responsible for ensuring “security and order in the port” (Art 83(1)(d) and Art 208(1)(a)). There is the added proviso that the Harbour Master

45

The principal Harbour Master offices are an echelon IIa position versus Port Authorities, which are echelon IIb positions.



has the role of “Port Security Committee” and may request assistance from the police or armed forces to perform this role. At the same time, GR 61 requires PAs (and PMUs) to secure the physical security of port facilities, by erecting boundary signs and providing security services (Art 35).

Prior to the current port reforms, the harbour master and port administration functions were performed from one office (ADPEL). The issue of institutional overlap did not arise or if it did could be resolved internally. While the Law has now created two separate government institutions to oversee port activities, it does not impose any duty on these institutions to co-ordinate the execution of their tasks. Nor does it create any institutional mechanisms to ensure that they co-operate in carrying out their respective mandates.

2.12 OVERVIEW OF SECTOR PROBLEMS AND CHALLENGES

The main sector problems and challenges identified by our analysis in the context of institutional and legal frameworks are:

Incomplete and deficient legal framework. The Law on Shipping and subsidiary government and ministerial regulations do not provide a comprehensive legal framework for the ports sector. The Law lacks implementation detail, especially in relation to crucial issues relating to the landlord role of PAs (i.e. transfer of land to PAs, relinquishing of functions to PAs, future control over Pelindo assets, the relationship between Pelindos and PAs, mixed messages regarding the Pelindos’ future monopolies, etc). Subsidiary regulations do not yet adequately fill all gaps. In some areas, e.g. the relationship between the DGST, PAs and Harbour Master, the Law creates the potential for jurisdictional overlap and institutional conflict.

Uncertainty regarding transitional arrangements to achieve landlord status. The Pelindos are the “elephant in the room”, but the Law fails to satisfactorily create a framework for landlord operations. The Law does not adequately address the future role of the Pelindos (except in appearing to provide protection to their established rights). As Pelindos themselves perform various landlord functions, the lack of direction undermines the notion that such functions are now the sole responsibility of PAs. PAs, as newcomers with weak capacity (see below), are not well-placed to assert their authority vis-à-vis the Pelindos. Arriving at sensible outcomes is complicated by the fact that Pelindos fall under the Ministry of State-Owned Enterprises, rendering it difficult to include them in the Ministry of Transport’s reform efforts. It appears that a solution must be found at the government level to ensure inter-ministerial collaboration in pursuing a common port reform vision. It is, therefore, to be welcomed that The Masterplan for the Acceleration and Expansion of Indonesia’s Development 2011 – 2025 has specifically identified a need to revise the Law to secure “the separation between regulatory functions (Port Authority) and operating functions (Enterprise)”46 be

46

This is planned for December 2011: See Masterplan, p 179.


27


accelerated. There is also a need to revisit the role of the DGST and to ensure that its functions are aligned with those of PAs and PMUs.

Weak direction on private sector participation. The Law introduces the concept of private sector participation, but fails to give strong direction to ensure a concerted effort in developing time-bound plans to secure greater private investment. PAs (and PMUs) face a particular challenge to develop capacity to implement private investment programs, especially given their limited capacity, uncertainty about the future role of Pelindos, and lack of clarity about their control over port land. Pelindos need to be restructured to assume the role of PBEs, but the Law fails to spell out how this is to be achieved.

Deficiencies in the institutional design of Port Authorities. PAs have been created using an “off the shelf” institutional structure that has not been specifically tailored to port management. As currently constituted, the PAs lack all the basic features that have made landlord port authorities successful institutional models for ports elsewhere in the world. In fact, the establishment of port authorities as line agencies is a throwback to early port reform efforts promoted by the World Bank that transformed line agencies port entities to the port authority model for port administration.

Mixed messages on encouraging competition. While the Law emphasizes the need for competitiveness and eradicating monopolies, other measures appear to preserve the status quo and hinder new market entrants. Pelindos appear to be given strong rights to continue all current activities, while rules governing special terminals and own-interest terminals contain several restrictive provisions that will hinder any effort to enhance competition.

Lack of a comprehensive framework for competition regulation. At present, the Law only addresses tariff regulation, but is silent on the notion of regulating anti-competitive behavior. As presently worded, the MoT faces the potentially difficult task of approving tariffs for each of the PAs and PMUs. Many costs are unique to individual ports which imply different tariffs levels, which all need to be assessed by the MoT. The need for complicated tariff setting can be avoided if a strategy of enhanced competition is adopted, especially in the case of PBEs whose cost structures are more complex. This would enable the MoT to adopt less intrusive regulation – such as tariff filing and monitoring. With regard to broader competition issues, the Competition Commission has jurisdiction over anti-competitive behavior of port operators and service providers, but for the time being state-owned enterprises such as the Pelindos appear to enjoy important exemptions and in practice no cases have ever been brought specifically against Pelindos.

Conflicting government agency objectives. The Ministry of State-Owned Enterprises (MOE) has as one of its main objectives to maximize revenues to the government. In fact, each year the MOE sets financial targets that the Pelindos are expected to meet, so it is difficult to imagine a scenario where port charges would decrease as the ports approach full capacity, as is the current situation for Jakarta. This is contrary to what the Law and MoT hope to achieve in terms of enhancing



port competitiveness – that is, minimizing port costs while improving port performance.


29

CHAPTER 3: ANALYSIS OF PORT TRAFFIC AND CURRENT PERFORMANCE


In this chapter we describe the sources and types of information collected on traffic for ports within the Indonesian port system, and trends in foreign and domestic traffic volumes by type of cargo and commodity/commodity group. Data on foreign trade (imports and exports) and domestic shipping (loadings and unloading) are presented for the following cargo types and commodity/commodity groups:

General cargo

Container

Dry bulk

o Cement

o Coal

o Iron ore

o Fertilizer

o Grain

o Other dry bulk

Liquid bulk

o Petroleum & products

o Crude palm oil (CPO)

o Other liquid bulk

Total traffic

While information has been collected and analyzed for 561 Indonesian ports, for the sake of brevity and significance, in many tables in this chapter we present specific information for only the top 50 Indonesian ports for the commodity/commodity group being discussed.

3.1 APPROACH AND DATA SOURCES

One of the concerns regarding the 2010 Technical Report on the Development of the National Port Master Plan was the lack of comprehensive traffic data describing the extent of operations for the entire Indonesian port system and for many of the country’s major ports. The 2010 Technical Report cited the lack of available data as the key impediment to the presentation of national port traffic data.



However, a complete profile of the traffic handled at Indonesian ports is an important element to prepare traffic forecasts, identify necessary future port capacity additions and estimate investment. To address this need, the NPMP Revision Team put forth a concerted effort to obtain data pertaining to port traffic from a variety of sources. These sources include data maintained by the DGST, by individual Pelindos, and from other recent studies of the Indonesian port sector. The information obtained from each of these sources is described in the sections below.

3.1.1 DGST Shipping Data Sets

The NPMP Revision Team met several times with DGST officials responsible for maintaining shipping statistics and was able to obtain access to key data included in DGST’s 2009 national shipping data sets. This valuable information is compiled from data provided by the shipping companies that report information on vessel calls at Indonesian ports. Separate data sets are maintained for foreign trade for domestic shipping. The foreign data set includes the following information:

Name of shipping company

Name of vessel

Deadweight, gross tonnage and horsepower of vessel

Name and location of shipper (exporter or importer)

Direction of trade (import or export)

Foreign port of origin or destination

Indonesian port of origin or destination

Commodity and commodity group

Tons or TEU loaded or unloaded

Crew

Type of vessel (tramper or liner)

For 2009, the foreign trade data set contains 32,734 records of individual vessel calls in Indonesia for foreign trade.

The domestic shipping data sets have separate files for coal, fertilizer, cement and other commodities. The domestic data sets include the following information:

Name of shipping company

Name of vessel

Flag (domestic or foreign)

Deadweight, gross tonnage and horsepower of vessel

Indonesian port of origin and destination


31


Commodity and commodity group

Cargo type

Tons or TEU loaded or unloaded

Type of vessel (tramper or liner)

For 2009, the domestic trade data set contains more than 72,000 records of cargo/commodity shipments in Indonesian domestic trade between ports.47 The NPMP Revision Team worked extensively with these data sets to clean them of inconsistencies and obvious errors, including the following:

Indonesian port names were harmonized to a single spelling and to a single name for a particular port;

Commodity (e.g. coal) or commodity group (petroleum and petroleum products) classifications were harmonized to a single commodity or commodity group name and spelling;

Obvious errors in reported cargo volumes were corrected when the cargo volume grossly exceeded the carrying capacity of the vessel;

Container shipments in TEU and vehicle shipments in units were separated from other cargo reported in tons.

The DGST data sets provide the single most comprehensive view of the cargo handled in Indonesian ports during 200948. Many of the tables presented subsequently in this chapter are based on these DGST data sets.

3.1.2 Pelindo Port Data

Historic information on cargo handled at Indonesian ports is also maintained by the individual Pelindos. The time series presented in this chapter are largely derived from data provided or reported by the Pelindos. The most comprehensive data on traffic from 2000 through 2009 at their ports was provided by Pelindo II. This was supplemented with available data reported by other Pelindos in publicly available documents.

47

Please note that some of the vessel calls have multiple records to accommodate the multiple commodities that are loaded or unloaded at a port.

48 Despite efforts to clean the DGST data set, a subsequent review of the traffic tables

generated for and presented in this report were found to still contain clearly erroneous data for some ports, particularly for general cargo and some dry bulk commodities. Overall, the data for container movements is considered the most accurate. It is expected that at the onset of the IndII Phase 2 project, further work to correct the dataset will be undertaken and historical traffic tables presented in this report will be revised and distributed (see Annex 3).



3.1.3 Data from Other Recent Studies of Indonesian Ports

The NPMP Revision Team reviewed information on port traffic from a number of recent Indonesian port sector studies and reports to fill in data gaps and to confirm or verify information obtained from the two primary sources described above.

3.1.4 Data Issues

Some of the issues concerning Indonesian port data have already been indicated above. However, for a country that is so dependent on its port system for the movement of foreign and domestic trade it is critical that efforts be made to improve the availability and accuracy of basic port traffic and other statistics. Some of the key issues identified include:

There is not a definitive list of Indonesian ports that standardizes the name of the port and the public and private terminals that are considered to be part of the port for reporting purposes. Hence, data that is reported often corresponds to differing definitions of ports and terminals included without such indications.

Data collected by Pelindos and/or port authorities should be regularly provided to DGST and compared against other data sources.

Beyond traffic data, there is a dearth of information available on port operations and performance. A standardized set of data and their definitions to be collected should be developed.

A comprehensive review of the processes and systems used to report, collect and analyze port data in Indonesia was beyond the scope of the present assignment.

3.2 INDONESIAN PORT TRAFFIC 1999-2009

As an archipelago, Indonesia relies heavily on its ports to accommodate its extensive foreign trade as well as for vast domestic commerce. In 2009, a total of 968.4 million tons were handled at Indonesian ports, consisting of 560.4 million tons of dry bulk cargo (nearly three-quarters of which was coal), 176.1 million tons of liquid bulk cargo (86 percent of which was petroleum and petroleum products or CPO), 143.7 million tons of general cargo and 88.2 million tons of containerized cargo (Table 3-1).

Foreign trade accounted for 543.4 million tons or 56 percent of the total volume of cargo handled at Indonesian ports in 2009. Export shipments at 442.5 million tons accounted for more than 80 percent of the foreign trade, while imports of 101.0 million tons accounted for 20 percent of the foreign trade. The export figures are higher due to the substantial volume of coal exports of 278.6 million tons in 2009.


33


Table 3-1: Indonesian Port Traffic by Trade Flow and Cargo Type, 1999 and 2009 (000’s tons)

Indonesian domestic cargo handled at its ports in 2009 totaled 433.3 million tons, with dry bulk shipments of 247.8 million tons accounting for 58 percent of total domestic shipments.49

49

The reason for a significant discrepancy between domestic unloading and loading statistics in 1999 is not known. Conceptually, these figures should be close as they are in 2009.

Trade flow AAGR

and cargo type 1999 2009 1999-2009

IMPORTS

General cargo 11,777 18,628 4.7%

Container cargo 6,755 30,658 16.3%

Dry Bulk 12,281 9,719 -2.3%

Liquid Bulk 17,327 41,954 9.2%

Subtotal 48,140 100,958 7.7%

EXPORTS

General cargo 16,635 14,212 -1.6%


Dry Bulk 41,511 303,133 22.0%

Liquid Bulk 38,535 94,769 9.4%

Subtotal 105,249 442,457 15.4%

DOMESTIC UNLOADING

General cargo 25,018 55,430 8.3%


Dry Bulk 26,885 123,743 16.5%

Liquid Bulk 45,448 19,675 -8.0%

Subtotal 103,195 212,460 7.5%

DOMESTIC LOADING

General cargo 17,535 55,430 12.2%


Dry Bulk 14,499 123,771 23.9%

Liquid Bulk 47,334 19,675 -8.4%

Subtotal 85,893 212,485 9.5%

TOTAL

General cargo 70,966 143,699 7.3%


Dry Bulk 95,176 560,366 19.4%

Liquid Bulk 148,644 176,072 1.7%

Total 342,477 968,361 11.0%

Source: Prepared by Nathan Associates Inc. from DGST and Pelindio data.



Table 3-1 and Figure 3-1 also show the growth in Indonesian port traffic for the 10-year period from 1999 to 2009. During this period, total port traffic increased at an average annual rate of 11.0 percent. However, the distribution of the growth of traffic was quite diverse. For example, dry bulk traffic increased more than five-fold from 95.2 million tons in 1999 to 560.4 million tons in 2009. Container cargo also increased at a high average annual rate of 12.3 percent from 27.7 million tons in 1999 to 88.2 million tons in 200950. General cargo increased at an average annual rate of 7.3 percent, while liquid bulk cargos increased at a much slower annual rate of 1.7 percent during this period.

Figure 3-1: Indonesian Port Traffic by Trade Flow and Cargo Type, 1999 and 2009 (000’s tons)

Within trade flows, exports increased the most from 195.2 million tons in 1999 to 442.5 million tons in 2009, corresponding to an average annual increase of 15.4 percent. Imports and domestic commerce volumes experienced annual growth in the range of 8-10 percent from 1999 to 2009.

50

Container cargo volumes were estimated by multiplying TEU reported by 10 tons per TEU.

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

General Cargo Container Cargo Liquid Bulk

1999 70,966 27,692 148,644

2009 143,699 88,222 176,072

00

0's

to

ns

-

100,000

200,000

300,000

400,000

500,000

600,000

1999 2009

Dry Bulk 95,176 560,366

00

0's

to

ns


35


It is also interesting to note the different participation rates of containerized and general cargo for the foreign and domestic trade from 1999 to 2009, as shown in Table 3-2 and depicted graphically in Figure 3-2. Within these categories of foreign trade, the rate of container penetration increased from 35 percent in 1999 to 65 percent in 2009. During this period, containerized cargo increased four-fold, while general cargo increased by 15 percent. In contrast, the rate of container penetration for domestic cargo actually declined from 22.5 percent in 1999 to 19.7 percent in 2009. Reasons for this decline in domestic container penetration rates are not readily discernable and warrant further investigation.

Table 3-2: Indonesian General Cargo and Container Traffic by Trade Flow, 1999 and 2009 (000’s tons)

Figure 3-2: Percentage of Indonesian General Cargo and Container Traffic that is Containerized by Trade Flow, 1999 and 2009

Type of cargo Imports Exports Subtotal Unloading Loading Subtotal Total

1999

General Cargo 11,777 16,635 28,412 25,018 17,535 42,553 70,966

Container 6,755 8,568 15,323 5,844 6,525 12,368 27,692

Total 18,532 25,203 43,735 30,862 24,059 54,922 98,657

% Containerized 36.5% 34.0% 35.0% 18.9% 27.1% 22.5% 28.1%

2009

General Cargo 18,628 14,212 32,840 55,430 55,430 110,859 143,699

Container 30,658 30,342 61,000 13,613 13,610 27,223 88,222

Total 49,286 44,554 93,840 69,042 69,040 138,082 231,922

% Containerized 62.2% 68.1% 65.0% 19.7% 19.7% 19.7% 38.0%

Source: Prepared by Nathan Associates Inc. from DGST and Pelindio data.

Foreign Trade Domestic Trade

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1999 2009 1999 2009


00

0's

to

ns General Cargo

Container



3.2.1 Indonesian Port Traffic in 2009

Further detail of Indonesian port traffic in 2009 by trade flow and principal commodity/ commodity group is presented in Table 3-3. Within the dry bulk cargo type, coal accounts for nearly 90 percent of the total dry bulk foreign trade but only 56 percent of the domestic dry bulk trade. Other substantial volumes of dry bulk commodities shipped on domestic trades include fertilizer (30.7 million tons), cement (14.9 million tons), grains (2.3 million tons) and other dry bulk products (60.1 million tons).

Within liquid bulk cargoes, virtually all of the 91.5 million tons of petroleum and petroleum products handled at Indonesian ports in 2009 was for foreign trade and only 385 thousand tons were reported as domestic shipments. For CPO, domestic shipments totaled 38.5 million tons in 2009, while 22.4 million tons of CPO was shipped as foreign trade (exports).

Table 3-3: Indonesian Port Traffic by Trade Flow and Cargo Type and Principal Commodity, 2009 (000’s tons)

Type of cargo Imports Exports Subtotal Unloading Loading Subtotal Total

General Cargo 18,628 14,212 32,840 55,430 55,430 110,859 143,699

Container 30,658 30,342 61,000 13,613 13,610 27,223 88,222

Dry Bulk 9,719 303,133 312,852 123,743 123,771 247,514 560,366

Cement - 144 144 7,459 7,483 14,941 15,085

Coal 685 278,618 279,303 69,674 69,674 139,349 418,652

Iron Ore 1,862 8,669 10,531 46 46 91 10,623

Fertilizer 3,360 1,802 5,162 15,331 15,334 30,665 35,828

Grain 3,469 363 3,832 1,172 1,172 2,343 6,175

Other Dry Bulk 343 13,537 13,879 30,062 30,062 60,124 74,003

Liquid Bulk 41,954 94,769 136,723 19,675 19,675 39,349 176,072

Petroleum & Products 31,801 59,309 91,110 192 192 385 91,495

CPO 269 22,169 22,438 19,243 19,243 38,485 60,923

Other Liquid Bulk 9,884 13,291 23,175 240 240 479 23,654

Total 100,958 442,457 543,415 212,460 212,485 424,946 968,361

Source: Prepared by Nathan Associates Inc. from DGST shipping data.

Domestic TradeForeign Trade


37


Figure 3-3: Indonesian Port Traffic by Trade Flow and Cargo Type (000’s tons)

As shown in Table 3-4 below, the top 50 ports in Indonesia handled 846.9 million tons in 2009 or 87.2 percent of the total traffic. These 50 ports are the most significant for both foreign and domestic trade accounting for 89 percent of the foreign trade and 85 percent of the domestic trade volumes in 2009. Figure 3-4 and Figure 3-5 present data for the top 50 ports geographic ally.

If the list was extended to include the top 100 ports, those ports handled 58.8 million tons in 2009 or 93.6 percent of the total traffic. Conversely, if the list was shortened to only include the top 25 ports, those ports handled 712.6 million tons in 2009 or 73 percent of the total.

In 2009, the port complex of Samarinda recorded the largest traffic volume at 72.2 million tons, followed by the ports of Tanjung Priok at 67.1 million tons and Tanjung Perak at 63.0 million tons.

As mentioned earlier, there is not a single definitive list of Indonesian ports that is used. As such, even with the list of top 50 ports in Table 3-4, the ports of Tanjung Perak and Gresik are presently separated as are the ports of Tanjung Priok and Sunda Kelapa. In some publications, these facilities are considered together as part of their respective regional port complex.

-

100,000

200,000

300,000

400,000

500,000

600,000

General Cargo

Container Dry Bulk Liquid Bulk

Loading 55,430 13,610 123,771 19,675

Unloading 55,430 13,613 123,743 19,675

Export 14,212 30,342 303,133 94,769

Import 18,628 30,658 9,719 41,954

000'

s ton

s



Table 3-4: Indonesian Top 50 Ports for Total Traffic by Trade Flow, 2009 (000’s tons)

Port Imports Exports Subtotal UnloadingLoading Subtotal Total

Samarinda 260 52,875 53,135 6,193 12,911 19,104 72,239

Tg. Priok 23,060 20,930 43,990 10,840 12,272 23,112 67,101

Tg. Perak 13,410 7,243 20,653 18,856 19,269 38,125 58,778

Bontang 678 46,764 47,442 300 566 866 48,308

Pontianak 52 250 302 13,175 33,371 46,546 46,847

Tg. Bara 221 41,179 41,400 - - - 41,400

Perawang 113 534 647 29,443 8,142 37,586 38,233

Taboneo 103 36,043 36,146 213 224 437 36,582

Kendawangan - 340 340 15,632 15,632 31,263 31,603

Dumai 857 18,604 19,461 6,415 868 7,283 26,744

Adang Bay 72 25,278 25,350 - - - 25,350

Balikpapan 3,155 18,859 22,013 2,613 228 2,841 24,854

Belawan 5,602 7,576 13,178 5,183 2,120 7,303 20,480

Kota Baru 441 18,434 18,876 165 1,404 1,569 20,445

Banjarmasin 143 11,658 11,800 6,632 1,011 7,642 19,443

Tg. Balai Karimun 5,988 11,337 17,326 - 3 3 17,329

Tg. Emas 3,572 2,709 6,282 3,594 7,120 10,714 16,995

Merak 3,630 1,427 5,058 1,997 7,892 9,889 14,947

Tarakan - 6,468 6,468 3,900 4,072 7,972 14,440

Muara Pantai - 14,394 14,394 - - - 14,394

Makassar 964 381 1,345 7,197 4,138 11,335 12,680

Muara Satui 58 7,876 7,934 1,612 1,621 3,232 11,167

Kuala Tungkal 47 272 319 188 9,358 9,546 9,865

Satui - 246 246 38 8,947 8,985 9,231

Teluk Melano - - - 8,947 - 8,947 8,947

Kuaro - - - 8,934 - 8,934 8,934

STS Karimun 4,420 4,423 8,843 - - - 8,843

Falabisahaya - - - 8,350 29 8,379 8,379

Cilacap 6,344 1,787 8,131 26 38 64 8,195

Bitung 22 865 887 3,537 3,741 7,277 8,164

Panjang 2,198 3,086 5,283 1,634 550 2,184 7,467

Palembang 286 1,636 1,922 1,700 2,363 4,063 5,985

Ambon 0 157 157 2,901 2,924 5,825 5,982

Teluk Bayur 156 3,331 3,487 988 1,298 2,287 5,773

Cigading 4,706 670 5,376 74 312 386 5,762

P. Laut 72 5,616 5,688 - - - 5,688

Tuban 83 1,580 1,663 371 3,632 4,003 5,666

Tg. Pemancingan 50 5,387 5,437 0 48 49 5,485

Tarahan 140 3,997 4,137 670 581 1,252 5,389 Sei Putting - - - 2,358 2,268 4,626 4,626

Batu Ampar 523 3,868 4,391 4 5 9 4,400

Muara Berau 4 3,487 3,491 3 759 761 4,252

Gresik 2,448 626 3,074 529 640 1,169 4,244

Sunda Kelapa - - - 2,708 1,160 3,868 3,868

Lawi-Lawi 3,494 186 3,679 - - - 3,679

Balongan 3,122 476 3,597 3 2 5 3,602

Bintuni 7 520 527 3,020 33 3,053 3,580

Kumai 34 248 282 579 2,663 3,241 3,523

Tg. Batu 16 189 205 523 2,636 3,159 3,364

P. Sambu 96 22 118 2,867 328 3,195 3,313

Top 50 ports 90,646 394,089 484,735 185,001 177,232 362,233 846,968

All other ports 10,312 48,368 58,680 27,459 35,253 62,713 121,392

Total all ports 100,958 442,457 543,415 212,460 212,485 424,946 968,361

Source: Prepared by Nathan Associates Inc. from DGST Shipping Database, 2009.



39


Figure 3-4. Indonesian Top 50 Ports for Total Traffic by Trade Flow, 2009 (000’s tons)



Figure 3-5. Indonesian Top 50 Ports for Total Traffic by Cargo Type, 2009 (000’s tons)


41


Table 3-5 provides a breakdown of traffic handled at the top 50 Indonesian ports in terms of type of cargo and principal commodity/commodity group. Samarinda is the top port in terms of dry bulk cargo due to the 65.6 million tons of coal handled in 2009, followed by Tanjung Bara that handled 41.0 million tons of dry bulk. Tanjung Priok is the top port in terms of container traffic with 39.2 million tons of containerized cargo handled in 2009 followed by Tanjung Perak at 17.4 million tons.

Tanjung Priok is also the top port for handling cement at 3.9 million tons followed by Bintuni at 3.0 million tons. Cigading is the top port for iron ore at 1.8 million tons.

For fertilizer, both the ports of Pontianak and Teluk Melano each handled around 9.0 million tons in 2009. Tanjung Perak is the leading port for handling grains at 5.7 million tons in 2009, followed by Bau-Bau at 4.2 million tons. The port of Kendawangan is the leading port for other dry bulk commodities, handling 31.3 million tons in 2009.

For liquid bulk cargo, Bontang is the lead port in terms of petroleum and petroleum products at 25.6 million tons followed by Tanjung Balai Karimun at 12.9 million tons. For CPO, there are four major ports led by Dumai at 10.1 million tons, followed by Satui and Kuaro each at around 9.0 million tons and Tanjung Perak at 7.5 million tons. Balikpapan and Merak handle the largest volume of other liquid bulk products, each at around 3.6 million tons in 2009.



Table 3-5: Indonesian Top 50 Ports for Total Traffic by Cargo Type and Principal Commodity, 2009 (000’s tons)

3.3 INDONESIAN TRAFFIC BY CARGO TYPE OR PRINCIPAL COMMODITY

In this section we present information on port traffic of the top 50 Indonesian ports in 2009 for specific cargo types and commodity/commodity groups. For some cargo types, such as containers discussed immediately below, additional historical data is available and trends in traffic volumes are identified and analyzed.

Port

General

Cargo Container Cement Coal Iron Ore Fertilizer Grain

Other

Dry

Bulk Subtotal

Petrol. &

Products CPO

Other

Liq.

Bulk Subtotal Total

Samarinda 4,227 950 64 65,639 45 191 581 58 66,577 8 37 440 485 72,239

Tg. Priok 10,273 39,228 3,861 5,325 232 246 1,698 1,978 13,340 2,725 525 1,010 4,260 67,101

Tg. Perak 12,632 17,443 319 4,042 181 832 1,528 11,824 18,727 1,762 7,478 735 9,975 58,778

Bontang 258 9 22 19,368 - 2,007 4 70 21,471 25,616 13 942 26,571 48,308

Pontianak 24,745 992 968 10,024 - 9,011 21 0 20,023 22 1,041 23 1,086 46,847

Tg. Bara 262 - - 40,818 - 148 - 28 40,994 - - 144 144 41,400

Perawang 24,694 627 16 990 - 3 1 11,837 12,847 15 5 45 64 38,233

Taboneo 448 - - 35,718 272 16 - - 36,005 - - 129 129 36,582

Kendawangan 0 - - - 340 - - 31,263 31,603 - - - - 31,603

Dumai 5,916 - 205 414 2 408 4 84 1,118 9,093 10,073 545 19,711 26,744

Adang Bay - - - 25,019 36 100 - - 25,155 - - 195 195 25,350

Balikpapan 925 381 14 15,412 - 69 8 522 16,025 3,668 193 3,663 7,524 24,854

Belawan 2,486 8,884 876 2,033 20 704 65 316 4,015 776 4,106 213 5,096 20,480

Kota Baru 472 5 26 18,431 989 2 1 7 19,456 249 140 123 512 20,445

Banjarmasin 809 1,180 115 16,765 197 275 9 11 17,373 7 65 9 81 19,443

Tg. Balai Karimun 438 - - 245 - 2 0 2,418 2,666 12,876 3 1,346 14,225 17,329

Tg. Emas 704 5,752 85 9,596 - 169 189 64 10,104 67 240 128 435 16,995

Merak 6,067 637 - 4,281 - - - 86 4,367 335 18 3,523 3,875 14,947

Tarakan 327 173 - 13,651 90 15 - 148 13,905 35 - - 35 14,440

Muara Pantai - - - 14,339 54 - - - 14,393 - 1 - 1 14,394

Makassar 1,166 2,505 305 7,320 10 102 1,104 57 8,897 9 93 9 112 12,680

Muara Satui - - - 10,971 174 - 21 - 11,167 - - - - 11,167

Kuala Tungkal 6,779 225 - - - 2,812 3 14 2,829 21 8 4 33 9,865

Satui 2 - 0 232 - - - - 232 - 8,996 - 8,996 9,231

Teluk Melano 0 - - - - 8,946 - - 8,946 - 1 - 1 8,947

Kuaro - - - - - - - - - - 8,933 1 8,934 8,934

STS Karimun 29 - - - - - - 967 967 6,701 - 1,146 7,847 8,843

Falabisahaya 59 - - 8,319 - - 0 0 8,320 0 - - 0 8,379

Cilacap 1,311 - - 60 - 48 227 - 335 5,627 19 902 6,549 8,195

Bitung 6,378 626 28 - - 27 26 90 172 0 988 - 988 8,164

Panjang 760 3,017 174 965 155 707 47 68 2,116 156 1,192 226 1,574 7,467

Palembang 296 620 76 2,883 - 1,011 41 66 4,076 62 874 56 992 5,985

Ambon 5,642 152 26 - - 0 24 96 146 41 - - 41 5,982

Teluk Bayur 927 421 1,326 603 174 279 12 13 2,406 16 2,003 - 2,019 5,773

Cigading 3,370 18 112 93 1,824 191 - 10 2,231 114 - 29 143 5,762

P. Laut 14 - - 5,518 - - - 14 5,533 47 - 95 142 5,688

Tuban 406 - 163 3,539 - 10 0 299 4,011 879 - 370 1,249 5,666

Tg. Pemancingan 1 - - 5,113 334 - - - 5,447 - - 38 38 5,485

Tarahan 211 - - 5,162 - - 5 4 5,171 1 - 6 7 5,389

Sei Putting - - - 4,614 - 12 - - 4,626 - - - - 4,626

Batu Ampar 1,054 468 8 142 60 2 - 2,558 2,769 7 83 19 109 4,400

Muara Berau 2 - - 4,246 - 4 - - 4,250 - - - - 4,252

Gresik 194 14 44 - 20 2,682 10 361 3,117 225 - 694 919 4,244

Sunda Kelapa 86 - 950 - - 2,823 3 5 3,780 0 - 1 1 3,868

Lawi-Lawi - - - - - - - - - 3,653 - 26 3,679 3,679

Balongan 171 - - - - - - - - 2,834 - 598 3,432 3,602

Bintuni 52 1 3,000 - - - 2 3 3,006 497 - 23 520 3,580

Kumai 15 19 5 403 76 14 5 - 502 - 2,987 - 2,987 3,523

Tg. Batu 25 - - 3,326 - - - 1 3,326 6 - 7 12 3,364

P. Sambu 1 - - 3,192 - - - - 97 - 23 3,313

Top 50 ports 124,666 84,462 12,792 368,813 5,509 33,874 5,639 65,365 488,799 78,249 50,117 17,484 145,729 846,968

All other ports 19,034 3,761 2,294 49,839 5,114 1,953 536 8,638 71,567 13,246 10,807 6,170 30,343 121,392

Total all ports 143,699 88,222 15,085 418,652 10,623 35,828 6,175 74,003 560,366 91,495 60,923 23,654 176,072 968,361


Liquid BulkDry Bulk


43


3.3.1 Containers

The presentation of port volumes in this chapter up to now has been in terms of tons of cargo so as to be uniform across cargo types. However, for the discussion of container shipments, it is customary to speak in terms of twenty foot equivalent units (TEU) which has become a standard measurement unit within the container industry. Hence in this subsection, all information regarding containers handled at Indonesian ports is expressed in TEU.

Table 3-6 presents containers handled at the top 50 Indonesian ports for containers in 2009 by type of trade flow. In 2009, a total of 8.8 million TEU were handled at Indonesian ports, consisting of 6.1 million TEU for foreign trade (69 percent) and 2.7 million for domestic trade (31 percent). The top 50 ports that handled containers account for 99.7 percent of the total container traffic. Due to the requirement of specialized handling equipment, the handling of containers is concentrated at just a few ports with the top 5 ports handling 84 percent of the total volume in 2009 and the top 10 ports handling 91.5 percent.

As can be seen from Table 3-6, there seems to be a demarcation between the volume of containers at the top 6 container ports from those lower in the list. The top 6 ports are

Tanjung Priok (3.9 million TEU), Tanjung Perak (1.7 million TEU), Belawan (0.9 million TEU), Tanjung Emas (0.6 million TEU), Panjang (0.3 million TEU) and Makassar (0.3 million TEU). No other Indonesian port handled much more than 100 thousand TEU in 2009.

It is interesting that for Tanjung Priok, 3.1 million TEU of its total 3.9 million TEU were of containers for foreign trade (78.8 percent), whereas Tanjung Perak handled 1.2 million TEU of its total 1.7 million TEU for foreign trade (69 percent). At Makassar, nearly all of the containers handled in 2009 were for domestic trade.

A longer perspective on the growth of container traffic at Indonesian ports is presented in Table 3-7 for the period of 1990 to 2009. During this period, container traffic in Indonesia increased nearly nine-fold from 1.0 million TEU in 1990 to 8.9 million TEU in 200951. The growth in container volumes is shown graphically in Figure 3-6.

51

There are differences between the figures reported in Table 3-6 and Table 3-7 for container traffic in 2009. For purposes of computing average annual growth rates, it was decided to use the same Pelindo-based data sources for 2009 as for other years shown in Table 3-7.



Table 3-6: Indonesian Top 50 Ports for Container Traffic by Trade Flow, 2009 (000’s TEU)

Port Imports Exports Subtotal Unloading Loading Subtotal Total

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

Tg. Perak 630 576 1,206 256 282 539 1,744

Belawan 302 309 610 180 98 278 888

Tg. Emas 291 253 543 17 15 32 575

Panjang 137 139 277 14 11 25 302

Makassar 2 - 2 144 104 249 250

Banjarmasin - - - 61 57 118 118

Pontianak - - - 70 29 99 99

Samarinda 0 - 0 50 45 95 95

Pekanbaru 11 32 44 16 13 30 73

Merak 25 36 61 1 1 3 64

Perawang 1 53 54 4 5 9 63

Bitung - - - 27 36 63 63

Palembang 16 16 33 14 15 29 62

Batu Ampar 18 29 47 - - - 47

Teluk Bayur - - - 20 22 42 42

Balikpapan 1 2 3 19 16 35 38

Batam 1 3 4 15 11 26 30

Jayapura - - - 12 15 28 28

Buatan 2 26 27 - - - 27

Kabil 12 15 27 0 0 0 27

Kuala Tungkal 0 22 22 - - - 22

Sorong - - - 13 9 22 22

Tarakan - - - 9 8 17 17

Ambon - - - 7 8 15 15

Batu Licin - - - 7 7 14 14

Bau-Bau - - - 7 4 11 11

Biak - - - 7 3 10 10

Merauke - - - 6 4 10 10

P. Burung - 10 10 - - - 10

Talang Duku 4 5 9 - - - 9

Palu - - - 5 4 9 9

Timika - - - 5 4 9 9

Kendari - - - 6 3 9 9

S. Guntung - 8 8 - - - 8

Fak-Fak - - - 4 3 7 7

Manokwari - - - 4 3 7 7

Nabire - - - 4 3 6 6

Benoa - - - 3 3 6 6

Benete 2 3 5 - - - 5

Jambi 2 2 5 - - - 5

Muntok 2 2 4 - - - 4

Sampit - - - 2 2 4 4

S. Buatan 0 3 4 - - - 4

Pantoloan - - - 2 1 3 3

Pangkal Balam 1 1 3 0 - 0 3

Malili - - - 1 1 2 2

Tg. Pandan - - - 1 1 2 2

Kumai - - - 1 1 2 2

Luwuk - - - 1 0 2 2

Top 50 ports 3,064 3,031 6,095 1,347 1,354 2,700 8,796

All other ports 1 3 5 14 7 22 26

Total all ports 3,066 3,034 6,100 1,361 1,361 2,722 8,822




45


Table 3-7: Indonesian Main Ports for Container Traffic, 1990-2009 (TEU)

Port 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Tanjung Priok 643,582 736,370 866,717 1,054,152 1,270,094 1,630,320 1,606,797 1,908,711 1,898,069 2,118,547 2,494,606 2,524,375 2,600,144 2,904,829 3,178,313 3,329,999 3,419,611 3,689,121 3,973,661 3,799,411

Tanjung Perak 198,135 256,135 320,263 416,517 503,135 563,202 554,023 590,000 712,000 860,000 915,000 875,000 1,425,000 1,079,627 1,600,000 1,650,000 1,851,847 2,041,586 2,213,477 1,744,300

Belawan 82,585 102,557 133,401 152,514 176,982 191,058 245,701 256,243 226,916 266,565 311,089 358,837 407,830 426,555 519,787 521,017 559,904 581,354 590,069 888,400

Tanjung Emas 37,361 57,111 68,863 71,542 93,557 103,846 126,321 157,943 212,862 230,698 262,697 266,754 260,102 323,398 275,860 277,511 370,100 407,110 468,177 576,100

Makasar 6,457 15,469 24,885 47,352 69,684 111,542 102,497 136,653 102,339 125,518 164,684 177,416 207,485 232,154 256,875 222,231 256,071 302,043 362,452 463,818

Banjarmasin 2,766 4,186 7,903 23,979 39,064 59,939 74,256 102,306 95,482 109,259 142,958 109,258 142,958 138,840 149,302 159,298 198,354 224,377 258,034 284,282

Samarinda - 668 183 666 2,698 1,467 19,645 42,693 41,146 110,118 68,685 68,676 71,618 88,043 120,862 126,340 206,400 145,554 167,387 266,438

Pontianak 847 796 2,838 4,854 9,909 26,367 44,142 62,074 36,812 66,443 93,098 100,813 112,240 123,646 139,456 132,273 138,991 143,443 132,732 133,419

Panjang 19,386 20,459 25,488 37,952 44,247 48,681 77,508 77,428 59,365 65,212 76,090 76,469 76,134 71,248 85,130 93,164 122,200 79,767 106,935 104,175

Palembang 8,300 21,580 30,424 35,440 37,494 15,610 60,052 53,077 28,421 46,605 45,657 43,176 46,755 54,092 58,737 65,879 70,338 78,820 78,469 84,403

Bitung 134 524 763 3,767 9,015 14,559 18,198 43,248 40,180 48,875 66,737 66,737 80,386 83,861 92,898 106,183 91,400 117,117 105,405 61,914

Pekanbaru - - - 7,121 11,522 9,308 27,508 9,345 4,466 - 14,236 117,946 24,743 53,226 21,647 40,127 43,337 46,804 50,548 57,612

Balikpapan 754 1,094 1,817 3,018 4,022 4,025 4,539 6,142 4,959 27,547 22,401 32,861 34,210 52,632 54,467 65,172 51,600 78,836 70,952 52,844

Jambi - - - 1,491 4,195 7,186 15,333 - 29,118 20,529 36,655 34,480 44,867 41,521 38,491 33,566 46,845 50,588 54,276 52,086

Teluk Bayur - - 1,016 948 835 1,912 6,619 7,957 6,342 14,983 12,383 14,817 25,711 27,746 36,466 34,349 37,700 43,686 48,503 47,633

Batam a/ 102,631 133,345 134,562 155,444 171,409 187,375 203,340 175,000 150,000 125,000 104,200

Jayapura - - - 113 338 518 631 644 1,910 2,065 264 397 267 4,163 13,111 12,552 18,828 35,771 30,405 25,592

Sorong - - - 520 830 34 321 818 782 835 2,163 3,523 5,897 10,159 9,636 13,250 14,310 15,693 18,832 24,110

Subtotal 1,000,307 1,216,949 1,484,561 1,861,426 2,276,791 2,789,540 2,983,770 3,454,464 3,500,387 4,215,595 4,860,585 5,002,574 5,715,894 5,876,991 6,828,776 7,073,000 7,658,526 8,215,977 8,836,482 8,746,627

Other ports - 896 1,093 1,616 3,092 4,009 9,638 64,661 43,137 52,397 67,915 67,515 97,625 198,223 116,519 139,190 95,581 331,174 45,984 224,911

Total 1,000,307 1,217,845 1,485,654 1,863,042 2,279,883 2,793,549 2,993,408 3,519,125 3,543,524 4,267,992 4,928,500 5,070,089 5,813,518 6,075,214 6,945,295 7,212,191 7,754,107 8,547,151 8,882,466 8,971,538

a/Batam includes Batu Ampar and Kabil.

Source: Compiled by Nathan Associates Inc. from DGST, Pelindo II and other data.



Figure 3-6: Indonesian Main Ports for Container Traffic, 1990-2009 (TEU)

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

TEU

s

Tho

usa

nd

s

Year

Main Ports

Other Ports


47


The corresponding average annual growth rates for container traffic at the main Indonesian ports is presented in Table 3-8 for the entire period of 1990 to 2009, and for the sub-periods of 1990 to 2000, 2000 to 2009 and 2000 to 2008. Figure 3-7 displays the growth in container traffic at the main container ports during this period.

For the entire period of 1990 to 2009, container traffic at Indonesian ports increased at an average annual rate of 12.2 percent, which is very high for a 19-year period. Equally impressive is the average annual growth rate of 17.3 percent that was recorded from 1990 to 2000. For the most recent period of 2000 to 2009, the average annual growth rate has been lower but still quite robust at 6.9 percent. If one discounts the financial crisis year of 2009 and looks at the 2000 to 2008 period, the average annual growth rate was 7.3 percent.

Table 3-7: Indonesian Main Ports for Containers, Selected Years, 1990-2009 (TEU)

Port 1990 2000 2008 2009 1990-2009 1990-2000 2000-2009 2000-2008

Tanjung Priok 643,582 2,494,606 3,973,661 3,799,411 9.8 14.5 4.8 5.8

Tanjung Perak 198,135 915,000 2,213,477 1,744,300 12.1 16.5 7.4 12.3

Belawan 82,585 311,089 590,069 888,400 13.3 14.2 12.4 6.4

Tanjung Emas 37,361 262,697 468,177 576,100 15.5 21.5 9.1 7.3

Makasar 6,457 164,684 362,452 463,818 25.2 38.2 12.2 9.3

Banjarmasin 2,766 142,958 258,034 284,282 27.6 48.4 7.9 11.3

Samarinda - 68,685 167,387 266,438 - - 16.3 11.8

Pontianak 847 93,098 132,732 133,419 30.5 60.0 4.1 3.5

Panjang 19,386 76,090 106,935 104,175 9.3 14.7 3.6 4.3

Palembang 8,300 45,657 78,469 84,403 13.0 18.6 7.1 7.8

Bitung 134 66,737 105,405 61,914 38.1 86.1 (0.8) 5.9

Pekanbaru - 14,236 50,548 57,612 - - 16.8 (10.0)

Balikpapan 754 22,401 70,952 52,844 25.1 40.4 10.0 10.1

Jambi - 36,655 54,276 52,086 - - 4.0 5.8

Teluk Bayur - 12,383 48,503 47,633 - - 16.1 16.0

Batam a/ 133,345 125,000 104,200 - - (2.7) (0.9)

Jayapura - 264 30,405 25,592 - - 66.2 72.0

Sorong - 2,163 18,832 24,110 - - 30.7 23.3

Subtotal 1,000,307 4,860,585 8,836,482 8,746,627 12.1 17.1 6.7 7.4

Other ports - 67,915 45,984 224,911 - - 14.2 (4.7)

Total 1,000,307 4,928,500 8,882,466 8,971,538 12.2 17.3 6.9 7.3

a/Batam includes Batu Ampar and Kabil.

Source: Compiled by Nathan Associates Inc. from DGST, Pelindo II and other data.

Avergae annual growth rate (%)



Figure 3-7: Indonesian Main Ports for Containers, Selected Years, 1990-2009 (TEU)


49


3.3.2 Other Cargo Types and Commodity/Commodity Groups

Tables A-1 through A-10 in Annex 1 present traffic data for the top 50 Indonesian ports in each of the following cargo type or commodity/commodity groups:

General cargo

Cement

Coal

Iron ore

Fertilizer

Grain

Other dry bulk

Petroleum & products

Crude palm oil (CPO)

Other liquid bulk

3.4 THE RISK OF INSUFFICIENT CAPACITY

The cargo growth described above is reflective of the economic growth that Indonesia has enjoyed in recent years. With a number of economic development initiatives underway, significant growth is likely to continue and will challenge Indonesia’s port system to stay ahead of market demand. As is shown in the next chapter, Indonesia is already at risk of the country’s largest container ports becoming bottlenecks to seamless cargo flows, effectively raising the cost and risk of doing business in Indonesia.



CHAPTER 4: PORT FACILITIES AND OPERATIONS REVIEW

This chapter summarizes our review of Indonesia’s two main container ports: Tanjung Priok, Jakarta; and Tanjung Perak, Surabaya. The review focuses on these two ports because of their significant role as Indonesia’s commercial gateways and the expected container terminal capacity shortages in the near term future.

The preparation of this chapter relied on site visits to Jakarta and Surabaya as well as meetings with the respective Port Authorities, Pelindos, and container terminal managers. Meetings were also held with Chamber of Commerce & Industry members involved in shipping, logistics and transport, the Sub Director of Ports and Dredging at the Ministry of Transport, the World Bank, PUL Group (a major operator of bonded warehouses, container depots and a trucking company), and major carrier company Maersk Lines. Telephone interviews were also conducted with operations managers of several shipping lines, including Evergreen Line, American President Line (APL), Mediterranean Shipping Line (MSC), NYK, and MOL. Additionally, several reports were reviewed along with materials provided by the Port Authorities, Port Companies and container terminal operators, mostly related to operational performance data and physical characteristics of present and proposed terminals. The main studies reviewed included:

Draft National Port Master Plan, September 2010 (NPMP);

Master Plan Study on Port Development and Logistics for Greater Jakarta Metropolitan Area, Japan International Cooperation Agency, March 2011 (JICA 2011);

The Study for Development of the Greater Surabaya Metropolitan Ports, Japan International Cooperation Agency, November 2007 (JICA 2007); and

The Study on the New Public Private Partnership Strategy for the Port Development and Management in Indonesia, October 2009 (JICA 2009).

We describe below the container terminals, their present productivity and utilization, and the expansion measures considered by the local port authorities and Pelindos. We also assess the proposed short-term measures for improving capacity.

4.1 TANJUNG PRIOK CONTAINER TERMINALS

Tanjung Priok comprises of three container terminals, including JICT I, JICT II, and Koja. Terminal I has a berth length of 1,690 m and depth alongside ranging from 11 – 14 m and a container yard (CY) of 36.9 ha. Terminal II has a berth length of 510 m, a depth


51


alongside of 8.6 m, and a container yard of 9.24 ha. The main equipment includes 18 shore cranes (gantries) and 56 yard cranes (RTG).52

Koja has a berth length of 650 m, depth alongside of 14 m, and a container yard of 21.80 ha. The main equipment includes 6 gantries and 21 RTGs.53

There is also a smaller terminal, Multi-Terminal, with berth length of 404 m, depth alongside of 9 m, and container yard of 6 ha.54 This terminal also handles breakbulk and bulk cargoes.

4.1.1 Throughput

Table 4-1 presents JICT and Koja throughput statistics. As seen in Table 4-1, the total throughput of JICT, including Terminals I and II, reached 2.095 million TEUs and that of Koja 0.743 million in 2010. The overall throughput of Tanjung Priok’s international containers reached 2.838 million TEUs, with JICT accounting for 73.8 percent of total international container volume.

Table 4-1: Tanjung Priok Throughput (TEUs)

Description JICT Koja Total

Total 2010 2,095,011 742,694 2,837,705

Share 73.8% 26.2% 100.0%

Jan-Apr 2010 623,054 241,911 864,965

Jan-Apr 2011 742,549 279,161 1,021,710

Change 19.2% 15.4% 18.1%

Source: JICT, Koja

Analysis of the 4-month throughput of these terminals indicates a significantly high growth rate of 18.1 percent. By comparison, the Tanjung Priok Masterplan (JICA 2011) predicted for the “Basic Case” an annual growth rate of 11.2 percent during the 2009–2015 period. The annual growth rate for the 2010–2015 period included in the draft NPM for the “General Results Base Case” is 7.9 percent.

52

http://www.jict.co.id 53

http://tpkkoja.co.id 54

http://www.multiterminal.co.id



4.1.2 Berth Productivity

Berth productivity is measured at JICT using 3 rates:

Gross Quay Crane Rate = Dividing the number of crane moves the crane handled by the first-to-last box hours (including intermediary breaks);

Vessel Operating Rate = Dividing the number of vessel moves the crane handled by the first-to-last box hours (including intermediary breaks); and

Berth Productivity = The same as above, but dividing by the total time the vessel was at berth (presumably first-to-last line).

Table 4-2 presents the productivity data for both terminals for the periods Jan–Apr 2010 and 2011. As seen in this table, crane productivity ranged from 24–27 moves/hour, which is in line with worldwide terminals handling similar ships. The same can be said regarding the number of cranes per vessel, averaging 2.0–2.2, and the berth productivity, ranging from 45–48 (information not available for Koja). We also observe from the table that JICT’s productivity is higher than Koja’s, reflecting the more modern equipment and larger facilities there.

Table 4-2: Crane and Vessel Handling Productivity at Tanjung Priok (moves/hour)

Description JICT Koja

Jan-Apr 2010

Gross Quay Crane Rate 26 24

Vessel Operating Rate 55 47

Cranes per Vessel 2.1 2.0

Berth Productivity 45 40

Jan-Apr 2011

Gross Quay Crane Rate 27 25

Vessel Operating Rate 60 50

Cranes per Vessel 2.2 2.0

Berth Productivity 48 n.a.

Source: JICT, Koja

Interestingly, the productivity of both terminals increases slightly during 2011, probably reflecting increased throughput. A related observation is that despite the increase in throughput, these terminals have not yet reached a stage of congestion (further discussed below).


53


The productivity statistics above were also corroborated in our interviews with shipping lines. Likewise, these lines indicated their satisfaction with the level of productivity. For example, one line noted that the crane productivity for the same ships in Singapore, considered one of the most efficient ports worldwide, is only 15–20 percent higher. Similar observations also are made in previous studies (JICA 2009). Hence, altogether, vessel handling at these terminals can be generally considered as productive. This, obviously, is a positive observation. The negative side of it is that future improvements in productivity are likely to be small – as well as their impact on berth and overall terminal capacity.

4.1.3 Berth Utilization

Berth utilization is calculated as follows:

Berth Utilization = Dividing the total time vessels where at berth by the calendar time.

Berth utilization at JICT Terminal I, the main terminal handling about 97 percent of the traffic, averaged 48 percent in 2010 and 51 percent in 2011. The rise in utilization reflects the above-noted increase in throughput while productivity remaining almost unchanged. Berth utilization of 51 percent for a 7-berth terminal is considered within a reasonable range according to international standards. Berth utilization in Koja averaged 53 percent in 2010, though reaching up to 82 percent in June 2010. Berth utilization is calculated for the two terminals based on first-to-last line time of the ship. The actual time that the ship occupies the berth is longer since the berth is unavailable to the next ship until the one before it left the pier and the maneuvering basin. This could typically add about 3-5 percent to the utilization rates.

It is interesting to note that shipping lines interviewed estimated berth utilization much higher, within a range of 65 – 70 percent. As will be seen below, these lines observed that the berth has about 10 percent unutilized capacity.

4.1.4 Container Yard Utilization

Yard utilization is calculated as follows:

Yard Utilization = (Occupied Slots/Total Slots) x (Average Dwell Days/365)

The overall yard utilization of JICT averaged 66 percent in 2010, increasing to 77 percent during the first 4 months of 2011. Due to Customs regulations, the yard is divided into export and import sections since mixed storage is prohibited presumably to enhance security. Accordingly, the terminal maintains separate statistics for exports and imports, revealing a wide difference in yard utilization. For example, the import yard utilization increased from 84 percent in 2010 to 98 percent in 2011, reaching 102 percent in April 2011. We assume that reaching above 100 percent is the result of using the same slot by more than one box during the same day. Koja’s yard utilization



averaged 77 percent for imports and 27 percent for exports in 2010, occasionally reaching 100 percent for imports. This indicates a severe shortage in import slots in both terminals.

4.1.5 Dwell Time

The dwell time of the boxes stored in JICT in 2010 and 2011 averaged about 4 days in both years. Import boxes averaged 5 days while export boxes 2–3 days. This reflects the terminal policy of providing free storage for 5 days for imports and 2 days for exports. This is achieved by imposing high storage tariffs for imports after 5 days or, in some cases, forced evacuation to bonded warehouses. In the case of exports, the terminal simply disallows boxes to enter the terminal earlier.

The reported data on dwell time has been confirmed with a recent World Bank study based on a sample of 30,000 boxes. The main findings were that the overall dwell time was 4.88 days of which 2.5 days are taken for pre-Custom processing, 1.2 days for Customs processing, and 1.8 days for the actual pick-up. Similar dwell time data were also provided by shipping lines indicating that it ranges from 5–7 days and 1–3 days for import and export containers, respectively.

The dwell time data are within a reasonable range. It seems that the release process is working well. In fact, we understood that a large portion of imports are under special categories (Priority and MITA), thus allowing immediate release. The only negative observation here is that any further reduction in dwell time would be difficult. Hence, the increase in yard capacity generated by such reduction (see above formula) also is limited.

4.1.6 Ship Waiting Time

No statistics were provided by the two terminals on ship waiting time. However, our interviews with shipping lines indicated that there is currently almost no waiting. Both JICT and KOJA have established a well-functioning berthing window system as part of their Terminal Operating System (TOS). Most ships arriving within their allocated time, usually a 24-hour period, are worked on arrival. However, in both terminals most windows, especially those most desirable during the weekend, are already taken. Therefore, when ships miss their window, which happens in about 20 percent of the cases, they are forced to wait a day and at times 2 days for an open berth.

Additionally, there has been a shift in shipping service patterns from short Singapore shuttles toward longer Intra-Asia, multi-port rotations. The Intra-Asian ships are larger


55


and hence may occupy more than one berth55, their itinerary is longer, and therefore their probability of missing their windows is higher. Also, their port handling process is more complicated, since boxes are stowed in different holds according to ports, which may adversely impact productivity.

Although ship waiting times are currently within a reasonable range, even a small increase in demand may quickly lead to a sharp deterioration. A model based on queuing theory suggests that a small change in berth utilization may result in a large increase in waiting. For example, if trade grows at the predicted 11.2 percent (JICA 2011), or a total 23.6 percent for the next 2 years, berth utilization would increase from the current 51 percent to 75 percent in 2013; the queuing model suggests that ship waiting could rise from about 5 percent to about 32 percent of their working time at a 3-berth terminal similar to Koja. Put differently, while utilization increases 1.5 times (75:51), waiting increases 6.4 times (32:5).

4.1.7 Truck Waiting

The only statistics available is truck turn time, or gate-in/ gate-out time. In JICT, the average for 2010 was 0:42 hours with 9 percent of the trucks waiting more than 2 hours. The data for the first 4 months of 2011 was 0:36 hours with 11 percent of the trucks waiting more than 2 hours. Interestingly, during April 2011 there was a sharp increase with the average reaching 1:07 hours and 23 percent of the trucks waiting more than 2 hours. These statistics are in line with that of international terminals, indicating that the gate and yard control systems work well.

The more critical truck statistics, that which includes pre-gate waiting, are not reported. Still, our interviews with shipping lines and truck companies generally indicated overall satisfaction. It should be noted that the gate operates 24/7.

4.1.8 Impact of High Container Yard utilization

The above analysis of the operational performance of Tanjung Priok terminals indicates that the terminals perform reasonably well. However, the analysis also indicates that these terminals’ main components, the berth and yard, are operating close to capacity. This observation is especially true regarding the yard, particularly for import boxes, where current occupancy has recently reached over 100 percent.

It seems, therefore, that the terminals are already reaching congestion in their yards. Yard congestion, in turn, could have a dramatic impact on the performance of both the berth and the gate. Put differently, ship and truck waiting could dramatically increase

55

For example, the berth length of the 3-berth Koja terminal is 650 m or about 215 m per berth, including inter-ship spacing of about 15 m. Accordingly, an Intra-Asian ship with 240-m LOA and total berth requirement of 270 m, may take more than one berth.



if the yard congestion even slightly increases. Estimating this impact is difficult since, unlike the case with berth utilization, there are no common theoretical models linking yard congestion to ship and truck waiting. Still, the relationship is quite clear. When the yard is congested, finding a place to store a box, either an import brought in by the ship or an export brought in by truck, is difficult and, hence, may require more time. Finding an export box required for ship loading may be even more time consuming, since it may require shifting several boxes stacked above the desired box. The result is that the ship-handling productivity is slowed down, ship’s time at berth lengthens, and berth utilization increases. This, in turn, further adds to ship waiting as documented above through the queuing model.

4.1.9 Need for Immediate Expansion

Although the operational performance of Tanjung Priok terminals is relatively high, showing no visible signs of congestions, both terminals are operating close to full capacity. This is a risky situation, since even a small increase in demand could result in a large deterioration in operational performance, resulting in low vessel-handling productivity, long ship’s waiting times for berth and long queues of trucks at the gate. Hence, there is a need for immediate expansion of both the berth and the yard available for handling containers in Tanjung Priok.

4.1.10 Long-Term Plans

The focus of the Tanjung Priok Masterplan (JICA 2011) is on long-term expansion requirements, with emphasis on new terminal construction. Phase I of the recommended plan includes a new North Kalibaru terminal on reclaimed land, north of the existing terminals in Tanjung Priok. Recent publications indicated that the Ministry of Transport is preparing a tender for this terminal, geared toward private investors. The tender includes land reclamation, civil structures and equipment, a new and deeper access channel, a new breakwater and a new elevated access road connected to the harbor toll road. According to reports, the tender is expected to be issued in 2011 and the terminal ready for operation in 2014.

The Masterplan does not address the expected short-term shortage in capacity in the interim period before the terminal opens. Moreover, based on experience in other green-field projects of similarly large scale, it is quite likely that the bidding and construction process of the new terminal will take longer and the new terminal would be ready in 2015 (as assumed by the Masterplan) and perhaps even later.

4.1.11 Short-Term Plans

Pelindo II is well aware of the urgent need for expansion and, in response, developed a short-term expansion plan. The plan, referred to as “Optimization of the Capacity of


57


Existing Terminals”, involves an exchange of port area between domestic and international, but no additional physical areas (hence the term optimization). Figure 4-1 presents the proposed changes in the layout of Tanjung Priok. As the figure shows, international container terminals will gain about 4 berths at OJA & SAMIN (white rectangle) and will lose the same number at MTI (yellow rectangle) and JICT 2 (blue rectangle). However, the new berths at OJA & SAMIN are much deeper and better situated than those lost to domestic. Hence, altogether, our rough assumption is that in terms of capacity, there will be a net gain of about 1 berth, or about 10 percent of the combined berth capacity of the existing terminal.56 Shipping lines interviewed estimated that the terminals presently operate at about 90 percent of their capacity, which means that they possess about 10 percent of unutilized capacity. Hence,

Figure 4-1: The Optimization Plan of Tanjung Priok

overall, the combination of the unutilized capacity and that generated by the Optimization Plan could amount to additional capacity of 20 percent, which may be sufficient for covering the short-term demand for berthing.

The Optimization Plan will also expand the yard area. Moreover, realizing that the capacity of present terminals is dictated by their yard area, the plan provides an estimation of the additional capacity to be generated by the additional yard. Figure 3-2 presents the calculations of added capacity based on the added container yard area. As seen there, the main addition of yard space and respective capacity will be at JICT,

56

This is a very rough estimate. If required, a more accurate capacity estimate can be developed based on a simulation model considering the actual dimensions of the various berths along with ship population (LOA, moves), productivity and window requirements.



with 12 ha and 0.7 million TEU capacity. Altogether, the Optimization Plan is expected to add 1.7 million TEU capacity to the existing terminal capacity of 4.5 million TEUs, bringing the total to 6.2 million TEUs. This capacity should be sufficient until 2014, for which the master plan forecast is for 6.1 million TEUs. By then, the new terminal at North Kalibaru should be ready. The capacity and forecast figures above refer to both international and domestic containers.

Short of an in-depth study, we cannot either confirm or argue with the above calculations. In any event, it seems that the small difference between demand and capacity of 1.6 percent (0.1/6.1) suggests high probability of yard congestion in the near future. In addition, there is the risk, as noted above, that North Kalibaru could be delayed by 1 or 2 years.

Our expectation is that future yard congestion will be especially severe for import containers, already the main users of the yard area. This is simply because the proportion of import containers has been growing in recent years and will likely continue to grow in the near future.

4.2 TANJUNG PERAK

4.2.1 Container Handling Facilities

The main terminal for handling international containers is TPS. The terminal’s main facilities include a narrow, 50-m wide and 1,000 m long wharf for international containers, with depth alongside of 10.5 m, and a 50-m wide and 450-m long wharf with 7.5 m depth alongside for domestic containers. The total container yard area is 38 ha of which 29 ha serves international containers and 9 ha serving domestic containers. The terminal also has a container freight station (CFS) of 10,000 sq m. The international wharf and domestic wharf arte equipped with 7 and 4 gantry cranes, respectively. The container yard is served by 27 RTGs.57

A second terminal, BJTI, created by converting a general cargo terminal to a container terminal, is also serving international containers, using a 565-m wharf with depth alongside of 9.6 m. Domestic containers are handled on the other side of this wharf, with a length of 700 m and depth alongside of 9.5 m as well as at the northern end of it, with 140 m and depth alongside of 6.5 m. The container yard is quite limited with a total of 2.4 ha for international and 1.2 for domestic. The main equipment includes 7 harbor mobile cranes (HMC) and one gantry. The container yard is served by 4 RTGs.58

TPS is the major container terminal in Surabaya. Due to the limited scope of this study, we have only visited TPS and discussed its operations performance and expansion options with its management. Accordingly, the discussion below focuses on TPS.

57

http://www.tps.co.id 58

http://www.bjti.co.id


59


4.2.2 Throughput

Table 4-3 presents the throughput statistics for TPS (international and domestic) and BJTI (international containers). As seen in this table, TPS handles both international and domestic containers, although the share of domestic has declined in 2011 to only 15 percent of the total. It was understood that the focus of TPS is on international containers, which generates much more income, with domestic serving as a secondary source of income. The recent growth rate of international containers has been 4.9 percent. The historical rate (not presented here) is even lower, at about 3 percent per year. A similar growth rate is recorded for BJTI.

4.2.3 Productivity and Utilization

No statistics on productivity were made available. From discussion with the terminal management we understood that crane productivity is about 24 moves/hour, which is somewhat lower than that in the Tanjung Priok terminals. However, Tanjung Priok terminals handle larger ships, using newer and faster shore cranes and have a marginal layout, unlike TPS whereby the distance between the berth and the yard is 2 km on average. This configuration slows productivity down. We also understood that ships typically work with 2 cranes. Accordingly, berth productivity is likely around 48 moves/hour. This performance is reasonable when compared to international standards.

Table 4-3: Tanjung Perak’s Throughput

Description

TPS BJTI TPS+BJTI

International Domestic Total TPS International International

Total 2010 989,622 242,279 1,231,901 127,432 1,117,054

Total 2011 (4 months) 346,170 59,179 405,349 44,843 391,013

Monthly Average 2010 82,469 20,190 102,658 10,619 93,088

Monthly Average 2011 86,543 14,795 101,337 11,211 97,753

Change in Monthly Average

4.9% -26.7% -1.3% 5.6% 5.0%

Source: websites

4.2.4 Dwell Time and Ship and Truck Waiting

Dwell time of containers, according to TPS management, is 6.1 days for imports and 2.5 days for exports, close to the dwell time figures reported for Tanjung Priok. No data



were obtained on ship and truck waiting. However, no meaningful ship waiting was indicated during interviews with shipping lines.

4.2.5 Need for Immediate Expansion

The Tanjung Perak master plan developed in 2007 indicated that demand will exceed capacity during the period 2011 to 2013, depending on the growth scenarios. TPS indicated that there is occasional shortage of storage capacity. Hence, as was the case in Tanjung Priok, the terminal capacity is dictated by the container yard.

4.2.6 Long-Term Expansion Plans

Much like Pelindo II in Jakarta, Pelindo III, the operator of Tanjung Perak port in Surabaya, focuses its attention on the long-term plans. Pelindo III decided not to follow the master plan recommendations and, instead, to develop a new terminal adjacent to TPS, called Lamong, based on a very long causeway/bridge and a small remote yard. Phase I of this terminal will consist of 500 m of berth with depth alongside of 14 m and 20 ha of container yard. Phase II will double Phase I. The construction of this terminal has just started and may be operational in 3 years. The terminal is defined as multipurpose because Pelindo III observes an urgent need for additional capacity for handling non-containerized cargo and domestic containers. Hence, this terminal is not expected to provide additional capacity for handling international containers, the focus of our study.

4.2.7 Short-Term Plans

Pelindo II is also considering continuing with the rehabilitation of conventional terminals and expanding those already rehabilitated. These terminals, especially the largest (Jamrud), are mainly designed for handling domestic containers. Hence, like Lamong, they will not add much to the capacity for handling international containers. Figure 4-2 presents an aerial photo of Tanjung Perak, including TPS, BJTI where international containers are handled, along with Berlian, Mirah and Jamrud, which mainly serve domestic containers and non-container cargoes.


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Figure 4-2: TPS Expansion Options



CHAPTER 5: FORECAST OF INDONESIAN PORT TRAFFIC

5.1 APPROACH

We have tailored our approach to the forecasting of Indonesian port traffic to generate the most rigorous methodology feasible taking into account the quantity and accuracy of data and the time available for the exercise. Nonetheless, the approach draws upon tested principles, techniques and concepts employed by Nathan Associates in dozens of other port demand forecasting assignments.

First, the forecast is driven by the top-down approach, working first at the national level based on macroeconomic trends and conditions in Indonesia, the region and its trading partners. Forecasts at the national level are then assigned to individual port areas based on historical patterns adjusted for special conditions such as implementation of the economic development corridor strategy.

Components of trade such as international container traffic and domestic container traffic that have different determinants of growth are forecasted separately taking into consideration customized regression models developed for this study.

In preparing the port traffic forecast, the NPMP Revision Team reviewed documents and/ or met with representatives of other economic, spatial and logistical planning efforts currently being implemented in Indonesia. These include:

Masterplan of Acceleration and Expansion of Indonesia Economic Development 2011-2025 (MP3EI)

National Transportation System (SISTRANAS)

Blueprint of Intermoda /Multimoda Transport and National Logistics System

Strategic Plan of National Transportation Development

The MP3EI directive is aimed at implementing the 2005 to 2025 Long-term National Development Plan, which is stated in the Law No. 17 Year 2007, the vision of the acceleration and expansion of Indonesia’s economic development is to create a self-sufficient, advanced, just, and prosperous Indonesia. By utilizing the MP3EI, Indonesia aims to earn its place as one of the world’s developed countries by 2025 with expected per capita income of US$ 14,250-US$ 15,500 with total GDP of US$ 4.0-4.5 trillion. To achieve the above objectives, real annual economic growth of 6.4-7.5 percent is expected for the period of 2011 to 2014. This economic growth is expected to coincide with the decrease in the rate of inflation from 6.5 percent in 2011 to 2014 to 3.0 percent in 202559.

59

This summary of key aspects of the MP3EI is drawn from sections of report, Republic of Indonesia, Masterplan for Acceleration and Expansion of Indonesia Economic Development, 2011-2025, May 2011.


63


The 2025’s vision is achieved by focusing on three main goals:

Increase value adding and expanding value chain for industrial production processes, and increase the efficiency of the distribution network. In addition increase the capability of industry to access and utilize natural resources and human resources. These increases can be attained by the creation of economic activities within regions as well as among regional centers of economic growth.

Encourage efficiency in production and improve marketing efforts to further integrate domestic markets in order to push for competitiveness and strengthen the national economy.

To push for the strengthening of the national innovation system in the areas of production, process, and marketing with a focus on the overall strengthening of sustainable global competitiveness towards an innovation-driven economy.

Acceleration and expansion of Indonesia’s economic development are based on the development of existing and creation of new growth centers. This development strategy is essentially an integration of the sectoral and regional development approaches. The purpose of developing new growth centers is to optimize agglomeration advantages, to exploit regional strengths, and to reduce spatial imbalance of economic development throughout the country. As part of this strategy, each region will develop their own specific local products.

The development of economic growth centers will be managed through the development of industrial clusters and special economic zones (SEZ). This will be accompanied with increased and improved connectivity between the centers of economic growth (major cities) and main industrial clusters supported by improved infrastructure including roads, seaports, airports, power, water, and other related infrastructures. In all, growth centers and connectivity are the building blocks of Indonesia Economic Corridors. Increasing the economic potential of the region through the economic corridors has become one of the three main pillars of MP3EI.

The success of the MP3EI depends on the strength of national and international economic connectivity (intra and inter region). With this consideration, the MP3EI has identified the strengthening of national connectivity as one of three main pillars. National connectivity consist of four national policy elements i.e. National Logistic System (Sistem Logistik Nasional/Sislognas), National Transportation System (Sistem Transportasi Nasional/Sistranas), Regional Development (RPJMN/RTRWN), and Information and Communication Technology (ICT). These policies were combined in order to create an effective, efficient, and integrated national connectivity.

The development of economic corridors in Indonesia is based on the potentials and advantages inherent in each region. As a country consisting of thousands of islands and located between two continents and two oceans, the Indonesian archipelago has a unique combination of economic potentials with each major island or region having its own strategic future role in achieving Indonesia’s 2025 vision. By taking into consideration these potentials and strategic roles of each major island, six economic corridors have been identified as depicted in Figure 5-1.



Figure 5-1. Indonesian Economic Development Corridors Established for the MP3EI

Source: Republic of Indonesia, Masterplan for Acceleration and Expansion of Indonesia Economic Development, 2011-2025, May 2011.


65


The development themes of each corridor in the acceleration and expansion of economic development are as follows:

Sumatra Economic Corridor as a “Center for Production and Processing of Natural Resources and As Nation’s Energy Reserves”

Java Economic Corridor as a “Driver for National Industry and Service Provision”

Kalimantan Economic Corridor as a “Center for Production and Processing of National Mining and Energy Reserves”

Sulawesi Economic Corridor as a “Center for Production and Processing of National Agricultural, Plantation, Fishery, Oil & Gas, and Mining”

Bali – Nusa Tenggara Economic Corridor as a “Gateway for Tourism and National Food Support”

Papua – Kepulauan Maluku Economic Corridor as a “Center for Development of Food, Fisheries, Energy, and National Mining”

We have prepared the forecast for Indonesian port traffic taking into account the economic growth objectives and the need for connectivity and port infrastructure to support the program. In the section below, we present the forecast of container traffic at Indonesian ports. In a subsequent section, we present the forecast of port traffic for other cargo types.

5.2 CONTAINERS

Due to the high rate of traffic growth and the anticipated requirement for investment in new and expanded facilities, a particular focus was placed on the development of a traffic forecast for containers. The first step was to separate Indonesian container flows into those for international trade and those for domestic trade, as the characteristics and determinants of future growth for these two trade flows are quite different.

5.2.1 Separation of Port Traffic into International and Domestic Trade Flows

Comprehensive data on the classification of container traffic between International and domestic trade flows are not publicly available. We have compiled available data from DGST and the Pelindos for the main container ports of Tanjung Priok, Tanjung Perak, Belawan, Makassar and Tanjung Emas. As was described in Chapter 3, these five container ports handled 83 percent of the total container volume in Indonesia in 2009 (Table 3-6).

Table 5-1 present the division of container traffic at these ports for selected years from 1999 through 2009. The share of domestic containers of the aggregate total for these 5 ports ranged generally between 35-40 percent except for the low figure of 26.2



percent for 2009. The 2009 data was obtained from the DGST shipping database discussed in the Chapter 3. Part of the explanation of the low domestic share for 2009 may be due to the problems with the classification of container traffic at Tanjung Emas which went from no foreign containers in 1999 to 94 percent foreign containers in 2009. If those containers were actually for domestic trade, then the share of domestic container trade of total trade in 2009 for these five ports would be 34 percent60.

60

As mentioned in Chapter 3, in the subsequent IndII Phase 2, it is anticipated that a further effort will be made to improve and refine the historical traffic data set. The composition of the Tanjung Emas container traffic will be one of the items addressed.


67


Table 5-1: Domestic and International Container Traffic at Indonesian Main Ports, Selected Years, 1990-2009 (TEU)

We have prepared an estimate of the split of Indonesian containers between domestic and international Trade flows from 1990 to 2009 (Table 5-2). The division includes assumptions that in the early part of this period, the use of containers was predominantly for international trade and it was only near the beginning of the new millennium that containers penetrated the domestic market. The share in 2009 of 31 percent domestic is obtained from the data reported for all ports in the DGST shipping data sets. Figure 5-2 presents graphically the trend in estimated domestic and international containers from 1990 to 2009.These data were used for the regression analyses presented in the following sections.

Trade flow and port 1999 2003 2004 2005 2006 2007 2009

Domestic

Tajung Priok 224,539 707,660 996,606 1,286,122 1,217,362 1,166,630 833,000

Tajung Perak 397,979 589,817 654,252 708,470 771,115 857,417 539,000

Belawan 9,879 189,754 245,756 238,943 255,904 260,839 278,000

Makassar 125,518 222,028 238,104 232,156 242,526 284,820 249,000

Tajung Emas 230,698 n.a. n.a. n.a. n.a. n.a. 32,000

Total 988,613 1,709,259 2,134,718 2,465,691 2,486,907 2,569,706 1,931,000

Foreign

Tajung Priok 1,193,818 2,050,163 2,251,543 2,044,294 2,202,560 2,524,162 3,090,000

Tajung Perak 184,895 985,181 1,078,678 1,075,678 1,080,732 1,190,043 1,206,000

Belawan - 235,801 274,031 281,106 304,000 320,515 610,000

Makassar - 10,143 11,740 12,044 13,545 17,223 2,000

Tajung Emas - n.a. n.a. n.a. n.a. n.a. 543,000

Total 1,378,713 3,281,288 3,615,992 3,413,122 3,600,837 4,051,943 5,451,000

Total

Tajung Priok 1,418,357 2,757,823 3,248,149 3,330,416 3,419,922 3,690,792 3,923,000

Tajung Perak 582,874 1,574,998 1,732,930 1,784,148 1,851,847 2,047,460 1,745,000

Belawan 9,879 425,555 519,787 520,049 559,904 581,354 888,000

Makassar 125,518 232,171 249,844 244,200 256,071 302,043 251,000

Tajung Emas 230,698 n.a. n.a. n.a. n.a. n.a. 575,000

Total 2,367,326 4,990,547 5,750,710 5,878,813 6,087,744 6,621,649 7,382,000

Domestic Share of Total

Tajung Priok 15.8% 25.7% 30.7% 38.6% 35.6% 31.6% 21.2%

Tajung Perak 68.3% 37.4% 37.8% 39.7% 41.6% 41.9% 30.9%

Belawan 100.0% 44.6% 47.3% 45.9% 45.7% 44.9% 31.3%

Makassar 100.0% 95.6% 95.3% 95.1% 94.7% 94.3% 99.2%

Tajung Emas 100.0% n.a. n.a. n.a. n.a. n.a. 5.6%

Total 41.8% 34.2% 37.1% 41.9% 40.9% 38.8% 26.2%

Source: Prepared by Nathan Associates from DGST and Pelindo data.



Table 5-2: Estimated Domestic and International Container Traffic at All Indonesian Ports, 1990-2009 (TEU)

Figure 5-1: Estimated Domestic and International Container Traffic at All Indonesian Ports, 1990-2009 (TEU)

Percent

Year Domestic International Total Domestic

1990 200,061 800,246 1,000,307 20.0%

1991 264,506 953,339 1,217,845 21.7%

1992 348,212 1,137,442 1,485,654 23.4%

1993 468,695 1,394,347 1,863,042 25.2%

1994 612,756 1,667,127 2,279,883 26.9%

1995 798,838 1,994,711 2,793,549 28.6%

1996 907,451 2,085,957 2,993,408 30.3%

1997 1,127,322 2,391,803 3,519,125 32.0%

1998 1,196,057 2,347,467 3,543,524 33.8%

1999 1,513,963 2,754,029 4,267,992 35.5%

2000 1,724,975 3,203,525 4,928,500 35.0%

2001 1,774,531 3,295,558 5,070,089 35.0%

2002 2,034,731 3,778,787 5,813,518 35.0%

2003 2,080,757 3,994,457 6,075,214 34.2%

2004 2,578,159 4,367,136 6,945,295 37.1%

2005 3,024,936 4,187,255 7,212,191 41.9%

2006 3,167,634 4,586,473 7,754,107 40.9%

2007 3,316,948 5,230,203 8,547,151 38.8%

2008 3,375,337 5,507,129 8,882,466 38.0%

2009 2,772,205 6,199,333 8,971,538 30.9%

Source: Prepared by Nathan Associates Inc. as decribed in text.

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

TEU

s

Year

International

Domestic


69


5.2.2 Base Case Forecast of International Container Flows

International container flows were forecast through 2030 based on a multiple regression model that assesses the relationship between historical international container TEU and the independent variables of trade-weighted GDP of Indonesia’s major trading partners and Indonesia’s own GDP. GDP in constant US dollars of 2000 were obtained for Indonesia, Europe, China, and the United States from the World Bank’s on-line databank for the period of 1990 to 2009. For Indonesia’s trading partners, their GDP was weighted in accordance of their share of Indonesian foreign trade in manufactured goods. The Indonesian trade data for manufactured goods was obtained from the on-line United Nations Statistics Division, Commodity Trade Statistics Database (COMTRADE) for 1990 to 2009.

The resulting regression model and the statistical results are presented in Table 5-3. The model has a coefficient of determination (R-squared) of 98 percent and the variables have t-statistics of nearly 4.0 with the exception of Europe that is still significant at a value of 2.0. The regression, based on the historical container traffic volumes, implicitly takes into account trends in the propensity to trade and containerization rates of general cargo.

Table 5-3: Regression Equation and Statistics for Forecast of Indonesian International Container Traffic

To apply this regression model to develop forecasts of Indonesian international container volumes in future years, it is necessary to develop assumptions regarding the future growth of GDP for Indonesia and each of its main trading partners. We have used the real GDP growth rates projected by the International Monetary Fund (IMF) as published in the Statistical Appendix of the April 2011 issue of the World Economic

Regression Statistics

Multiple R 0.990

R Square 0.980

Adjusted R Square 0.975

Standard Error 252,946.900

Observations 20

ANOVA

df SS MS F Significance F

Regression 4 4.74331E+13 1.18583E+13 185.3371032 1.41913E-12

Residual 15 9.59732E+11 63982134104

Total 19 4.83928E+13

Coefficients Standard Error t Stat P-value Lower 95% Upper 95%

Intercept (2,546,444.4) 674,378.4 (3.776) 0.002 -3.98E+06 (1,109,041.016)

Europe TW-GDP (553.3) 278.4 (1.987) 0.065 (1,146.803) 40.133

US TW-GDP 1,373.0 329.0 4.173 0.001 671.727 2,074.246

Indonesia GDP 19,050.0 4,996.2 3.813 0.002 8,400.881 29,699.091

China TW GDP 6.1E-06 1.6E-06 3.746 0.002 2.650E-06 9.647E-06

Source: Prepared by Nathan Associates Inc.



Outlook. The IMF projections are for 2011 through 2016. From 2016 through 2030, we have assumed GDP growth rates as shown in the Table 5-4 below.

Table 5-4: Projected GDP Growth for Selected Regions and Countries, 2011-2030

Alternative assumptions regarding future GDP growth are developed and applied in the alternative scenarios discuss later in this chapter.

Based on the regression model and these GDP projections, Table 5-5 presents the Base Case forecast of Indonesian international container traffic through 2030. International containers handled at Indonesian ports are projected to increase from 6.2 million TEU in 2009 to 10.7 million TEU in 2015 and to reach 15.7 million TEU in 2020. With continued growth through 2030, the total volume of international containers is projected to reach 29.4 million TEU that year. In terms of average annual rates of growth, from 2009 to 2015, the international container volume is projected to increase at an average rate of 9.5 percent, declining slightly to 8.0 percent from 2015 to 2020 and 6.5 percent from 2020 to 2030.

From 2009 to 2020, Indonesian GDP has been projected to grow at an overall average rate of 6.5 percent, as compared to the average growth rate of international container traffic during this period of 8.8 percent. Thus the implicit elasticity of container growth relative to GDP is 1.35 which is considered to be at the lower end of expected values.

Region or country 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2025 2030

Europe 1.7% 1.6% 1.8% 1.8% 1.7% 1.7% 1.7% 1.8% 1.8% 1.8% 1.8% 2.0% 2.0%

US 2.8% 2.8% 2.9% 2.9% 2.8% 2.8% 2.7% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4%

Indonesia 6.1% 6.2% 6.5% 6.6% 6.8% 6.9% 7.0% 6.8% 6.6% 6.4% 6.0% 5.5% 5.5%

China 10.3% 9.6% 9.5% 9.5% 9.5% 9.5% 9.5% 8.5% 8.5% 8.5% 7.5% 7.5% 7.5%

Source: IMF World Economic Outlook for 2011-2016; Nathan Associates inc. own estimates for 2016-2030.


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Table 5-5: Base Case Forecast of International Container Traffic at Indonesian Ports, 2009-2030 (TEU)

Tanjung Priok in Jakarta is by far the largest container port in Indonesia for handling international containers, accounting for 50 percent of the national volume. Within Tanjung Priok, the specialized container terminal of Jakarta International Container Terminal (JICT) handles only international traffic and accounts for more than 50 percent of the international containers at Tanjung Priok. As can be seen from Table 5-6, the ratio of TEU per box handled at JICT has remained relatively flat from 2000 through 2009 at a ratio of approximately 1.5. This means that there is roughly an equal distribution of 20-foot and 40-foot boxes handled at the terminal.61 It would be expected that due to the efficiencies and cost-savings achieved with the handling of 40-foot containers, during the forecast period, the ratio of TEU per box would increase to 1.6 or 1.65 as experienced in other major international container ports. One of the impediments to the greater use of 40-foot containers is the narrow roads and maneuverability issues. Nonetheless, over time, it is expected those impediments would be removed or mitigated.

61

A mix of 50 boxes of 20-foot and 50 boxes of 40-foot results in a total of 150 TEU for the 100 boxes handled.

Year TEU

2009 6,199,333

2010 6,926,383

2011 7,557,376

2012 8,248,675

2013 8,997,260

2014 9,809,023

2015 10,689,382

2016 11,644,330

2017 12,602,702

2018 13,613,965

2019 14,680,035

2020 15,727,137

2021 16,789,736

2022 17,918,258

2023 19,116,975

2024 20,390,444

2025 21,682,352

2026 23,052,639

2027 24,506,338

2028 26,048,815

2029 27,685,799

2030 29,423,403

Average Annual Growth Rate

2009-15 9.5%

2015-20 8.0%

2020-30 6.5%

Source: Nathan Associates Inc.



Table 5-6: Characteristics of Container Traffic at JICT, 2000-2009

The Draft Final Report prepared for the JICA Port Master Plan Study on Port Development and Logistics in Greater Jakarta Metropolitan Area of March 2011 estimated that average tons per TEU handled at JICT was 10.5 tons for export containers and 11.0 tons for import containers.

5.2.3 Base Case Forecast of Domestic Container Flows

A regression model was also prepared to project the future volume of containers on Indonesian domestic trade flows. The model consists of a simple regression of number of domestic TEU as the dependent variable and Indonesia’s GDP in constant US$ of 2000 as the independent variable. The data for Indonesia’s GDP is the same as that used for the international container forecast described earlier.

The resulting regression model and the statistical results are presented in Table 5-7. The model has a correlation coefficient (R-squared) of 86 percent and the Indonesian GDP variable has t-statistic of 10.4.

Table 5-7: Regression Equation and Statistics for Forecast of Indonesian Domestic Container Traffic

I tem 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

TEU 1,596,366 1,265,103 1,509,013 1,502,883 1,636,290 1,470,467 1,619,495 1,821,282 1,985,781 1,676,886

Box 1,037,379 842,939 1,013,087 1,002,155 1,133,202 994,352 1,085,977 1,212,584 1,340,898 1,128,040

TEU/ Box 1.54 1.50 1.49 1.50 1.44 1.48 1.49 1.50 1.48 1.49

Source: Prepared by Nathan Associates Inc. from data provided by Pelindo II.

Regression Statistics

Multiple R 0.926

R Square 0.857

Adjusted R Square 0.849

Standard Error 421,697.504

Observations 20

ANOVA

df SS MS F Significance F

Regression 1 1.91812E+13 1.9181E+13 107.863086 4.97275E-09

Residual 18 3.20092E+12 1.7783E+11

Total 19 2.23821E+13

Coefficients Standard Error t Stat P-value Lower 95% Upper 95%

Intercept (2,635,746) 424,646 (6.21) 0.00 (3,527,894) (1,743,597)

Indonesia GDP 24,376 2,347 10.39 0.00 19,445 29,307



73


The resulting Base Case forecast of Indonesian domestic container traffic is presented in Table 5-8. The volume of domestic containers is projected to increase from 2.7 million TEU in 2009 to 6.6 million TEU in 2015 and to reach 10 million TEU by 2020. In terms of average annual rate of growth, the projection results in an average rate of 15.4 percent from 2009 to 2015, 8.8 percent from 2015 to 2020 and 8.2 percent from 2020 to 2030. The high rate from 2009 to 2015 is due the fact that the volume of domestic containers in 2009 was at a depressed level. If 2009 had been a typical year, then the average growth rate from 2009 to 2015 would be around 10 percent.

Table 5-8: Base Case Forecast of Domestic Container Traffic at Indonesian Ports, 2009-2030 (TEU)

As mentioned earlier, it is difficult to obtain comprehensive information about the composition of container traffic in Indonesia. Table 5-9 presents data provided by Pelindo II for containers handled at its port excluding the JICT terminal. As such, this data provides an interesting look at the composition of domestic containers handled at Pelindo II ports. The ports included in this data set are Tanjung Priok (excluding JICT), Panjang, Palaembang, Teluk Bayer, Pontianak, Banten, Jambi, Sunda Kelapa, Bengalu, Balam, and Panadan.

Year TEU

2009 2,772,205

2010 4,049,710

2011 4,464,208

2012 4,925,705

2013 5,426,651

2014 5,970,863

2015 6,562,567

2016 7,206,449

2017 7,875,719

2018 8,569,475

2019 9,286,609

2020 10,001,951

2021 10,697,024

2022 11,430,326

2023 12,203,960

2024 13,020,144

2025 13,802,939

2026 14,624,873

2027 15,487,904

2028 16,394,086

2029 17,345,578

2030 18,344,644


2009-15 15.4%

2015-20 8.8%

2020-30 6.3%




As can be seen from Table 5-9, tons per TEU at these ports consistently averaged around 10 tons while the ratio of TEU per box has remained at about 1.24 from 2002 through 2009. This means that the mix of container was roughly 75 percent 20-foot containers and 25 percent 40-foot containers. The percent of TEU that are empty has averaged around 20 percent while generally ranging from 15 percent to 25 percent.

For the forecast, we have assumed a national average factor of 10 tons per TEU for both international and domestic trade flows. While we believe the ratio of TEU per box will increase somewhat over time, it does not affect the container forecast in this report that are presented in terms of TEU. The ratio of TEU per box, however, is significant in assessing port capacity and investment requirements to be presented in Chapter 8.

Table 5-9: Characteristics of Container Traffic at Pelindo II Ports excluding JICT, 2000-2009

5.2.4 Analysis of Base Case Container Forecasts

The combined container traffic for Indonesian international and domestic trade is presented in Figure 5-3. Total container traffic is forecast to double from 8.8 million TEU in 2009 to 17.2 million TEU in 2015 and to reach nearly 26 million TEU by 2020. This corresponds to an overall annual growth rate of 11.8 percent from 2009 to 2015 and 8.3 percent from 2015 to 2020.

I tem 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Tons in containers (000s) 12,136 9,991 15,102 16,752 19,819 22,564 21,901 23,645 26,683 26,005

Boxes (000s)

Full 20' 424.8 388.9 660.7 780.9 991.9 1,111.4 1,094.2 1,065.4 1,115.3 1,187.8

Full 40' 209.8 177.3 230.9 259.9 321.9 402.8 370.7 384.6 427.1 424.1

Empty 20' 220.6 155.7 212.6 225.1 239.8 234.1 262.4 345.9 342.4 404.4

Empty 40' 58.4 47.6 60.7 54.4 49.0 56.0 66.2 70.1 74.2 77.6

Total 913.6 769.4 1,164.8 1,320.2 1,602.7 1,804.2 1,793.4 1,866.0 1,959.0 2,093.9

TEUs (000s) 1,180.9 994.2 1,456.4 1,634.4 1,973.6 2,262.9 2,230.3 2,320.6 2,460.4 2,595.7

Tons/TEU 10.3 10.0 10.4 10.2 10.0 10.0 9.8 10.2 10.8 10.0

TEU/Box 1.29 1.29 1.25 1.24 1.23 1.25 1.24 1.24 1.26 1.24

Percent Empty 28.6% 25.2% 22.9% 20.4% 17.1% 15.3% 17.7% 20.9% 19.9% 21.6%

Source: Prepared by Nathan Associates Inc. from data provided by Pelindo II.


75


Figure 5-2: Indonesian Base Case Container Forecast for Domestic and International Trade, 2009-2030 (000’s TEU)

The Base Case container forecast indicates the Indonesia will experience sustained high levels of container traffic growth over the next 10 years. For both domestic and international trade flows, we believe the forecasted rates of growth are justified taking into account the following considerations:

Both the Government of Indonesia and independent multilateral organizations such as the IMF are forecasting real GDP growth for Indonesia of at least 6.5-7.0 percent for the next decade.

Implementation of economic development corridors will accelerate growth and also directly affect the volume of container traffic due to

o overall higher GDP growth of at least one percent per year due to accelerated program

o policies for promoting and facilitating increased value-added will mean that commodities previously exported in bulk may soon be shifted to further processed materials and products that are traditionally shipped in containers.

As described in Chapter 3, Indonesia has a history of high growth of container traffic dating back to 1990.

There remains substantial potential for domestic general cargo traffic and some further international general cargo traffic to be shifted to more efficient container transport.

Favorable demographic conditions means that productive age population will continue to increase faster than overall population resulting in a larger productive workforce and lower dependency ratios.

Projected Increases in GDP per capita will generate a burgeoning middleclass that in the next 10 years could be double or triple in size. The growing middle class will have greater demand for manufactured and consumer products that are important determinants of key segments of container traffic.

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

00

0's

TEU

s

Year

Domestic

International



The confluence of the considerations above are also mutually supporting in some respects. For example, the policy of shifting to increased value added not only affects the type of cargo to be traded but also reinforces the growth in GDP and GDP per capita and the burgeoning middle class.

It is important to note that the container forecasts presented herein do not include any international transshipment traffic. There are several reasons for this. First, there is no history of Indonesian ports serving as international container transshipment hubs, as this business has been dominated by Singapore and Malaysia within the region that are located on major international trade routes and have efficient port operations developed for the transshipment market. Second, the focus of the present study is more on the development requirements of Indonesian ports to support national economic growth, and as such, on ports that accommodate Indonesian foreign and domestic trade flows. The development of an international container transshipment hub in Indonesia should be regarded as a commercial investment decision that should be implemented with private sector financing if market conditions warrant. However, the assessment of that private investment opportunity is beyond the scope of the present study.

5.3 BASE CASE FORECAST FOR OTHER CARGO TYPES AND COMMODITY GROUPS

In this section, we present the forecast for other cargo types and commodities handled at Indonesian ports. Again, the forecasts are presented separately for international and domestic trade flows.

The forecast of other cargo types was not based on regression analysis due to the lack of adequate time series of port traffic by cargo type. Instead, the forecast has been prepared taking into consideration national trends in production, consumption and foreign and domestic trade for each cargo type/ commodity. Some of the assumptions regarding the forecast of individual cargo types/ commodities draw upon the analysis presented in the MP3EI report, the JICA Master Plan Study on Port Development and Logistics in Greater Jakarta Metropolitan Area, and the IndII 2010 Technical Report on Development of the National Port Master Plan prepared by DWA. A discussion of the assumptions and approach used to prepare the forecast of other cargo types and commodities is presented in the sections below.

Table 5-10 presents the forecast for total cargo handled at Indonesian ports by cargo type and commodity from 2009 through 2030. Total port traffic is forecast to increase from 1.0 billion tons in 2009 to 1.3 billion tons in 2015 and 1.5 billion tons in 2020. The corresponding annual average rate of growth is 4.5 percent from 2009 to 2015 and 3.7 percent from 2015 to 2020. These figures include cargo that is carried in containers. As can be seen from Table 5-10, the annual growth rates for other cargo types (with some notable exceptions) are generally less than 5 percent.


77


Table 5-10: Base Case Forecast of Total Cargo Handled at Indonesian Ports, 2009-2030 (000’s tons)

5.3.1 General Cargo

As can be in Table 3-10, the growth rates for domestic and international general cargo traffic are about one-third of those forecast for containers. This reflects the recent growth rates experienced for international general cargo traffic and the expectation that there will be further containerization of domestic general cargo. From 2009 to 2015, international general cargo is forecast to increase at an annual rate of 3 percent while domestic general cargo is forecast at an annual rate of 5 percent. During subsequent forecast periods, general cargo is still forecast to increase but at further reduced rates of growth.

5.3.2 Dry Bulk

Within the dry bulk cargo type, we discuss the forecast separately for cement, coal, iron ore, fertilizer, grains and other dry bulk.

Type of cargo Foreign Domestic Total Foreign Domestic Total Foreign Domestic Total Foreign Domestic Total

General Cargo 32,840 110,859 143,699 39,213 148,562 187,775 43,294 180,748 224,043 50,245 242,911 293,155

Container 61,000 27,223 88,222 106,894 65,626 172,519 157,271 100,020 257,291 294,234 183,446 477,680

Dry Bulk 312,852 247,514 560,366 328,918 342,135 671,053 310,318 438,906 749,224 284,436 675,731 960,167

Cement 144 14,941 15,085 6,700 21,925 28,625 8,757 28,655 37,411 14,264 48,947 63,210

Coal 279,303 139,349 418,652 279,303 203,330 482,633 250,000 272,101 522,101 200,000 443,224 643,224

Iron Ore 10,531 91 10,623 13,714 400 14,114 16,686 1,000 17,686 23,537 2,000 25,537

Fertilizer 5,162 30,665 35,828 7,323 39,934 47,257 9,346 48,586 57,932 14,514 68,536 83,050

Grain 3,832 2,343 6,175 4,316 2,639 6,954 4,672 2,885 7,557 5,422 3,348 8,770

Other Dry Bulk 13,879 60,124 74,003 17,562 73,907 91,469 20,858 85,679 106,537 26,700 109,676 136,376

Liquid Bulk 136,723 39,349 176,072 178,042 52,718 230,759 216,653 65,700 282,353 315,952 97,252 413,204

Petroleum & Products 91,110 385 91,495 118,649 501 119,151 144,355 610 144,965 213,681 903 214,584

CPO 22,438 38,485 60,923 30,069 51,574 81,643 37,471 64,271 101,742 55,467 95,136 150,603

Other Liquid Bulk 23,175 479 23,654 29,323 642 29,965 34,827 819 35,646 46,805 1,213 48,017

Total 543,415 424,946 968,361 653,066 609,040 1,262,107 727,537 785,374 1,512,911 944,867 1,199,340 2,144,207

Average annual growth rate (%)

General Cargo - - - 3.0 5.0 4.6 2.0 4.0 3.6 1.5 3.0 2.7

Container - - - 9.8 15.8 11.8 8.0 8.8 8.3 6.5 6.3 6.4

Dry Bulk - - - 0.8 5.5 3.0 (1.2) 5.1 2.2 (0.9) 4.4 2.5

Cement - - - 89.7 6.6 11.3 5.5 5.5 5.5 5.0 5.5 5.4

Coal - - - - 6.5 2.4 (2.2) 6.0 1.6 (2.2) 5.0 2.1

Iron Ore - - - 4.5 27.9 4.9 4.0 20.1 4.6 3.5 7.2 3.7

Fertilizer - - - 6.0 4.5 4.7 5.0 4.0 4.2 4.5 3.5 3.7

Grain - - - 2.0 2.0 2.0 1.6 1.8 1.7 1.5 1.5 1.5

Other Dry Bulk - - - 4.0 3.5 3.6 3.5 3.0 3.1 2.5 2.5 2.5

Liquid Bulk - - -

Petroleum & Products - - - 4.5 4.5 4.5 4.0 4.0 4.0 4.0 4.0 4.0

CPO - - - 5.0 5.0 5.0 4.5 4.5 4.5 4.0 4.0 4.0

Other Liquid Bulk - - - 4.0 5.0 4.0 3.5 5.0 3.5 3.0 4.0 3.0

Total - - - 3.1 6.2 4.5 2.2 5.2 3.7 2.6 4.3 3.5

Source: Prepared by Nathan Associates Inc. as described in text.

2020

Type of Trade

2030

Type of TradeType of Trade

2009 2015

Type of Trade



Cement

In 2009, Indonesian cement factories produced 37 million tons of cement, 37 million tons were sold in domestic market, and 4 million tons of cement/clinker were sold in overseas markets. In 2009, utilization of production capacity of the nine Indonesian cement companies averaged 82 percent. The Indonesia Cement Association prepares forecasts cement industry sales which are forecast to increase to 49 million tons in 2015 corresponding to an average annual growth rate of 4.8 percent. JICA prepared a regression model of domestic cement sales relative to construction GDP which resulted in a forecast 113 million tons of domestic cement sales by 2030, corresponding to an average growth rate of 5.7 percent.

In order to increase the utilization rate of the manufacturing plants, Indonesian cement companies expanded overseas markets after the economic crisis in 1998 and about 7 to 9 million tons of cement/clinker, which were nearly 20 percent of the production capacity, were annually exported to overseas market. With the increase of the domestic demand, export volume decreased significantly, and in 2009 the export volume of cement/clinker dropped to 4 million tons, which were equivalent to 8.4 percent of the total production capacity. Considering these situations surrounding the Indonesian cement market, JICA study team assumed that 5 percent of the cement production capacity will be sold to overseas markets in the form of cement and clinker.

Coal

Indonesia is one of the world leading producers of coal and leads the world in exports of thermal coal. In 2010, coal production in Indonesia totaled 325 million tons, of which 265 million tons were exported and 60 million tons were consumed domestically. Trends in Indonesian coal production, exports and domestic consumption from 1996 to 2010 is shown in Figure 5-4.


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Figure 5-3. Indonesian Coal Production, Exports and Domestic Consumption, 1996-2010 (million tons)

The Government of Indonesia has a policy to encourage further consumption of coal as an energy source as part of its overall energy strategy to diversify from crude petroleum and petroleum products. Also, the further development of the coal sector in Indonesia is a priority of the MP3EI. Potential areas of expansion in Central Kalimantan and inland locations in Sumatera will require development of costly inland transportation systems. It is expected that until such inland transport systems are developed, coal production in Indonesia will increase modestly at an annual rate of 2.4 percent. As domestic consumption increases with the implementation of the national energy policy, Indonesian exports of coal are expected to remain flat or decline slightly.

Obviously, major new investments in inland transport system and coal production will also require additional port capacity for the shipment of coal. Those considerations are included in the High Growth traffic scenario.

Iron Ore

Large quantities of iron ore reserves are located in Kalimantan. However, the national iron ore production is mostly exported and not used in domestic steelmaking as Indonesia does not currently process iron ore into sponge iron or iron pellet. As such, and also due to the ferrous content of the iron ore, the domestic steel company PT. Krakatau Steel imports iron ore from Chile, Brazil and other countries. Hence, Indonesian port traffic for iron ore is in foreign trade, both for imports and exports.

Iron ore port traffic is forecast to increase at an annual rate of 4.9 percent from 2009 to 2015 and 4.6 percent from 2015 to 2020 reflecting the increased demand for steel domestically and the resulting requirement for increased iron ore imports as well as



modest increases in iron ore production and exports. It is possible that, due to the policy of increasing value added, Indonesia may develop an iron ore processing facility and shipped exports as pellets or sponge iron. This would remain, however, a dry bulk cargo.

Fertilizer

The increased use of fertilizer in Indonesian agriculture is a significant component of the MP3EI plans for increasing yields of Indonesian principal crops. In 2011, Indonesian production of urea fertilizer is estimated at 7.1 million tons, about 81 percent of the estimated production capacity of 8.8 million tons. Other major types of fertilizer produced in Indonesia are ammonia-based products and nitrogen-phosphorous and potassium (NPK) products.

Information on the number and capacity of Indonesian fertilizer plants in 2010 is shown in Table 5-11 below, while Figure 5-5 presents the location and capacity of urea fertilizer plants. Fertilizer port traffic is forecast to increase at an annual rate of 4.7 percent from 2009 to 2015 and by 4.2 percent from 2015 to 2020.

Table 5-11. Indonesian Fertilizer Plants and Annual Capacity (000’s ton)

Source: Indonesia Fertilizer Producers Association (APPI), Presentation on APPI Experience, Kota Kinbalu, Malaysia, Dec 8-10, 2009.


81


Figure 5 4. Indonesian Urea Plants and Annual Capacity, 2010 (000’s tons)

Source: Indonesia Fertilizer Producers Association (APPI), Presentation on APPI Experience, Kota Kinbalu, Malaysia, Dec 8-10, 2009

Grains

Grain traffic handled at Indonesian ports consists of foreign imports of wheat and other grains and domestic shipments of rice, corn and other common crops. The major grain that is imported is wheat. Presently Indonesian imports a total of about four and a half million tons of wheat annually, and more than half are passing through Tanjung Priok.

Historical trends of Indonesian import of wheat were obtained by JICA from the FAO statistics, and its future volume was forecast by a regression model, in which total population in Indonesia served as a regressor (R=0.90). JICA forecast that Indonesia will import a total of about 7 million tons of wheat in 2030 as both population and per capita GDP increase. Currently Indonesia’s per capita wheat flour consumption is around 15kg/capita, and the forecast above results in around 20 kg/capita in 2030 compared to 71 kg per capita in Singapore and 40 kg per capita in Malaysia in 2002.

Other Dry Bulk

Other dry bulk commodities include other ores and minerals, sand and aggregates used for construction, chemical products, iron and steel and forestry products. This category of port traffic is forecast to increase at an average annual rate of 3.6 percent from 2009 to 2015 and 3.1 percent from 2015 to 2020.



5.3.3 Liquid Bulk

Within the liquid bulk cargo type, we discuss the forecast separately for petroleum and petroleum products, CPO and other liquid bulk.

Petroleum and Petroleum Products

Indonesia is currently a net importer of both crude oil and refined products. Indonesia's crude oil production has been declining since 1998, due to the maturation of the country's largest oil fields and failure to develop new, comparable resources. Indonesia was a member of the Organization of Petroleum Exporting Countries (OPEC) from 1962 to 2009. In 2004, the country became a net oil importer and in January 2009, suspended its OPEC membership.

Indonesian government announced a basic policy on energy through the presidential decree No. 05 of Year 2006 and Blue Print: National Energy Policy 2006 – 2025. According to the government policies, the share of petroleum shall decrease from 54.5 percent in 2005 to 20 percent in 2025 while that of coal shall increase to 33 percent from 16.8 percent at present. Sales of petroleum in the domestic market and import volume of petroleum product have been decreasing since 2004.

Figure 5-5: Indonesian Crude Oil Production and Consumption, 1999-2009

.

The Technical Report on the Development of the National Port Master Plan prepared a forecast of future petroleum port volumes taking into consideration:

Crude oil production has been falling consistently since 1990 and at an escalating rate in recent years. Although the average rate of decline between 1996 and 2008 was 3.8 percent, year‐to‐year declines have been 4 percent to 5 percent in most recent years. Increasing rates of decline are a common feature in mature oil fields


83


such as Indonesia’s. They projected crude oil production to decline at 4 percent a year between 2009 and 2030.

Crude oil exports have fallen at 6 percent a year over 1996 to 2008 but have been stable in recent years. We projected these exports to continue to decline, but at a modest rate of 1 percent a year.

Crude oil imports have been falling slowly in recent years. They projected these imports to continue to decline at a modest rate of 1 percent a year. Because crude oil imports are projected to decline at 1 percent a year, we used the same rate of decline for product exports.

Apparent domestic demand increased slowly between 1996 and 2008, at about 1 percent a year. Indonesian consumption figures from the U.S. Department of Energy for the same period increased at 2.5 percent a year. Before the oil subsidy reduction in 2005, typical year‐to‐year growth rates in consumption were between 5 percent and 7 percent.

We expect generally a low growth rate in future because of the probable removal of fuel subsidies and the likely high world price of crude oil in the long term, perhaps US$100 a barrel in today’s dollars. Under these circumstances, petroleum demand in Indonesia will increase but at a modest rate. The factors affecting demand will be increasing population and rising per capita incomes. They estimated that demand will grow at 3.0 percent a year between 2009 and 2030.

Crude Palm Oil (CPO)

Indonesia is the largest producer of palm oil in the world with 19.5 million tons in 2009. Malaysia is a close second at 17.5 million tons in 2009. Together these two countries account for about 82 percent of global CPO production.

Crude palm oil is an important commodity highlighted in the MP3EI for the economic corridors of Sumatra and Kalimantan. More than 70 percent of Indonesian CPO production area is in Sumatra, although in recent years, the production area in Kalimantan has been growing rapidly.

In 2009, Sumatra had approximately five million hectares of palm oil plantations, of which 75 percent were mature plantations. However, further expansion of palm oil plantations in both Sumatra and Kalimantan is limited due to environmental consideration. Hence, the strategy is to improve palm oil yields that are substantially below those achieved in Malaysia.

According to the MP3EI report, the low productivity for small holders is primarily caused by:

Use of low quality seeds. Research shows that the use of higher quality seeds can increase yields by up to 47 percent from current levels;

Inadequate use of fertilizer due to high prices for fertilizers;



Time between Fresh Fruit Bunches (FFB) to the old mill (above 48 hours) decreases the productivity of CPO produced.

Given the importance of CPO to the economic corridor goals and objectives for Sumatra and Kalimantan, it is believed that CPO production and shipments will increase at an average annual rate of 5.0 percent from 2009 to 2015 and 4.5 percent from 2015 to 2020, based on the assumption that new areas being brought under production are limited. The rate of growth for CPO production is thus assumed to be approximately equal to the long-term growth rate of global CPO demand.

Other Liquid Bulk

Other liquid bulk products include chemical products and other edible oils and products, such as vegetable oil and molasses. These other liquid bulk products are shipped as international trade and consist roughly of 60 percent exports and 40 percent imports. Indonesian port traffic of other liquid bulk products is forecast to increase at an average annual rate of 4.0 percent from 2009 to 2015 and by 3.5 percent from 2015 to 2020.

5.4 ASSIGNMENT OF TRAFFIC TO SPECIFIC PORT AREAS

The port traffic that has been forecast on a national basis has been assigned to port areas using the distribution for each type of cargo/commodity observed in 2009. The names of existing ports are used to identify the areas that are forecast to generate, attract and handle maritime traffic. As is discussed in Chapter 6, the capacity to handle the forecast traffic may be provided by the expansion of the existing port or the development of a new port in the area. The assignment of traffic to port areas took into considerations the implementation of the economic development corridor strategy. That strategy essentially builds upon the strengths and comparative advantages that are already present in the identified corridors, and as such, supports the assignment of forecasted traffic to port areas based on current transport patterns.

The MP3EI development focuses on eight main programs, namely the development of agriculture, mining, energy, industry, maritime, tourism, telecommunication, and development of strategic zones. These eight primary programs consist of 22 main economic activities which are designed based on the inherent potential and strategic value of each of the corridors. Table 5-12 provides a mapping of main economic activities for each corridor.


85


Table 5-12. Main Economic Activity for Each Economic Development Corridor

The resulting forecast of traffic in 2015 for Indonesia’s top 50 ports is presented in Table 5-13. As can be seen, due to the growth of container traffic, the Tanjung Priok and Tanjung Perak have both surpassed Samarinda as the top port.

Tables 5-14 and Table 5-15 present the traffic forecast by port and cargo type/ commodity for 2020 and 2030, respectively.



Table 5-13: Indonesia’s Top 50 Ports for Total Traffic by Cargo Type and Principal Commodity, 2015 (000’s tons)

Port

General

Cargo Container Cement Coal

Iron

Ore Fertilizer Grain

Other

Dry

Bulk Subtotal

Petrol. &

Products CPO

Other

Liq.

Bulk Subtotal Total

Samarinda 5,523 1,859 121 75,670 60 252 654 71 76,829 11 50 557 617 84,828

Tg. Priok 13,425 76,710 7,327 6,138 309 324 1,912 2,445 18,455 3,548 703 1,279 5,531 114,121

Tg. Perak 16,506 34,111 606 4,660 240 1,097 1,721 14,615 22,940 2,295 10,022 931 13,247 86,805

Bontang 337 18 41 22,328 - 2,647 4 87 25,107 33,358 18 1,193 34,569 60,031

Pontianak 32,335 1,941 1,837 11,556 - 11,885 23 0 25,301 29 1,395 29 1,453 61,030

Tg. Bara 343 - - 47,056 - 195 - 35 47,286 - - 182 182 47,811

Perawang 32,269 1,226 30 1,141 - 4 1 14,631 15,807 19 6 57 83 49,385

Taboneo 585 - - 41,176 362 21 - - 41,558 - - 163 163 42,307

Kendawangan 0 - - - 451 - - 38,642 39,093 - - - - 39,093

Dumai 7,730 - 390 477 2 539 5 104 1,517 11,841 13,498 691 26,030 35,277

Adang Bay - - - 28,843 48 132 - - 29,023 - - 247 247 29,270

Balikpapan 1,208 745 26 17,768 - 91 9 645 18,539 4,776 259 4,640 9,675 30,167

Belawan/ K Tanjung 4,279 17,373 1,699 2,389 26 947 74 395 5,530 1,160 7,915 271 9,347 36,529

Kota Baru 616 9 49 21,248 1,313 3 1 9 22,624 324 188 156 668 23,917

Banjarmasin 1,058 2,308 219 19,328 262 363 10 14 20,195 8 87 11 107 23,667

Tg. Balai Karimun 573 - - 282 - 3 0 2,989 3,274 16,768 4 1,706 18,477 22,324

Tg. Emas 920 11,249 162 11,062 - 223 213 80 11,739 88 322 162 572 24,480

Merak 7,929 1,246 - 4,935 - - - 106 5,041 436 24 4,462 4,923 19,138

Tarakan 428 339 - 15,738 119 20 - 183 16,060 46 - - 46 16,872

Muara Pantai - - - 16,531 71 - - - 16,602 - 1 - 1 16,604

Makassar 1,524 4,898 579 8,439 13 135 1,243 70 10,478 12 125 12 148 17,048

Muara Satui - - - 12,648 231 - 24 - 12,903 - - - - 12,903

Kuala Tungkal 8,858 439 - - - 3,709 3 18 3,730 27 11 5 43 13,069

Satui 3 - 0 267 - - - - 268 - 12,056 - 12,056 12,326

Teluk Melano 0 - - - - 11,800 - - 11,800 - 1 - 1 11,801

Kuaro - - - - - - - - - - 11,971 2 11,972 11,972

STS Karimun 38 - - - - - - 1,195 1,195 8,726 - 1,452 10,178 11,411

Falabisahaya 77 - - 9,591 - - 0 0 9,591 1 - - 1 9,669

Cilacap 1,713 - - 69 - 63 256 - 389 7,328 26 1,143 8,497 10,599

Bitung 8,335 1,223 54 - - 36 29 111 230 0 1,324 - 1,325 11,113

Panjang 994 5,900 330 1,113 205 933 53 84 2,718 204 1,597 286 2,086 11,698

Palembang 387 1,212 144 3,324 - 1,333 46 82 4,928 81 1,172 71 1,323 7,851

Ambon 7,373 298 49 - - 0 27 119 195 54 - - 54 7,920

Teluk Bayur 1,212 823 2,516 695 231 368 14 16 3,839 21 2,684 - 2,705 8,579

Cigading 4,403 36 213 107 2,423 253 - 13 3,009 149 - 37 186 7,634

P. Laut 18 - - 6,361 - - - 18 6,379 61 - 120 181 6,578

Tuban 531 - 309 4,079 - 13 0 370 4,772 1,144 - 469 1,614 6,916

Tg. Pemancingan 1 - - 5,894 444 - - - 6,338 - - 48 48 6,387

Tarahan 276 - - 5,951 - - 6 5 5,961 1 - 8 9 6,246

Sei Putting - - - 5,319 - 16 - - 5,335 - - - - 5,335

Batu Ampar 1,377 915 15 164 80 2 - 3,161 3,422 10 111 24 145 5,859

Muara Berau 3 - - 4,895 - 5 - - 4,900 - - - - 4,903

Gresik 253 28 84 - 27 3,538 11 446 4,105 293 - 879 1,172 5,558

Sunda Kelapa 113 - 1,802 - - 3,724 3 6 5,535 0 - 1 1 5,649

Lawi-Lawi - - - - - - - - - 4,757 - 33 4,790 4,790

Balongan 223 - - - - - - - - 3,691 - 757 4,448 4,671

Bintuni 68 3 5,693 - - - 3 4 5,699 647 - 30 677 6,447

Kumai 19 37 9 465 101 18 5 - 598 - 4,003 - 4,003 4,658

P. Sambu 0 - - 0 - - - - 0 0 - 0 0 0

Tg. Batu 32 - - 3,834 - - - 1 3,835 7 - 9 16 3,883

Top 50 ports 163,933 165,165 24,310 421,542 7,319 44,699 6,350 80,796 585,017 101,922 69,574 22,122 193,618 1,107,733

All other ports 23,842 7,355 4,315 61,091 6,795 2,558 604 10,673 86,036 17,228 12,069 7,844 37,141 154,374

Total all ports 187,775 172,519 28,625 482,633 14,114 47,257 6,954 91,469 671,053 119,151 81,643 29,965 230,759 1,262,107

Source: Prepared by Nathan Associates Inc. as described in text..

Liquid BulkDry Bulk


87



Port

General

Cargo Container Cement Coal

Iron

Ore Fertilizer Grain

Other

Dry Bulk Subtotal

Petrol. &

Products CPO

Other

Liq.

Bulk Subtotal Total

Samarinda 6,590 2,772 158 81,858 75 309 711 83 83,194 13 62 663 738 93,293

Tg. Priok 16,017 114,404 9,576 6,640 387 397 2,078 2,848 21,926 4,317 877 1,522 6,716 159,063

Tg. Perak 19,694 50,872 792 5,041 301 1,345 1,870 17,023 26,373 2,792 12,489 1,107 16,388 113,327

Bontang 402 26 54 24,154 - 3,245 5 101 27,558 40,586 22 1,419 42,027 70,014

Pontianak 38,581 2,894 2,401 12,501 - 14,570 25 0 29,497 35 1,739 34 1,808 72,780

Tg. Bara 409 - - 50,904 - 239 - 40 51,184 - - 217 217 51,809

Perawang 38,501 1,829 39 1,235 - 4 1 17,042 18,321 23 8 68 99 58,750

Taboneo 698 - - 44,543 453 25 - - 45,022 - - 194 194 45,915

Kendawangan 0 - - - 565 - - 45,008 45,573 - - - - 45,573

Dumai 9,223 - 509 516 3 661 5 121 1,815 14,407 16,821 822 32,049 43,088

Adang Bay - - - 31,202 60 162 - - 31,423 - - 294 294 31,717

Balikpapan 1,442 1,111 33 19,221 - 112 10 751 20,128 5,811 322 5,520 11,653 34,333

Belawan/ K Tanjung 5,105 25,910 2,221 2,584 33 1,161 80 460 6,539 1,411 9,864 323 11,598 49,153

Kota Baru 736 14 65 22,985 1,646 4 1 10 24,711 394 234 186 814 26,274

Banjarmasin 1,262 3,441 286 20,908 328 445 11 16 21,994 10 109 13 132 26,830

Tg. Balai Karimun 683 - - 306 - 3 0 3,482 3,791 20,400 5 2,029 22,434 26,908

Tg. Emas 1,097 16,776 212 11,967 - 273 232 93 12,776 107 402 192 701 31,350

Merak 9,460 1,858 - 5,339 - - - 123 5,462 531 30 5,308 5,869 22,649

Tarakan 510 505 - 17,024 149 25 - 214 17,412 55 - - 55 18,483

Muara Pantai - - - 17,883 90 - - - 17,972 - 2 - 2 17,974

Makassar 1,818 7,304 756 9,129 16 165 1,351 81 11,499 14 156 14 184 20,805

Muara Satui - - - 13,682 290 - 26 - 13,998 - - - - 13,998

Kuala Tungkal 10,569 655 - - - 4,547 3 20 4,571 33 13 6 52 15,847

Satui 4 - 0 289 - - - - 290 - 15,024 - 15,024 15,317

Teluk Melano 0 - - - - 14,466 - - 14,466 - 2 - 2 14,467

Kuaro - - - - - - - - - - 14,917 2 14,920 14,920

STS Karimun 45 - - - - - - 1,392 1,392 10,617 - 1,727 12,344 13,782

Falabisahaya 92 - - 10,375 - - 0 0 10,375 1 - - 1 10,468

Cilacap 2,044 - - 75 - 78 278 - 431 8,916 32 1,360 10,308 12,782

Bitung 9,944 1,825 70 - - 44 32 130 276 0 1,650 - 1,651 13,696

Panjang 1,186 8,800 431 1,204 257 1,144 57 98 3,191 248 1,990 340 2,578 15,754

Palembang 462 1,808 188 3,596 - 1,634 50 95 5,563 99 1,460 84 1,643 9,475

Ambon 8,797 444 64 - - 0 29 138 232 65 - - 65 9,539

Teluk Bayur 1,446 1,227 3,289 751 289 451 15 18 4,813 26 3,345 - 3,371 10,857

Cigading 5,254 54 279 116 3,036 310 - 15 3,756 181 - 43 225 9,288

P. Laut 21 - - 6,882 - - - 21 6,902 74 - 143 217 7,141

Tuban 633 - 404 4,413 - 16 0 431 5,264 1,392 - 558 1,951 7,848

Tg. Pemancingan 1 - - 6,376 557 - - - 6,933 - - 57 57 6,990

Tarahan 329 - - 6,437 - - 6 6 6,449 2 - 9 11 6,789

Sei Putting - - - 5,754 - 20 - - 5,774 - - - - 5,774

Batu Ampar 1,643 1,365 20 177 100 2 - 3,682 3,981 12 138 29 179 7,167

Muara Berau 4 - - 5,295 - 6 - - 5,302 - - - - 5,305

Gresik 302 41 110 - 33 4,337 12 520 5,011 356 - 1,045 1,402 6,757

Sunda Kelapa 135 - 2,355 - - 4,565 4 7 6,930 0 - 2 2 7,067

Lawi-Lawi - - - - - - - - - 5,788 - 39 5,827 5,827

Balongan 266 - - - - - - - - 4,491 - 900 5,391 5,657

Bintuni 81 4 7,440 - - - 3 5 7,448 787 - 35 823 8,356

Kumai 23 55 12 503 126 22 6 - 669 - 4,989 - 4,989 5,736

P. Sambu 0 - - 0 - - - - 0 0 - 0 0 0

Tg. Batu 39 - - 4,148 - - - 1 4,148 9 - 10 19 4,206

Top 50 ports 195,596 246,323 31,772 456,014 9,171 54,796 6,901 94,106 652,760 124,004 86,702 26,315 237,022 1,331,700

All other ports 28,447 10,968 5,640 66,087 8,514 3,136 656 12,431 96,464 20,961 15,040 9,331 45,332 181,211

Total all ports 224,043 257,291 37,411 522,101 17,686 57,932 7,557 106,537 749,224 144,965 101,742 35,646 282,353 1,512,911


Dry Bulk Liquid Bulk




5.5 ALTERNATIVE TRAFFIC SCENARIOS

In this section, we present the forecasts of Indonesian port traffic through 2030 for alternative assumptions regarding macroeconomic assumptions for Indonesia and trade partners. The alternative GDP growth rates used for the three scenarios is presented in Table 5-16 below.

Port

General

Cargo Container Cement Coal Iron Ore Fertilizer Grain

Other Dry

Bulk Subtotal

Petrol. &

Products CPO

Other Liq.

Bulk Subtotal Total

Samarinda 8,622 5,146 267 100,849 108 443 825 106 102,599 19 91 893 1,003 117,371

Tg. Priok 20,959 212,399 16,179 8,181 558 569 2,412 3,646 31,545 6,390 1,298 2,050 9,738 274,641

Tg. Perak 25,770 94,447 1,339 6,211 435 1,928 2,170 21,791 33,873 4,133 18,486 1,492 24,111 178,202

Bontang 526 48 90 29,757 - 4,653 5 129 34,635 60,077 33 1,912 62,022 97,231

Pontianak 50,482 5,374 4,057 15,401 - 20,887 29 0 40,374 52 2,574 46 2,672 98,902

Tg. Bara 535 - - 62,714 - 343 - 52 63,108 - - 292 292 63,935

Perawang 50,378 3,396 66 1,521 - 6 2 21,815 23,410 35 12 91 138 77,321

Taboneo 914 - - 54,877 654 36 - - 55,568 - - 262 262 56,743

Kendawangan 0 - - - 816 - - 57,614 58,430 - - - - 58,430

Dumai 12,068 - 861 636 4 947 6 155 2,608 21,325 24,900 1,107 47,332 62,008

Adang Bay - - - 38,440 87 232 - - 38,758 - - 396 396 39,154

Balikpapan 1,886 2,062 57 23,680 - 161 12 962 24,870 8,602 477 7,436 16,515 45,333

Belawan/ K Tanjung 6,680 48,104 3,752 3,184 48 1,664 93 589 9,330 2,089 14,601 435 17,125 81,239

Kota Baru 962 26 109 28,318 2,376 6 1 13 30,824 583 347 250 1,180 32,992

Banjarmasin 1,651 6,389 484 25,759 474 638 12 21 27,386 15 161 18 194 35,621

Tg. Balai Karimun 894 - - 376 - 5 0 4,457 4,838 30,197 7 2,733 32,937 38,670

Tg. Emas 1,436 31,146 357 14,743 - 391 269 119 15,879 158 594 259 1,011 49,473

Merak 12,378 3,450 - 6,578 - - - 158 6,735 786 44 7,151 7,981 30,544

Tarakan 667 938 - 20,974 215 35 - 274 21,498 82 - - 82 23,186

Muara Pantai - - - 22,031 129 - - - 22,161 - 2 - 2 22,163

Makassar 2,379 13,561 1,278 11,247 23 237 1,567 104 14,457 21 230 19 270 30,667

Muara Satui - - - 16,857 419 - 30 - 17,305 - - - - 17,305

Kuala Tungkal 13,829 1,217 - - - 6,519 4 26 6,548 48 20 8 76 21,670

Satui 5 - 0 356 - - - - 357 - 22,239 - 22,239 22,600

Teluk Melano 0 - - - - 20,737 - - 20,737 - 3 - 3 20,740

Kuaro - - - - - - - - - - 22,081 3 22,084 22,084

STS Karimun 59 - - - - - - 1,782 1,782 15,716 - 2,327 18,043 19,884

Falabisahaya 121 - - 12,782 - - 0 0 12,782 1 - - 1 12,904

Cilacap 2,674 - - 92 - 111 323 - 526 13,198 48 1,831 15,078 18,278

Bitung 13,012 3,388 118 - - 63 37 166 385 0 2,443 - 2,443 19,228

Panjang 1,551 16,337 728 1,483 371 1,639 66 125 4,414 367 2,946 458 3,771 26,074

Palembang 604 3,357 317 4,430 - 2,342 58 122 7,269 146 2,161 113 2,421 13,651

Ambon 11,511 825 109 - - 0 34 177 320 97 - - 97 12,753

Teluk Bayur 1,892 2,277 5,556 926 417 646 18 23 7,587 38 4,951 - 4,989 16,745

Cigading 6,874 100 471 143 4,384 444 - 19 5,461 268 - 59 327 12,763

P. Laut 28 - - 8,478 - - - 27 8,505 110 - 193 303 8,835

Tuban 828 - 683 5,437 - 23 0 552 6,694 2,061 - 752 2,813 10,335

Tg. Pemancingan 1 - - 7,856 804 - - - 8,659 - - 76 76 8,736

Tarahan 431 - - 7,931 - - 7 7 7,945 2 - 12 15 8,391

Sei Putting - - - 7,089 - 28 - - 7,117 - - - - 7,117

Batu Ampar 2,150 2,533 33 218 144 3 - 4,713 5,112 17 205 39 261 10,056

Muara Berau 5 - - 6,524 - 9 - - 6,533 - - - - 6,538

Gresik 396 77 186 - 48 6,217 14 665 7,130 527 - 1,408 1,936 9,538

Sunda Kelapa 176 - 3,979 - - 6,544 4 8 10,536 0 - 2 2 10,714

Lawi-Lawi - - - - - - - - - 8,568 - 53 8,621 8,621

Balongan 348 - - - - - - - - 6,648 - 1,213 7,861 8,208

Bintuni 107 8 12,571 - - - 3 6 12,580 1,166 - 48 1,213 13,908

Kumai 30 102 21 619 182 32 7 - 861 - 7,384 - 7,384 8,378

P. Sambu 1 - - 4,905 - - - - 4,905 229 - 47 275 5,181

Tg. Batu 51 - - 5,110 - - - 1 5,111 13 - 14 27 5,188

Top 50 ports 255,934 457,317 53,682 566,710 13,243 78,554 8,009 120,463 840,660 183,785 128,340 35,495 347,620 1,901,532

All other ports 37,221 20,364 9,529 76,514 12,294 4,495 762 15,913 119,507 30,799 22,263 12,523 65,584 242,675

Total all ports 293,155 477,680 63,210 643,224 25,537 83,050 8,770 136,376 960,167 214,584 150,603 48,017 413,204 2,144,207


Dry Bulk Liquid Bulk


89


Table 5-16. GDP Growth Assumptions for Alternative Traffic Scenarios, 2010-2030 (%)

Using the same regression models as the Base Case Scenario, forecasts of international and domestic container traffic were prepared after applying the trade-weighted GDP for each region/ country. As can be seen from Table 5-17, under the High Growth Scenario total Indonesian container traffic would reach 57 million TEU by 2030 as compared to 48 million forecast for the Base Case Scenario and 42 million for the Low Growth Scenario. Figure 5-7 presents the forecasts for total container trade for the three scenarios graphically.

Scenario 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2025 2030

High Growth

Europe 1.7 2.0 2.2 2.3 2.4 2.4 2.5 2.5 2.5 2.5 2.5 2.0 2.0 2.3

US 2.8 3.3 2.9 3.1 3.2 3.4 3.5 3.0 3.0 3.0 3.0 2.7 2.7 2.7

Indonesia 6.1 6.2 7.0 7.1 7.3 7.4 7.5 7.5 7.5 7.5 7.0 7.0 7.0 6.5

China 10.3 10.0 10.0 10.0 10.0 10.0 10.0 8.5 8.5 8.5 8.0 7.5 7.5 7.5

Base Case

Europe 1.7 1.6 1.8 1.8 1.7 1.7 1.7 1.8 1.8 1.8 1.8 2.0 2.0 2.0

US 2.8 2.8 2.9 2.9 2.8 2.8 2.7 2.4 2.4 2.4 2.4 2.4 2.4 2.4

Indonesia 6.1 6.2 6.5 6.6 6.8 6.9 7.0 6.8 6.6 6.4 6.0 5.5 5.5 5.5

China 10.3 9.6 9.5 9.5 9.5 9.5 9.5 8.5 8.5 8.5 7.5 7.5 7.5 7.5

Low Growth

Europe 1.7 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5

US 2.8 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.0 2.0 2.0 2.0

Indonesia 6.1 6.2 6.0 6.0 6.0 6.0 6.0 5.5 5.5 5.5 5.0 5.0 5.0 4.5

China 10.3 9.6 8.5 8.5 8.5 8.5 8.0 8.0 8.0 8.0 8.0 7.5 7.5 6.5




Table 5-17. Indonesian Container Traffic under Alternative Growth Scenario, 2009-2030 (000’s TEU)

Year InternationalDomestic Total InternationalDomestic Total InternationalDomestic Total

2009 6.199 2.772 8.972 6.199 2.772 8.972 6.199 2.772 8.972

2010 6.926 4.050 10.976 6.926 4.050 10.976 6.926 4.050 10.976

2011 7.548 4.464 12.012 7.557 4.464 12.022 7.577 4.464 12.041

2012 8.172 4.890 13.062 8.249 4.926 13.174 8.308 4.961 13.269

2013 8.838 5.342 14.180 8.997 5.427 14.424 9.107 5.502 14.609

2014 9.549 5.820 15.370 9.809 5.971 15.780 9.981 6.093 16.073

2015 10.308 6.328 16.636 10.689 6.563 17.252 10.937 6.736 17.673

2016 11.099 6.866 17.965 11.644 7.206 18.851 11.984 7.439 19.423

2017 11.904 7.388 19.293 12.603 7.876 20.478 13.033 8.195 21.228

2018 12.761 7.939 20.701 13.614 8.569 22.183 14.161 9.007 23.168

2019 13.673 8.521 22.194 14.680 9.287 23.967 15.375 9.880 25.255

2020 14.585 9.079 23.664 15.727 10.002 25.729 16.603 10.756 27.359

2021 15.527 9.665 25.191 16.790 10.697 27.487 17.883 11.694 29.577

2022 16.524 10.280 26.804 17.918 11.430 29.349 19.252 12.697 31.949

2023 17.582 10.925 28.508 19.117 12.204 31.321 20.716 13.770 34.486

2024 18.704 11.604 30.307 20.390 13.020 33.411 22.282 14.919 37.201

2025 19.894 12.316 32.209 21.682 13.803 35.485 23.958 16.147 40.106

2026 21.014 12.988 34.003 23.053 14.625 37.678 25.678 17.368 43.046

2027 22.195 13.691 35.887 24.506 15.488 39.994 27.513 18.669 46.182

2028 23.439 14.426 37.865 26.049 16.394 42.443 29.472 20.053 49.525

2029 24.750 15.194 39.944 27.686 17.346 45.031 31.563 21.528 53.091

2030 26.132 15.996 42.128 29.423 18.345 47.768 33.790 23.099 56.889


2009-15 8,8% 14,7% 10,8% 9,5% 15,4% 11,5% 9,9% 15,9% 12,0%

2015-20 7,2% 7,5% 7,3% 8,0% 8,8% 8,3% 8,7% 9,8% 9,1%

2020-30 6,0% 5,8% 5,9% 6,5% 6,3% 6,4% 7,4% 7,9% 7,6%


Low Growth Base Case High Growth


91


Figure 5-6. Forecast of Indonesian Total Container Traffic under Alternative Growth Scenarios, 2015-2030 (000’s TEU)

Figure 5-8 presents the forecast of total Indonesian traffic by cargo type for the three scenarios. Total traffic is forecast to reach 2.7 billion tons by 2030 for the High Growth Scenario as compared to 2.1 billion tons in the Base Case Scenario and 1.8 billion tons in the Low Growth Scenario.

Figure 5-7. Forecast of Total Indonesian Port Traffic by Cargo Type Under Alternative Growth Scenarios, 2015-2030 (000’s tons)

Table 5-18 and Table 5-19 provide further detail regarding the alternative traffic forecast by cargo type for the High Growth Scenario and Low Growth Scenario, respectively.

-

10,000

20,000

30,000

40,000

50,000

60,000

2015 2020 2025 2030

00

0's

TEU

s

Year

Low Growth

Base Case

High Growth

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Low Base High Low Base High Low Base High

2015 2020 2030

00

0's

to

ns

Year

Dry Bulk

Liquid Bulk

Container

General Cargo



Table 5-18. High Growth Scenario Forecast of Total Cargo Handled at Indonesian Ports, 2009-2030 (000’s tons)


General Cargo 32,840 110,859 143,699 40,369 152,858 193,226 46,799 190,488 237,287 59,906 268,703 328,609

Container 61,000 27,223 88,222 109,370 67,360 176,730 166,030 107,560 273,590 337,900 230,990 568,890

Dry Bulk 312,852 255,914 568,766 503,082 346,293 849,375 575,209 449,686 1,024,895 758,098 634,983 1,393,081

Cement 144 14,941 15,085 6,706 22,676 29,382 9,188 30,345 39,533 15,694 53,327 69,021

Coal 279,303 139,349 418,652 314,541 203,330 517,871 330,586 272,101 602,687 365,172 365,681 730,854

Iron Ore 10,531 91 10,623 151,783 400 152,184 198,375 1,000 199,375 323,131 2,479 325,611

Fertilizer 5,162 30,665 35,828 7,532 41,095 48,627 9,845 52,448 62,293 16,036 85,433 101,468

Grain 3,832 2,343 6,175 4,444 2,717 7,161 4,907 3,000 7,907 5,981 3,657 9,638

Other Dry Bulk 13,879 60,124 74,003 18,075 76,076 94,150 22,309 90,791 113,101 32,083 124,406 156,489

Liquid Bulk 136,723 39,349 176,072 184,105 55,769 239,873 231,466 74,563 306,029 360,024 121,407 481,430


CPO 22,438 38,485 60,923 31,829 54,592 86,421 42,594 73,057 115,651 69,381 119,002 188,383

Other Liquid Bulk 23,175 479 23,654 30,179 661 30,840 36,718 863 37,581 54,352 1,406 55,758

Total 543,415 433,346 976,761 836,925 622,280 1,459,205 1,019,504 822,298 1,841,802 1,515,928 1,256,082 2,772,010


General Cargo - - - 3.5 5.5 5.1 3.0 4.5 4.2 2.5 3.5 3.3

Container - - - 10.2 16.3 12.3 8.7 9.8 9.1 7.4 7.9 7.6

Dry Bulk - - - 8.2 5.2 6.9 2.7 5.4 3.8 2.8 3.5 3.1

Cement - - - 89.7 7.2 11.8 6.5 6.0 6.1 5.5 5.8 5.7

Coal - - - 2.0 6.5 3.6 1.0 6.0 3.1 1.0 3.0 1.9

Iron Ore - - - 56.0 27.9 55.8 5.5 20.1 5.6 5.0 9.5 5.0

Fertilizer - - - 6.5 5.0 5.2 5.5 5.0 5.1 5.0 5.0 5.0

Grain - - - 2.5 2.5 2.5 2.0 2.0 2.0 2.0 2.0 2.0

Other Dry Bulk - - - 4.5 4.0 4.1 4.3 3.6 3.7 3.7 3.2 3.3

Liquid Bulk - - -


CPO - - - 6.0 6.0 6.0 6.0 6.0 6.0 5.0 5.0 5.0


Total - - - 7.5 6.2 6.9 4.0 5.7 4.8 4.0 4.3 4.2


2009 2015 2020 2030

Type of Trade Type of Trade Type of Trade Type of Trade


93


Table 5-19. Low Growth Scenario Forecast of Total Cargo Handled at Indonesian Ports, 2009-2030 (000’s tons)

5.6 IMPLICATIONS OF INDONESIAN PORT TRAFFIC FORECAST FOR 2009-2030

The Indonesian port traffic forecast presented in this report has a number of key implications that need to be considered for the future development of the national port system. These include:

By 2020 Indonesia container traffic will be more than double 2009 volumes and will double again by 2030.

New and expanded container terminals are urgently required in many locations.

Increased container volumes will likely lead to a need for new container hub ports such as in Kuala Tanjung and bulk facilities at Balikpapan/Maloy62. Feasibility of development of a new container hub ports needs further study.

Slower growth of dry and liquid bulk traffic means that total cargo tonnage will only increase by 50 percent by 2020 and another 50 percent by 2030.

62

These container hub ports will more likely serve as domestic container distribution centers to

other Indonesian ports, rather than handle international transshipment containers.


General Cargo 32,840 110,859 143,699 36,983 140,272 177,256 40,434 166,600 207,033 46,009 203,084 249,092

Container 61,000 27,223 88,222 103,080 63,280 166,360 145,850 90,790 236,640 261,320 159,960 421,280

Dry Bulk 312,852 255,914 568,766 289,314 314,218 603,532 261,307 385,699 647,005 217,576 545,654 763,230

Cement 144 14,941 15,085 182 19,458 19,640 227 24,248 24,475 352 37,656 38,008

Coal 279,303 139,349 418,652 247,419 181,468 428,887 212,467 231,605 444,072 156,678 342,832 499,510

Iron Ore 10,531 91 10,623 13,714 123 13,837 16,288 156 16,445 19,855 267 20,123

Fertilizer 5,162 30,665 35,828 6,723 38,802 45,524 8,101 46,084 54,185 11,427 63,146 74,573

Grain 3,832 2,343 6,175 4,215 2,577 6,792 4,541 2,776 7,317 5,270 3,222 8,492

Other Dry Bulk 13,879 60,124 74,003 17,061 71,791 88,852 19,683 80,829 100,512 23,993 98,530 122,524

Liquid Bulk 136,723 39,349 176,072 172,491 50,354 222,846 206,052 59,813 265,866 284,072 80,423 364,496


CPO 22,438 38,485 60,923 28,720 49,261 77,981 34,111 58,507 92,617 45,842 78,628 124,470

Other Liquid Bulk 23,175 479 23,654 28,488 606 29,094 33,025 720 33,745 42,275 968 43,242

Total 543,415 433,346 976,761 601,869 568,125 1,169,994 653,643 702,902 1,356,544 808,977 989,121 1,798,098


General Cargo - - - 2.0 4.0 3.6 1.8 3.5 3.2 1.3 2.0 1.9

Container - - - 9.1 15.1 11.2 7.2 7.5 7.3 6.0 5.8 5.9

Dry Bulk - - - (1.3) 3.5 1.0 (2.0) 4.2 1.4 (1.8) 3.5 1.7

Cement - - - 4.0 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5

Coal - - - (2.0) 4.5 0.4 (3.0) 5.0 0.7 (3.0) 4.0 1.2

Iron Ore - - - 4.5 5.0 4.5 3.5 5.0 3.5 2.0 5.5 2.0

Fertilizer - - - 4.5 4.0 4.0 3.8 3.5 3.5 3.5 3.2 3.2

Grain - - - 1.6 1.6 1.6 1.5 1.5 1.5 1.5 1.5 1.5

Other Dry Bulk - - - 3.5 3.0 3.1 2.9 2.4 2.5 2.0 2.0 2.0

Liquid Bulk - - -


CPO - - - 4.2 4.2 4.2 3.5 3.5 3.5 3.0 3.0 3.0


Total - - - 1.7 4.6 3.1 1.7 4.3 3.0 2.2 3.5 2.9


2009 2015 2020 2030

Type of Trade Type of Trade Type of Trade Type of Trade



Additional bulk port capacity will be needed in some locations and may be undertaken by the private sector.

The high rates of forecast traffic growth should serve as an important opportunity for Indonesia to expand and modernize it ports system to meet the coming demand and to enhance competitiveness with other nations and regions.


95

CHAPTER 6: INVESTMENT REQUIREMENTS


This chapter presents the investment requirements prepared for Indonesian port system through 2030. It builds upon the information on historic port traffic and operational performance presented in Chapter 3 and Chapter 4 and the projections of port traffic through 2030 presented in Chapter 5.

6.1 APPROACH AND METHODOLOGY

As described in Chapter 5, international and domestic container traffic is projected to experience the highest rate of growth during the forecast period through 2030. As such, the principal focus of this chapter is on assessing the investment requirements for expanded and new container facilities. However, in order to have a complete profile of Indonesia’s port sector investment requirements, the; requirements for CPO, petroleum and other cargoes are summarized incorporated from the DWA analysis presented in IndII 2010 Technical Report on the Development of the National Port Master Plan.

We have tailored our approach for estimating Indonesia’s port sector investment requirements through 2030 using the most rigorous methodology feasible taking into account the quantity and accuracy of data and the time available for the exercise. Nonetheless, the approach draws upon tested principles, techniques and concepts employed by Nathan Associates in dozens of other port master planning and investment prioritization assignments. The methodology employed consisted of the following 12 steps listed in Figure 6-1.

The NPMP Revision Team put forth a concerted effort to obtain data pertaining to port traffic from a variety of sources. These sources include data maintained by the DGST, by individual Pelindos, and from other recent studies of the Indonesian port sector. The information obtained from each of these sources is described in the sections below.



Figure 6-1. Investment Requirement Methodology

The NPMP Revision Team met several times with DGST officials responsible for maintaining shipping statistics and was able to obtain access to key data included in the 2009 national shipping data sets maintained by DGST. This valuable information is compiled from data provided by the shipping companies that report information on vessel calls at all Indonesian ports. As this data includes traffic at all Indonesian ports

1

• Collect and analyze information on existing and planned port facilities including meters of berth and depth

2

• Separate facility data into specialized container facilities, conventional berths used for containers and general cargo berths

3

• Review overall container and general cargo productivity factors by type and size of facility

4

• Estimate existing container and general cargo capacity and compare with existing throughput (calculate capacity utilization)

5

• Identify potential for productivity improvements over time due to improved operations and more and higher capacity cranes and another cargo handling equipment

6

• Recalculate capacity utilization based on assumed productivity increases

7

• If additional capacity needed for container demand and excess capacity exists for general cargo; convert additional conventional berths to container

8

• If still additional capacity is needed to accommodate forecasted container demand, assume construction of new berth(s) with a minimum length of 200m and associated yard and equipment

9 • Calculate unit costs for new container berth and associated yard and equipment based on differentiated cost assumptions analysis for individual ports

10• Calculate investment requirements for additional container capacity for

new construction and for conversion of conventional berths to container use

11

• Identify specific year that additional capacity needs to come on-line.

12• Identify potential for private sector investment and requirements for

public investment


97


including special ports, it provides the most comprehensive overview of traffic within the national port system.

THE NPMP Revision Team reviewed information on port traffic from a number of recent Indonesian port sector studies and reports to fill in data gaps and to confirm or verify information obtained from the two primary sources described above.

6.2 CONTAINER PORT FACILITIES AND CAPACITY ASSESSMENT

In this chapter, we present an analysis of the capacity of existing facilities at Indonesia’s main container ports and a comparison of estimated capacity with forecasted traffic through 2030. Physical requirements for additional container port facilities are identified and the corresponding investment requirements are estimated.

6.2.1 Container and General Cargo Port Facilities

The NPMP Revision Team collected information on container and general cargo port facilities from several sources. The primary source was an inventory of 231 port facilities provided DGST, organized by region and province. This inventory included current data on berth length and depth for each port and specific facilities within the port. Other information was obtained from a 2006 compendium of information on Indonesia’s main ports and summaries for 26 ports presented by DWA in the 2010 IndII Technical Report on the Development of the National Port Master Plan.

We compiled and compared information on general cargo and container terminal berth length and depth; however, information on depth did not appear up-to-date or accurate and was not used in the analysis.

Table 6-1 presents information collected on container and general cargo facilities at 22 main Indonesian container ports. The ports are grouped by region that corresponds to economic development corridors used in the MP3EI.

There are 11 Indonesian ports that have specialized container terminals with total berth length of 9.6 km. Another 3.4 km of conventional berths are estimated to be used at the main Indonesian container ports listed in Table 6-1. Those ports also have conventional berths for general cargo that total 26.3 km.

Tanjung Priok has the most berth facilities dedicated to container operations at 3,308 m followed by Tanjung Perak at 1,870 m. The ports of Belawan, Makassar and Panjang each have approximately 860 m of berths of specialized container terminals.

These 22 ports handled 8.7 million TEU in 2009 or 98 percent of Indonesia’s total container traffic. The location of each port and the container traffic volumes for 2009 and forecast through 2030 is presented graphically in Figure 6-1. The forecast of



general cargo and container traffic from 2009 to 2030 is shown in Table 6-2 that follows.

Table 6-1. Container and General Cargo Berth Facilities at Selected Indonesian Ports, 2011 (meters)

Total

North Sumatera

Belawan/Kuala Tanjung 850 242 2,180 3,272

Teluk Bayur 222 - 838 1,060

Pekanbaru - 181 181 362

Batam - 428 1,714 2,142

West Kalimantan

Pontianak 405 - 422 827

South Sumatera

Palembang 266 - 475 741

Panjang 848 532 1,380

Jambi - 88 350 438

East-South Kalimantan

Balikpapan - 98 491 589

Samarinda - 234 703 937

Banjarmasin 240 - 625 865

South Sulawesi

Makassar 850 210 735 1,795

Java

Tg. Perak 1,870 235 7,281 9,385

Tg. Emas 495 494 577 1,566

Tg. Priok 3,308 800 5,845 9,953

Bali- NT

Benoa - 41 206 247

The East

Bitung 225 - 1,187 1,412

Jayapura - 86 128 214

Merauke - 102 152 254

Ambon - 58 851 909

Pantoloan - 30 573 603

Sorong - 85 226 310

Total above ports 9,579 3,411 26,272 39,261

Source: Nathan Associates Inc. as described in text.

Container

ConventionalConventionalTPKRegion and port

General Cargo

Total Container


99


Figure 6-2. Location and Forecasted Container Traffic at Main Indonesian Container ports, 2009-2030 (TEU)



Table 6-2. General Cargo and Container Traffic Forecast at Main Indonesian Container Ports, 2009-2030

6.2.2 Port Productivity Factors

The common methodology for calculating capacity of container terminals is based on separating the terminals into its main components, calculating the capacities of each, and identifying the most constraining one as that of the entire terminals. Typically, the main terminal components include:

Berth (Pier, Dock) – where ships are moored and shore cranes transfer containers between ship-board and shore (first point of rest);

Container Yard (container yard)– where containers are transported to/from ship-side are temporary stored and trucks and railcars are loaded/unloaded; and

2009 2015 2020 2030 2009 2015 2020 2030

North Sumatera

Belawan/Kuala Tanjung 4,062.8 5,309.0 6,334.4 8,288.4 888.4 1,737.3 2,591.0 4,810.4

Teluk Bayur 927.4 1,211.8 1,445.9 1,891.9 42.1 82.3 122.7 227.7

Pekanbaru 229.7 300.2 358.2 468.7 73.1 143.0 213.3 396.0

Batam 2,305.8 3,013.0 3,594.9 4,703.9 104.2 203.7 303.8 564.0

West Kalimantan

Pontianak 338.8 442.7 528.2 691.1 99.2 194.1 289.4 537.4

South Sumatera

Palembang 296.1 386.9 461.7 604.1 62.0 121.2 180.8 335.7

Panjang 760.4 993.7 1,185.6 1,551.3 301.7 590.0 880.0 1,633.7

Jambi 140.8 183.9 219.5 287.2 32.0 62.5 93.2 173.0


Balikpapan 924.7 1,208.3 1,441.7 1,886.4 38.1 74.5 111.1 206.2

Samarinda 639.0 835.0 996.3 1,303.7 95.0 185.9 277.2 514.6

Banjarmasin 809.4 1,057.6 1,261.9 1,651.2 118.0 230.8 344.1 638.9

South Sulawesi

Makassar 1,166.1 1,523.8 1,818.1 2,379.0 456.2 892.0 1,330.4 2,469.9

Java

Tg. Perak 3,763.7 4,918.1 5,867.9 7,678.1 1,744.3 3,411.1 5,087.2 9,444.7

Tg. Emas 703.9 919.8 1,097.4 1,436.0 575.2 1,124.9 1,677.6 3,114.6

Tg. Priok 6,686.0 8,736.7 10,424.1 13,639.8 3,922.8 7,671.0 11,440.4 21,239.9

Bali- NT

Benoa 10.0 13.0 15.6 20.3 5.7 11.2 16.7 31.0

The East

Bitung 1,043.2 1,363.1 1,626.5 2,128.3 62.6 122.3 182.5 338.8

Jayapura 63.7 83.3 99.4 130.0 27.8 54.4 81.1 150.5

Merauke 100.8 131.7 157.2 205.7 10.1 19.8 29.5 54.8

Ambon 307.4 401.6 479.2 627.8 15.2 29.8 44.4 82.5

Pantoloan 10.9 14.3 17.0 22.3 3.4 6.6 9.9 18.4

Sorong 319.3 417.3 497.8 651.4 22.0 42.9 64.0 118.9

Total above ports 25,610 33,465 39,929 52,247 8,699 17,011 25,370 47,102


Region and port

GenCar (000 tons) Container (000 TEU)


101

CHAPTER 6: INVESTMENT REQUIREMENTS CHAPTER 6: INVESTMENT REQUIREMENTS

Gate – where containers, trucks and railcars are processed underway to/from the terminal, including pre-gate parking for trucks.

Sometimes the list above is expanded to include three additional components outside the terminal: the access channel and turning basin on the water side, and the road and rail connections to the hinterland on the land side.

The capacity of the container terminal is determined by its most restricted component (“bottleneck”). In most port areas worldwide, there is acute shortage of waterfront area. Hence, the container yard, which typically consumes about 70 – 80 percent of the waterfront area, is the most restricting component and the determining component of the overall terminal capacity. The gate usually does not restrict capacity since it consumes relatively small land area. Also, in some cases, the gate and the pre-gate parking area can be located away from the waterfront area where there is plenty of land. The berth, despite being the most expensive terminal component, usually has a much larger capacity than the yard.

Berth capacity is a function of berth productivity and the time that the berth is expected to operate at this level of productivity. This time is also measured as a percentage of the available (usually calendar) time and therefore defined as berth utilization. Berth productivity, in turn, is a function of crane productivity and the average number of cranes that can serve this berth.

Terminal capacity is simply the product of berth capacity multiplied by the number of berths. The key factor in the above formula is berth utilization. Defining this utilization level is based on a trade-off between ship and terminal time (who waits for whom). This trade-off is often analyzed using a queuing simulation model whereby the waiting time is defined as a fraction of the working time (e.g., 10 percent), or as an absolute value (e.g., 4 hours).

The concept of capacity is closely related with the concepts of productivity and utilization. Operating the same terminal at higher crane productivity would result in a higher capacity. This can be seen from the formula above whereby increase in crane productivity results in a higher berth capacity (and vice-versa) without increasing the number of berths or cranes. This is not the case with utilization, however. Increasing utilization beyond a certain level, whether of the berth or the yard, usually results in congestion and lower operational performance and level of service to terminal users. This in turn would result in increasing the waiting times of ships and trucks along with overall system cost.

Table 6-3 presents an outlook for berth capacity indicators developed by Nathan Associates Inc. taking into account industry trends and expected developments for container ports worldwide.



Table 6-3. Container Terminal Berth Capacity Indicators, 2009-2025

For this report, the approach used to estimate port capacity for this report is based on an overall factor for throughput per meter of berth. The productivity factor is affected by a number of variables, including:

Volume of containers or general cargo handled

Composition of traffic between international and domestic trades

Size and type of vessels served

Adequacy of space available in container yard or dock area/ storage facilities

Capacity and quantity of cranes and other handling equipment

Training and operational performance of operators

Traffic flow and level of congestion in and near port

Hours worked

Increased use of 40-foot containers

It is not possible to account for the variability of all of these factors for all of the ports assessed in this report. However, from observations of port the performance in Indonesia and elsewhere, the overall productivity of ports often falls into discrete categories based on the size and type of the terminals analyzed. This is because often a number of the above factors are inter-related and mutually supporting. For example the greater volume of traffic and the larger vessels will tend to call at ports that are capable of accommodating them. Thus the type and quantity of cranes and other cargo handling equipment is correlated to the type and size of terminal. Similarly, the training and operating performance of port operators is frequently correlated to the volume of port traffic.

The productivity factors presented in Table 6-4 are based on experience in Indonesia as developed from the following sources:

DWA, 2010 IndII Technical Report on the Development of the National Port Master Plan,

Year Type of Berth

Berth

Length

(m)

Depth

Alongside

(m)

Berths

per

Terminal

Design

Ship

(TEU)

Berth

Capacity

(TEU/ Berth)

Berth-m

Capacity

(TEU/m)

2009 Multipurpose 150 10-11 2 1,000 100,000 667

2009 Sub Panamax 250 12 3 3,000 350,000 1,400

2012 Panamax 280 14 3 4,500 450,000 1,607

2012 Panamax 280 14 4 4,500 495,000 1,768

2014 Post Panamax I 300 15 3 5,700 500,000 1,667

2014 Post Panamax I 300 15 4 5,700 550,000 1,833

2017 Post Panamax II 350 16 4 8,000 700,000 2,000

2025 Post Panamax III 400 16-18 4 12,000 1,000,000 2,500



103


JICA, Study on the Development of Domestic Sea Transportation and Maritime Industry in the Republic of Indonesia (STRAMINDO), March 2004

Nathan Associates experience in Indonesia and other similar ports worldwide.

The resulting productivity factors were calibrated with actual 2009 port throughputs to reflect the level of port utilization for various types and sizes of Indonesian ports.

Table 6-4. Assumed Indonesian Port Productivity Factors by Type of Facility, 2009-2030

We have incorporated improvements in the productivity factors over time. This is to reflect:

projected increases in traffic volumes

increased vessel sizes

provision of higher capacity cranes and more overall cargo-handling equipment

improved training and performance of operators

Container productivity is assumed to improve by 30 percent between 2009 and 2015 and another 25 percent between 2015and 2020. General cargo productivity is assumed to increase by 40 percent during each of the periods shown from 2009 through 2030. This is due to factors cited above, plus the greater use of unitized or palletized cargo handling in place of individual bags for break-bulk cargo. Even still, the rate of general cargo handling per meter of berth is only 4.9 thousand tons in 2030, as compared to the handling of containerized cargo at conventional terminals of 8.1 thousand tons per meter of berth (assuming an average of 10 tons per TEU). Cargo at a specialized container terminal has an assumed productivity in 2030 of over 20 thousand tons per meter of berth.

6.2.3 Container Capacity and Requirements for Additional Capacity

We have applied the port productivity factors described in the section above to the estimates of existing meters of berth by type at each of the 22 main container ports. The results are presented in Table 6-5.

Type of cargo and terminal 2009 2015 2020 2030

Containers (TEU/ m of berth)

Specialized Terminal

Tanjung Priok 1,250 1,625 2,031 2,031

Other ports over 750,000 TEU 1,000 1,300 1,625 1,625

Other ports 300,000-750,000 TEU 750 975 1,219 1,219

Other ports under 300,000 TEU 650 845 1,056 1,056

Conventional Terminal 500 650 813 813

General cargo (tons/ m of berth) 1,800 2,520 3,528 4,939




The analysis indicates that many of Indonesia’s main port are approaching the limits of their effective capacity given current productivity factors. For containers, the ports of Belawan, Tanjung Emas, Tanjung Perak, Tanjung Priok are each operating at around 90 percent of effective capacity, while the ports of Pekanbaru and Samarinda, are each operating at around 80 percent of effective capacity.

With the exceptions of Balikpapan and Belawan, general cargo operations generally have sufficient or excess capacity.

Table 6-5. Capacity Analysis for Main Indonesian Container Ports, 2009

Table 6-6 through Table 6-8 present the capacity analysis for the main Indonesian container ports for 2015, 2020, and 2030, respectively. By 2015, the growth in forecasted container traffic results seven Indonesian port requiring additional capacity. The largest increase is needed for Tanjung Priok that will need to increase capacity by

Length TEU/ m Capacity

(000 teu)


(000 teu)

Total

Capacity

(000 teu)

Capacity

Utiliz. %

Length Tons/ m Capacity

(000 tons)

Capacity

Utiliz. %

North Sumatera

Belawan/Kuala Tanjung 850 1,000 850 242 500 121 971 91% 2,180 1,800 3,924 104%

Teluk Bayur 222 650 144 - 500 - 144 29% 838 1,800 1,508 61%

Pekanbaru - 650 - 181 500 91 91 81% 181 1,800 326 71%

Batam - 650 - 428 500 214 214 49% 1,714 1,800 3,084 75%

West Kalimantan

Pontianak 405 650 263 - 500 - 263 38% 422 1,800 760 45%

South Sumatera

Palembang 266 650 173 - 500 - 173 36% 475 1,800 855 35%

Panjang 848 650 551 500 - 551 55% 532 1,800 958 79%

Jambi - 650 - 88 500 44 44 73% 350 1,800 631 22%

East-South Kalimantan 650 500 1,800

Balikpapan - 650 - 98 500 49 49 78% 491 1,800 884 105%

Samarinda - 650 - 234 500 117 117 81% 703 1,800 1,265 51%

Banjarmasin 240 650 156 - 500 - 156 76% 625 1,800 1,125 72%

South Sulawesi

Makassar 850 750 638 210 500 105 743 61% 735 1,800 1,323 88%

Java

Tg. Perak 1,870 1,000 1,870 235 500 117 1,987 88% 7,281 1,800 13,105 29%

Tg. Emas 495 750 371 494 500 247 618 93% 577 1,800 1,038 68%

Tg. Priok 3,308 1,250 4,135 800 500 400 4,535 87% 5,845 1,800 10,521 64%

Bali- NT

Benoa - 650 - 41 500 21 21 28% 206 1,800 371 3%

The East 650 500 1,800

Bitung 225 650 146 - 500 - 146 43% 1,187 1,800 2,137 49%

Jayapura - 650 - 86 500 43 43 65% 128 1,800 231 28%

Merauke - 650 - 102 500 51 51 20% 152 1,800 274 37%

Ambon - 650 - 58 500 29 29 53% 851 1,800 1,533 20%

Pantoloan - 650 - 30 500 15 15 23% 573 1,800 1,031 1%

Sorong - 650 - 85 500 42 42 52% 226 1,800 406 79%

Total above ports 9,579 971 9,298 3,411 500 1,705 11,003 79% 26,272 1,800 47,289 54%


Region and port

TPK

Container General Cargo

Total Container ConventionalConventional


105


1.8 million TEU and Tanjung Perak that will need to add 0.8 million TEU of capacity63. Belawan/Kuala Tanjung will also require a substantial capacity increase of 0.4 million TEU. In terms of meters of berth,

63

While the names of the existing ports are used to identify the areas where additional container capacity is needed, the capacity may well be provided by the development and construction of a new port in the area. However, the location of new ports will be determined by a masterplan study that looks at several alternatives. Master plan studies for specific ports arebeyond the scope of this present study.





(000 teu)

Length TEU/

m

Capacity

(000 teu)

Total Capacity

(000 teu)

Capacity

Utiliz. %

Length Tons/

m

Capacity

(000 tons)

Capacity

Utiliz. %

TEU

(000s)

Berth

(m)

North Sumatera

Belawan/Kuala Tanjung 850 1300 1,105 242 650 157 1,262 138% 2,180 2,520 5,493 97% 475 400

Teluk Bayur 222 845 188 - 650 - 188 44% 838 2,520 2,112 57% - -

Pekanbaru - 845 - 217 650 141 141 101% 145 2,520 365 82% 2 36

Batam 845 - 428 650 278 278 73% 1,714 2,520 4,318 70% - -

West Kalimantan

Pontianak 405 845 342 - 650 - 342 57% 422 2,520 1,063 42% - -

South Sumatera

Palembang 266 845 225 - 650 - 225 54% 475 2,520 1,197 32% - -

Panjang 848 975 827 - 650 - 827 71% 532 2,520 1,341 74% - -

Jambi - 845 - 88 650 57 57 110% 350 2,520 883 21% 6 -

East-South Kalimantan 845 650 2,520

Balikpapan - 845 - 98 650 64 64 117% 491 2,520 1,238 98% 11 -

Samarinda - 845 - 234 650 152 152 122% 703 2,520 1,771 47% 34 200

Banjarmasin 240 845 203 156 650 102 304 76% 469 2,520 1,181 90% - 156

South Sulawesi

Makassar 850 1300 1,105 210 650 137 1,242 72% 735 2,520 1,852 82% - -

Java

Tg. Perak 1,870 1300 2,431 235 650 152 2,583 132% 7,281 2,520 18,347 27% 828 800

Tg. Emas 495 1300 644 687 650 446 1,090 103% 384 2,520 969 95% 35 192

Tg. Priok 3,308 1625 5,376 800 650 520 5,896 130% 5,845 2,520 14,729 59% 1,776 1,200

Bali- NT

Benoa - 845 - 41 650 27 27 42% 206 2,520 519 3% - -

The East 845 650 2,520

Bitung 225 845 190 - 650 - 190 64% 1,187 2,520 2,991 46% - -

Jayapura - 845 - 86 650 56 56 98% 128 2,520 324 26% - -

Merauke - 845 - 102 650 66 66 30% 152 2,520 384 34% - -

Ambon - 845 - 58 650 37 37 80% 851 2,520 2,146 19% - -

Pantoloan - 845 - 30 650 20 20 34% 573 2,520 1,444 1% - -

Sorong - 845 - 85 650 55 55 78% 197 2,520 497 84% - -

Total above ports 3,165 2,985


Region and port

ConventionalTotal Cont.


TPK Conventional

Additional

Cont. Capacity


107




(000 teu)


(000 teu)

Total

Capacity

(000 teu)

Capacity

Utiliz. %


(000 tons)

Capacity

Utiliz. %

TEU

(000s)

Berth

(m)

North Sumatera

Belawan/Kuala Tanjung 1,250 1,625 2,031 242 813 197 2,228 116% 2,180 3,528 7,690 82% 363 400

Teluk Bayur 222 1,056 234 - 813 - 234 52% 838 3,528 2,956 49% - -

Pekanbaru - 1,056 - 217 813 176 176 121% 145 3,528 511 70% 37 200

Batam - 1,056 - 428 813 348 348 87% 1,714 3,528 6,046 59% - -

West Kalimantan

Pontianak 405 1,056 428 - 813 - 428 68% 422 3,528 1,489 35% - -

South Sumatera

Palembang 266 1,056 281 - 813 - 281 64% 475 3,528 1,676 28% - -

Panjang 848 1,625 1,378 - 813 - 1,378 64% 532 3,528 1,877 63% - -

Jambi - 1,056 - 88 813 71 71 131% 350 3,528 1,236 18% 22 -

East-South Kalimantan 1,056 813 3,528

Balikpapan - 1,056 - 98 813 79 79 140% 491 3,528 1,733 83% 32 200

Samarinda 200 1,056 211 234 813 190 402 69% 703 3,528 2,479 40% - -

Banjarmasin 240 1,056 254 156 813 127 380 90% 469 3,528 1,654 76% - -

South Sulawesi

Makassar 850 1,625 1,381 210 813 171 1,552 86% 735 3,528 2,593 70% - -

Java

Tg. Perak 2,670 1,625 4,339 235 813 191 4,529 112% 7,281 3,528 25,686 23% 558 400

Tg. Emas 495 1,625 804 687 813 558 1,362 123% 384 3,528 1,356 81% 315 200

Tg. Priok 4,508 2,031 9,157 800 813 650 9,807 117% 5,845 3,528 20,621 51% 1,634 1,000

Bali- NT

Benoa - 1,056 - 41 813 33 33 50% 206 3,528 727 2% - -

The East 1,056 813 3,528

Bitung 225 1,056 238 - 813 - 238 77% 1,187 3,528 4,188 39% - -

Jayapura - 1,056 - 86 813 70 70 117% 128 3,528 453 22% 12 -

Merauke - 1,056 - 102 813 83 83 36% 152 3,528 538 29% - -

Ambon - 1,056 - 58 813 47 47 95% 851 3,528 3,004 16% - -

Pantoloan - 1,056 - 30 813 24 24 40% 573 3,528 2,021 1% - -

Sorong - 1,056 - 85 813 69 69 93% 197 3,528 696 71% - -



Region and port

Total Cont.Conventional Conventional

Additional Cont.

Capacity


TPK





(000 teu)


(000 teu)

Total

Capacity

(000 teu)

Capacity

Utiliz. %


(000 tons)

Capacity

Utiliz. %

TEU

(000s)

Berth

(m)

North Sumatera

Belawan/Kuala Tanjung 1,650 1,625 2,681 242 813 197 2,878 167% 2,180 4,939 10,766 77% 1,932 1,200

Teluk Bayur 222 1,056 234 - 813 - 234 97% 838 4,939 4,139 46% - -

Pekanbaru 200 1,219 244 217 813 176 420 94% 145 4,939 715 66% - -

Batam - 1,219 - 428 813 348 348 162% 1,714 4,939 8,464 56% 216 200

West Kalimantan

Pontianak 405 1,219 494 - 813 - 494 109% 422 4,939 2,084 33% 44 200

South Sumatera

Palembang 266 1,056 281 - 813 - 281 119% 475 4,939 2,346 26% 55 200

Panjang 848 1,625 1,378 - 813 - 1,378 119% 532 4,939 2,628 59% 256 200

Jambi - 1,056 - 88 813 71 71 243% 350 4,939 1,731 17% 102 200

East-South Kalimantan 1,056 813 4,939

Balikpapan 200 1,056 211 98 813 79 291 71% 491 4,939 2,426 78% - -

Samarinda 200 1,219 244 234 813 190 434 119% 703 4,939 3,471 38% 81 200

Banjarmasin 240 1,219 293 156 813 127 419 152% 469 4,939 2,315 71% 219 200

South Sulawesi

Makassar 850 1,625 1,381 210 813 171 1,552 159% 735 4,939 3,630 66% 918 600

Java

Tg. Perak 3,070 1,625 4,989 235 813 191 5,179 182% 7,281 4,939 35,960 21% 4,265 2,800

Tg. Emas 695 1,625 1,129 687 813 558 1,687 185% 384 4,939 1,899 76% 1,427 1,000

Tg. Priok 5,508 2,031 11,188 800 813 650 11,838 179% 5,845 4,939 28,870 47% 9,402 4,800

Bali- NT

Benoa - 1,056 - 41 813 33 33 93% 206 4,939 1,017 2% - -

The East 1,056 813 4,939

Bitung 225 1,056 238 - 813 - 238 143% 1,187 4,939 5,863 36% 101 200

Jayapura - 1,056 - 86 813 70 70 216% 128 4,939 634 21% 81 200

Merauke - 1,056 - 102 813 83 83 66% 152 4,939 753 27% - -

Ambon - 1,056 - 58 813 47 47 176% 851 4,939 4,205 15% 36 200

Pantoloan - 1,056 - 30 813 24 24 75% 573 4,939 2,829 1% - -

Sorong - 1,056 - 85 813 69 69 173% 197 4,939 975 67% 50 200



Region and port

Additional Cont.

Capacity


TPK Conventional Total Cont. Conventional


109


Tanjung Priok will require an additional 1,200 m; Tanjung Perak, 800 m; and Belawan/Kuala Tanjung 400 m64.

The ports of Tanjung Emas, Banjarmasin and Pekanbaru will also need to add container capacity in 2015; however, it seems likely that this could be accomplished by converting some under-utilized conventional general cargo berths for container operations. This is typically done by demolishing warehouses and sheds on the quay, strengthening the quay for mobile cranes and adding ancillary container handling equipment. It should be noted, that for this report, an engineering assessment of the feasibility of converting general cargo berths for container operations has not been conducted.

The capacity analysis for 2020 shown in Table 3-7 assumes that the additional capacity needed for 2015 had been provided. It then shows that with the continued robust growth of container traffic, six ports again will need to expand container capacity to meet demand. As in 2015, the ports of Tanjung Priok, Tanjung Perak, Belawan/Kuala Tanjung and Tanjung Emas will need to bring on-line new container berths. In addition, the ports of Pekanbaru and Balikpapan will each now need to add a new berth of a t least 200 m.

By 2030, 16 of Indonesian main container ports will need to provide additional capacity. This includes accommodation for 9.4 million TEU at Tanjung Priok, 4.3 million TEU at Tanjung Perak 1.9 million TEU at Belawan/Kuala Tanjung and 0.9 million TEU at Makassar.

6.3 INVESTMENT REQUIREMENTS

In this section, we first estimate unit investment costs for container port development and construction followed by the presentation of investment requirements by port and time period.

6.3.1 Unit Investment Costs

For this report, we have adopted the unit costs for container terminal development and construction presented in the DWA 2010 IndII Technical Report on the Development of the National Port Master Plan. For that study, DGST developed rough cost estimates for the developments identified as being required for the major cargoes and ports. Costs were estimated for each port terminal facility (including

64

While the requirements for capacity expansion are expressed here in terms of meters of berth, there will also need to be additional yard capacity and cargo handling equipment provided. These elements are included in the unit investment costs presented later in this chapter.



directly‐related infrastructure) for each port and cargo category by developing measures of physical requirements for port terminal facilities and applying unit construction costs. The unit costs were from the DGST records of construction costs from past projects and were cross‐checked with some international unit costs from recent projects. The values are presented in constant US dollars of 2010.

The differentiation in unit costs for specific ports resulted in the range of unit cost estimates shown In Table 6-9. Further details of the quantities and unit costs assumed for each port is presented in Annex 2. As can be seen, the cost of land acquisition varies from a low of US$ 50,000 per hectare for Pelabuhan Ratu, a small fishing village in West Java, to US$ 500,000 per hectare for Tangerang near Jakarta. A major factor is the cost of reclamation that varies from US$ 100,000 per hectare in Palembang to US$ 5 million per hectare in Tanjung Perak.

Container handling and equipment unit costs shown in Table 6-9 are for a package of equipment including gantry cranes and associated yard equipment.

Table 6-9. Range of Unit Cost Estimates for Container Terminal Development and Construction (US$ of 2010)

The corresponding calculation of total direct unit cost per meter of berth for development and construction of container terminals in each of the 22 main container ports is presented in Annex 2 and summarized in Table 6-10. These were calculated by dividing the total investment cost by the meters of berth constructed. Due to the cost of land reclamation, the highest total unit cost per meter of berth is at Tanjung Perak at US$ 872,000 per m followed by Balikpapan at US$ 832,000. Most other ports have

No Description Unit Min Max

1 Preparation & Earth Work

Land Acquisition Ha 50,000 500,000

Reclamation Ha 100,000 5,000,000

Break Water m 1,000 100,000

Dredging m3 7 8

2 Quay Side

Concrete Slab m2 2,500 2,500

Approach Trestle m2 15,000 15,000

Trestle, 1 Unit m2 2,500 2,500





Jetty/Wharf m2 2,000 5,000

Dolphin m2

3 Storage and Pavement

Pavement Ha 500,000 500,000

4 Buildings m2 300 300

5 Handling Equipment unit 8,000,000 16,300,000

Total Cost

Source: IndII, 2010 Technical Report on the Development of

the National Port Master Plan.


111


total unit investment costs in the range of US$ 400,000 to US$ 600,000 per meter of berth. For ports that did not have specific investment costs estimates, unit costs were used from the reference port as shown in Table 6-10.

Table 6 -10. Unit Investment Cost for Indonesian Container Terminal Development (US$

000 of 2010)

Region and Port

Reference

port

Cost per m

of berth

North Sumatera

Belawan/Kuala Tanjung Belawan 546

Teluk Bayur Belawan 546

Pekanbaru Belawan 546

Batam Belawan 546

West Kalimantan Belawan 546

Pontianak Pontianak 501

South Sumatera

Palembang Palembang 771

Panjang Panjang 400

Jambi Panjang 400


Balikpapan Balikpapan 832

Samarinda Pontianak 501

Banjarmasin Banjarmasin 602

South Sulawesi

Makassar Makasar 499

Java

Tg. Perak Tg. Perak 872

Tg. Emas Tg. Priok 610

Tg. Priok Tg. Priok 610

Bali- NT

Benoa Tg. Perak 872

The East

Bitung Bitung 656

Jayapura Sorong 407

Merauke Sorong 407

Ambon Ambon 439

Pantoloan Bitung 656

Sorong Sorong 407




6.3.2 Container Port Investment Requirements

The unit investment cost per meter of berth for each port has been applied to the estimates of physical capacity additions to calculate the container port investment requirements. By 2015, the investment requirements for the ports analyzed total US$ 1.9 billion with Tanjung Priok and Tanjung Perak accounting for 75 percent of the total requirement (Table 6-11). By 2020, an additional investment of US$ 1.6 billion will be needed.

Table 6-11. Container Port Investments for Main Indonesia Container Ports, 2015-2030 (US$ millions of 2010)

2015 2020 2030 Total

North Sumatera

Belawan/Kuala Tanjung 218 218 655 1,092

Teluk Bayur - - - -

Pekanbaru 12 109 - 121

Batam - - 109 109

West Kalimantan

Pontianak - - 100 100

South Sumatera

Palembang - - 154 154

Panjang - - 80 80

Jambi - - 80 80

East-South Kalimantan -

Balikpapan - 166 - 166

Samarinda 100 - 100 201

Banjarmasin 56 - 120 177

South Sulawesi

Makassar - - 300 300

Java

Tg. Perak 697 349 2,441 3,487

Tg. Emas 70 122 610 802

Tg. Priok 731 610 2,926 4,267

Bali- NT

Benoa - - - -

The East -

Bitung - - 131 131

Jayapura - - 81 81

Merauke - - - -

Ambon - - 88 88

Pantoloan - - - -

Sorong - - 81 81

Total above ports 1,886 1,574 8,057 11,517


Region and port


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With the forecasted growth of container traffic through 2030, the investment requirements for the 16 ports that will need to expand container capacity is estimated to exceed US$ 8 billion.

6.4 SUMMARY OF INVESTMENT REQUIREMENTS

In this section, we present a summary of Indonesian port investment requirements for all cargo types through 2030. This is followed by a discussion of short-term improvements that can be implemented for Tanjung Priok and Tanjung Perak to relieve near-term capacity constraints before additional berths and terminals are constructed ad operational.

6.4.1 Investment Requirements for All Cargo Types

The estimates of container investment requirements are based on those presented in Chapter 3, while those for other cargo types are extracted from the DWA, 2010 IndII Technical Report on the Development of the National Port Master Plan.65

The composition of the total investment requirement through 2030 is shown in Figure 6-2 by cargo type. Of the total investment of US$ 19.2 billion, 60 percent is needed for container traffic, 18 percent for petroleum and petroleum products, 13 percent for coal, and 9 percent for CPO.

Figure 6-2. Port Investment Requirements through 2030 by Type of Cargo

65

The DWA 2010IndII Technical Report on Development of the National Port Master Plan added a high contingency allowance of 40 percent on top of the direct investment costs. We have not included this contingency as the unit direct investment cost factors are deemed sufficient for preparation of an order of magnitude estimate of investment requirements.

Container, 11,517

Petroleum, 3,470

Coal, 2,491

Cruise, 122



Table 6-12 provides the detailed breakdown of the total port investment requirement through 2030 by region and port as well as type of cargo.

The revised traffic forecasts and investment requirements for container ports have been incorporated in the revised hinterland cards that were initially prepared by DWA in the 2010 IndII Technical Report on the Development of the National Port Master Plan. These are shown for each region in Figure 6-3 through Figure 6-10.


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Table 6-12. Investment Requirements for Indonesian Main Ports by Cargo Type, 2011-2030 (US$ million of 2010)

Port Container CPO Petroleum Coal Cruise Total

North and West Sumatera

Belawan/Kuala Tanjung 1,092 1,092

Dumai - 124 118 - - 242

Teluk Bayur - 257 45 - - 302

Pekanbaru 121 - - - 121

Batam 109 - - - 109

Pembuangan - 134 117 - - 251

Sibolga - 37 16 - - 53

Aceh - 222 - - 222

Bintan - 46 - - 46

Teluk Tapang - 54 - - 54

West Kalimantam

Pontianak (S. Pemuju) 100 - - - - 100

Tlk Air - 60 38 - - 98

South Sumatera

Palembang and Environs 154 173 1,106 - 1,433

Panjang 80 22 - - 102

Jambi 80 - - - 80

Bengkulu - 15 14 - - 29

Tlk Semangka - - 137 - - 137

Bangka/Belitung - - 663 - - 663


Balikpapan & Environs 166 48 39 578 - 831

Samarinda 201 30 - - - 231

Banjarmasin 177 412 199 807 - 1,595

Sangkulirang - - - - -

South -Central Sulawesi

Makassar 300 36 66 - - 402

Pare-Pare - - 54 - - 54

Luwuk and Environs - 7 7 - - 14

Java

Tanjung Priok & Environs 4,267 - 377 - - 4,644

Tanjung Perak & Environs 3,487 8 152 - - 3,647

Tanjung Emas 802 - - - -

Pelabuhan Ratu - - - - -

Balongan/Cirebon - - 221 - - 221

Cilacap - - 81 - - 81

Jepara (Tg Jati) - - 184 - - 184

13 Other Locations - - 797 - - 797

Bali-NT

Tanah Ampo - - - 122 122

The East

Bitung 131 - - - - 131

Jayapura 81 - 15 - - 96

Merauke - - 26 - - 26

Ambon 88 - 31 - - 119

Sorong 81 - 17 - - 98

Halmahera (Ujung Pulau) - 10 10 - - 20

Total 11,517 1,649 3,470 2,491 122 19,249




Figure 6-3. West Kalimantan – No Strategic Ports, regional ports centred around Pontianak


117


Figure 6-4. South Sumatra – no Strategic Ports, regional ports centred around Panjang and Palembang



Figure 6-5. East and South Kalimantan – Strategic Ports: Balikpapan, Samarinda and Banjarmasin


119


Figure 6-6. South Sulawesi – Ports & Terminals centred around Makassar, no Strategic Ports



Figure 6-7. Java, South Sumatra – Strategic Ports Regions Jakarta (Tanjung Priok) and Surabaya (Tanjung Perak)


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Figure 6-8. Bali, Lombok, Nusa Tenggara and to the south and east – No strategic ports



Figure 6-9. The East – Strategic Ports: Bitung, Ambon and Sorong


123


Figure 6-10. The East – Strategic Ports: Bitung, Ambon and So

ro



6.5 SHORT-TERM SOLUTIONS TO CAPACITY CONSTRAINTS

The investments identified above focus on relatively long-term capacity requirements. The traffic forecast presented in Chapter 5 underscored the impending capacity constraints that both Tanjung Priok and Tanjung Perak are facing in the near-term future. We have identified some short-term measures that can help mitigate capacity constraints until new construction/expansion bring additional capacity on line. We have not prepared cost estimates for these short-term measures as they require further study; still, they are relatively low cost and if implemented have the potential to address short term capacity shortages and to mitigate any risk of construction delay and market swings indicating stronger growth than the forecasts reflect. We describe the short-term capacity solutions in the text that follows.

6.5.1 Short-Term Capacity Solutions for Tanjung Priok

Though Tanjung Priok’s terminals are performing to acceptable standards, the berth and yard are operating at close to capacity, particularly for imported boxes in the yard area, where current occupancy has exceeded 100 percent. Yard congestion will ultimately impact berth and gate performance, causing a dramatic increase in both ship and truck waiting time. The Tanjung Priok master plan addresses capacity enhancement measures with the introduction of a new container terminal, which is likely not to become operational before 2015. Pelindo II has also prepared an Optimization Plan, focusing on short-term measures that will add an estimated 1.7 million TEUs to the current capacity of 4.5 million TEUs, for a total available capacity of 6.2 million TEUs. This may be sufficient through the year 2014, when the Pelindo II forecast indicates a volume of 6.2 million TEUs. However, at this time the difference between capacity and demand will be a diminutive 1.6 percent; this gap is so small so as to raise serious concerns about capacity sufficiency.

Integrated Off-Dock Container Yards

Our expectation is that future yard congestion will be especially severe for import containers given historic trends and expected future growth. The pressures from import containers is simply because the proportion of import containers has been growing in recent years and will probably continue growing in the near future reflecting the rising standard of living. One immediate option for easing container yard congestion is establishing an Integrated Off-Dock Container Yard Program. The main thrust of the Integrated Off-Dock Program is relocating some of the yard and gate activities from the marine terminals inside Tanjung Priok to off-dock container yards located nearby and outside the port in an effort to expand container yard capacity.

Conversion of Existing Depots

The proposed off-dock container yards could be based on existing depots for empty containers, especially those located in the Marunda area, about 7 km away from


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Tanjung Priok. Figure 6-12 presents a regional map of Jakarta, showing the relative locations of Tanjung Priok and Marunda. Most shipping lines already have their depots in Marunda, either operated by them or by private contractors. Most of the depots are located within the planned Marunda Special Economic Zone (KFK), which is already dedicated to handling foreign trade.

The existing depots are quite large, some of them reaching 10 ha, or about half the size of Koja. Moreover, there appears to be plenty of open area that could be easily converted into container yards. Marunda is quite close to Tanjung Priok, with the trip time between Marunda and Tanjung Priok taking about 10 minutes or less during night hours. Further, Marunda is located close to the Outer Ring Road. Once the missing segment of this road near the port and the special exit to Marunda are completed, expected next year, connectivity to the port will be excellent.66

The investments required for conversion of a depot for empty boxes to a container yard are relatively small. In fact, several of these depots already have the required machines and pavement strength for handling loaded containers. Still, there is a need for improving security and obtaining a license for bonded warehousing.

Figure 6 -11. Tanjung Priok and Marunda Map

Modification of the Marine Terminal Operation

Providing off-dock container yards is only one component of the program. Another important component is the adjustment of the marine terminal operating system.

66

Marunda also has a port, which raises the possibility of barging the containers instead of trucking them although the viability of such a short trip by barge seems questionable.



Ideally, over-the-road trucks would be allowed alongside the vessel, with the gantry cranes staging the import containers directly to trucks. This system, common in general cargo (direct transfer) is impractical in the case of modern container terminals due to a combination of safety issues, potential damage to trucks, and reduction in ship handling productivity due to crane-waiting for trucks.

Based on the experience of other ports using this system, the proposed ship-side system includes creating a small buffer area for containers on the dock near the gantry crane, probably under its back-reach. From there, a Top-Lift (or a Reach Stacker) will load the outside trucks. Accordingly, the proposed specialized handling process includes the following steps:

The shore crane places the import containers in a small pile under its back reach;

Once the cranes have finished the discharge of a hold and moved away, a Top-Lift picks containers from the pile and loads them onto an outside truck destined to the off-dock container yard;

The loaded truck proceeds immediately to the gate and leaves the marine terminal through a special lane, proceeding to the off-dock container yard;

Once the truck arrives at the off-dock yard, a Top-Lift lifts the container and stages it in the ship stack;

The empty truck returns to the marine terminal, enters through a special lane and parks at an assigned place nearby the vessel.

Fast gate processing is critical for the system’s success. Accordingly, the marine terminal is expected to allocate a special lane dedicated to the off-dock operation. The gate could be fully automated, equipped with electronic reader and cameras. There is no need for inspection or document generation at the gate (e.g., EIS), since the containers are under the custody of the shipping line. To further expedite the gate processing, the trucks used for the transfer should be easily identified by special colors and, most desirably, electronic tags (RFID). These trucks should be driven by experienced drivers familiar with the port. If Customs requires, special electronic tugs could be placed around the seals with readers placed at the gate and along the way to Marunda. Another possibility intended to expedite the transfer to off-dock container yards is allowing the off-dock operator to use its own Top-Lifts inside the marine terminal.

It is expected that the bulk of the transfer between the marine terminal and off-dock yard will take place at night. In fact, night transfer is already used for most empty box transfers from the depots in Marunda to Tanjung Priok. Another option to consider is that following the inauguration of the new road, double-long chassis (2 x 40-ft) will be permitted on the short 7 km road to further save on the cost of inter-terminal transfer. Altogether, the intention here is to create a fast and low cost, conveyor-like system of moving containers between the marine terminals and the off-dock container yards.


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Integrated Operation

The key to a successful off-dock operation is its integration with the marine terminal operating system. The off-dock operator should have access to the marine terminals’ TOS and have real-time access to the ship discharge process. Likewise, the off-dock operator should be able to watch via the CCTV system the situation at vessel side, truck parking, and gate. Accordingly, the off-dock operator is expected to continuously monitor the operations and immediately intervene in case of problems (e.g., by adding trucks, Top-Loaders, etc.).

Through Bill of Lading

The intention of the program is to transfer a ship’s entire discharge volume to the off-dock container yards. Hence, the entire operation should be controlled by the shipping line, deciding which vessels to handle inside or outside the marine terminal, at the off-dock container yard. The system suits mainly larger shipping lines, which have several weekly services. Accordingly, the lines can decide that one or two services will be handled at the off-dock container yard the way they presently decide what service is handled in JICT and what service in Koja. In this case, the lines simply “re-nominate” vessels to the off-dock container yard, using documentation similar to the present ship bill of lading arrangement. The transfer from the vessel to the off-dock container yard is entirely covered by the line since the point of delivery is shifted to the off-dock container yard.

Costs and Savings of Off-Dock Container Yards

The use of off-dock container yards involves additional costs:

Additional lift at ship-side and off-dock container yard by Top-Lift; and

Additional drayage between the marine terminal and the off-dock container yard.

But, it also involves savings:

The handling of boxes by Top-Loaders is less expensive than handling them by RTGs at the marine terminals;67

Using outside trucks for the ship-side to (off-dock) yard is less expensive than using yard tractors; and

The gate process at off-dock yards is less expensive than that at the marine terminal.

Additionally, off-dock yards are expected to provide a much more expedited service to trucks coming to pick-up import boxes than the time required in the marine terminals, saving time to the consignee’s trucks.

67

The on-dock container yard includes 2 lifts by RTGs vs. 3 lifts by Top Loaders in off-dock container yard. The cost of a Top-Loader is about $1.3 million vs. $0.4 million for Top Loader. Likewise the labor and real estate is less expensive at the off-dock container yard.



It is reasonable to assume that despite the above-mentioned savings, the off-dock container yards will involve additional operating costs. These added operating costs are much smaller than the costs of congestion expected in the marine terminals. Put differently, if the off-dock yards handle 20 percent of the ships, it is equivalent to increasing the capacity of the Tanjung Priok marine terminals complex by 20 percent (assuming that the capacity is determined by their container yards). Operating at 20 percent above capacity will bring the entire system to a hold, requiring wide usage of forced container evacuation and long waiting times for ships and trucks. Finally, the additional off-dock capacity can be introduced within several months with little investment, mostly by private operators.

Reduced Tariff at the Marine Terminal

The costs of off-dock transfer will be fully covered by the shipping lines nominating their off-dock container yard as a point of delivery. The lines, in turn, will recover part of their costs by enjoying a reduced marine terminal tariff. Usually, the marine terminal costs are roughly divided into 2/3 for the ship-to-shore transfer (stevedoring) and 1/3 for ship-to-yard transfer, storage, truck loading and yard processing (terminal handling). It is reasonable to expect that the reduction in the current marine terminal tariff will reflect this division and lines using off-dock transfer will only be charged 2/3 of the full tariff.

Additional Services at the Off-Dock Container Yards

The Marunda area has plenty of space. Hence, it is reasonable to expect that the operators of off-dock container yards will increase the size of their facilities there and offer additional, value-added services. They could provide longer storage time to laden boxes at reasonable cost, currently unavailable at the marine terminals where space is scarce. Some consignees have a genuine need for such a service. For example, in cases whereby consignees do not have sufficient storage space at their premises, they have not decided yet on the final destination of containers, or they would like to delay Customs duty payment. Off-dock container yards also could offer services related to the freight itself, such as de-stuffing of boxes, storage of cargoes, pick & pack, labeling and even distribution. Additionally, these off-dock container yards will continue serving as depots.

Export Containers

The intent is to use the off-dock container yards mainly for import containers. Still, there also is the option to use these yards for storage of export containers. In this case, trucks coming with import containers could haul back export ones, reducing the transport cost. As with the import containers, using off-dock container yards may add to the transport cost (although much less, since most of the transfer is through backhaul). The advantage of storing export boxes at the off-dock container yards is that it allows exporters to bring in their containers as soon as they are ready, even if it is several days prior to ship arrival. Presently, the marine terminals only allow export containers 3 days of storage. Once export containers are delivered to the off-dock


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container yards, shippers can obtain dock receipts, allowing them to collect their invoices.

Off-Dock Container Yard vs. Dry Port vs. Bonded Warehouse

Off-Dock Container Yards, Dry Ports, and Bonded Warehouses have some similarities, generally related to storage and processing of international containers. Still, there are important differences among them:

Off-Dock Container Yard -- The emphasis here is operational, relieving congestion of the marine terminal by adding an off-dock addition to the on-dock, marine container yard;

Dry Port – The emphasis here is on providing low-cost transport, usually by rail, between the marine terminal and far-away hinterland points where there is concentration of cargo, mostly exports; and

Bonded Warehouse – The emphasis is on storage and processing of cargoes while delaying the payment of Customs dues.

The bonded warehouses located nearby Tanjung Priok are already used by the marine terminals to evacuate import containers in case of severe shortage in storage space inside the marine terminals. This forced evacuation is quite costly with all expenses charged to consignees.

Obstacle for Implementation Off-Dock container yards

The off-dock program should be voluntary. Some shipping lines may enthusiastically adopt it, seeing a potential to attract customers by offering better services. Other lines may elect to continue with the present operating system. It could well be that the program provides incentive for establishing joint ventures between local logistics operators and shipping lines. In any event, lack of private sector interest and investment is not expected to be an obstacle here.

The main obstacle seen at this stage is institutional, mainly related to regulations of Customs and the Ministry of Transport. The main issue with Customs stems from the location of Marunda at a different zone. Another problem is the need to ensure the transfer of in-tact containers between marine terminals and off-dock yards. Additionally, adjusting the operating system and tariffs of the marine terminals will need to be done.

6.5.2 Short-Term Capacity Solutions for Tanjung Perak

Tanjung Perak faces immediate need for additional capacity for handling international containers and this capacity could be provided by expanding TPS’ container yard area. Fortunately, TPS still has some developable area within its boundaries, so there is no need for the integrated off-dock program suggested for Tanjung Priok.



An immediate step to increase storage capacity is simply by allowing mixed storage of import and export containers at TPS’s container yard. Our rough estimate of the impact of this step on storage (and terminal) capacity is about 5 percent. Another immediate measure is demolition of the warehouse which, as we understand, is barely used. The warehouse, together with the open area around it, occupies about 2 ha. Converting this area to a container yard could also add another 5 percent to the capacity.

A more substantial addition to the container yard could be generated by fully developing an area of 6 ha located in front of the existing container yard and marked by the upper rectangle in Figure 6-14. This could add about 20 percent to the capacity. Hence, overall, terminal capacity could be enhanced by about 30 percent.

Figure 6-12. TPS Expansion Options


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CHAPTER 7: LEGAL, REGULATORY AND ADMINISTRATIVE ACTIONS TO IMPLEMENT THE LAW ON SHIPPING


This chapter identifies the legal, regulatory and administrative actions needed to effectively implement the Shipping Law 17 of 2008 (“the Law”).

As noted earlier, many port sector provisions of the Law are themselves problematic. Ideally, therefore, any implementation actions should include a revision of the Law itself. The Government of Indonesia (“GoI”) appears to recognize this and has alluded to the need to revise legislation to accelerate the separation of the regulatory role of port authorities from the operating functions of the Pelindos. The GOI has also set December 2011 as the target date for the separation of these functional areas68. Nevertheless, the process of adopting a new Law may take longer and hence both interim and longer term actions are proposed in this Chapter that may be undertaken to improve the Law’s effectiveness (pre- and post-revision). Many actions that are identified are intended to overcome vagueness in the Law with regard to its implementation.

The GoI has itself undertaken various actions to ensure the implementation of the Law. The first was to adopt implementation regulations contained in Government Regulation No.61 of 2009 on Port Affairs (GR 61). Further steps were taken at the end of 2010, when the Minister of Transport adopted a series of regulations setting up port authorities, port management units (PMUs), and harbor masters’ offices69.

Many actions to implement the Law are integrated activities that have legal, regulatory and administrative components. For example, legislation needs to be developed to create a framework for tariff regulation (legal), and the regulator needs to regulate tariffs (regulatory) and develop supporting systems and procedures (administrative). Often, there is also a logical progression in these tasks. The adoption of legislation paves the way for regulatory implementation and administrative action. For this reason, this Chapter proposes implementation actions in relation to specific topical areas, rather than as strict legal, regulatory and administrative subsets.

68

See Master Plan for the Acceleration and Expansion of Indonesia’s Development 2011 – 2025, p 179.

69 Ministerial Regulation No 62/2010 on the organization and working procedures of Port

Management Units; Ministerial Regulation No 63/2010 on the organization and working procedures of Port Authorities; Ministerial Regulation No 64/2010 on the organization and working procedures of the Harbour Master’s Office; and Ministerial Regulation No 65/2010 on the organization and working procedures of the Batam Port Office.



Finally, it may be noted that the adoption of the National Port Master Plan (NPMP) is itself a legal and administrative action that is required to implement the Law. Amongst others, the NPMP must give policy direction in numerous areas such as the construction of new ports, private sector participation, etc. It is also a prerequisite for various actions required under the Law, such as the preparation of individual port master plans.






7.1 REVISION OF THE LAW ON SHIPPING

The Law requires revision in several areas. Improvement is mainly needed to address gaps identified during our reviews. Some conflicts (or contradictions) have also been identified. Both have been extensively documented in Chapter 2. As recommended earlier, the revision of the Law presents an opportunity to adopt a specific Law on Ports. This Law would not deal with shipping and other maritime-related issues as is the case with the existing Law. It would ensure a greater focus on the ports sector and bring Indonesia into line with the majority of maritime countries worldwide that separate port law from shipping law. Table 7-1 provides a summary of issues and concerns.

As noted elsewhere, it is possible to rectify some of the Law’s deficiencies in subsidiary regulations. Indeed, the GoI has attempted to do so, e.g. with regard to the authority to approve individual port master plans. However, the Law also contains some fundamental deficiencies which cannot be corrected other than by amending or repealing the Law itself. A prominent example is the restrictive provisions on the organizational structures of port authorities and PMUs (see detailed discussion below). Similarly, because of the Law’s strictures, port authorities (and PMUs) may be precluded from assuming some of the important functions typically associated with landlord ports, such as port marketing and promotion.

7.2 SUBSIDIARY REGULATIONS UNDER THE LAW ON SHIPPING

In numerous areas, the Law on Shipping identifies a need for subsidiary rules to implement policies, programs and administrative actions. Some areas are now covered in GR 61, as shown in Table 7-2. However, GR 61 does itself not address all subject areas in adequate implementation detail, while in other areas, subsidiary regulations still need to be promulgated.


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Table 7-1. Issues and Concerns of Prevailing Law

Subject Area Gap/Deficiency

1. National Port System Lack of guidance on classification of port hierarchy

Lack of provisions matching port type to institutional structure

Lack of guidance on assignment of responsibility for a port to a sphere of government

Lack of guidance on classification of commercial and non-commercial ports

2. Port Master Planning Lack of transitional provisions regarding the status and approval of existing port master plans

Lack of time bound plan for completion of port master plans

3. Institutional Framework Lack of flexibility of port authorities and port management units to evolve into fully-fledged landlord authorities

Lack of empowering provisions to enable port authorities (and PMUs) to fully assume landlord functions (see discussion below related to transfer of land and assets, competition, and monopoly status of Pelindos)

Full spectrum of typical landlord port functions not assigned to port authorities (or PMUs)

Lack of guidance on introducing a time-bound concessioning program

Lack of guidance on role of DGST and relationship between DGST and port authorities / PMUs

4. Port Construction Lack of coordination mechanisms between national, regional and local government related to granting of construction licenses

Lack of transitional provisions related to port construction already underway (by Pelindos or others)

Cumbersome licensing requirements

5. Port Operations Lack of transitional provisions related to existing operations

Limited regulatory value of port operating license

6. Special and Own-interest terminals

Vagueness regarding links between special terminal and port authorities

Anti-competitive conditions attached to licenses for special and own-interest terminals

Lack of transitional provisions governing licenses of existing special and own interest terminals

7. Tariffs Lack of enabling provisions to introduce flexible tariff regulation



Subject Area Gap/Deficiency

8. Designation of port open for foreign trade

Vagueness of rationale for procedure to designate foreign trade ports

9. Harbour Master Conflicts in functions assigned to port authorities and Harbour Master (and potential overlaps in jurisdiction)

Lack of institutional coordinating mechanisms between Harbour Masters, port authorities and PMUs.

Table 7-2. Scope of Government Regulation No. 61 of 2009

Regulations Proposed for Law on Shipping

Reference Subject Matter Promulgator Status

Art 78 Guidelines and procedures for Port Master Plans, Port Working Areas and Port Interest Areas

Government Issued under Govt Regulation No 61 of 2009

Art 89 Port Authorities and Port Management Units Government As above

Art 95 Port Business Entities Government As above

Art 99 Port Construction and Operation Government As above

Art 108 Special terminals and change of status Government As above

Art 110 Non-commercial port tariff Government To be issued70

Art 110 Provincial and local port tariff Regional Government

To be issued

Art 113 Port and special terminals open to foreign trade

Government Issued under Govt Regulation No 61 of 2009

Art 177 Operation of Aids to Navigation Government To be issued

Art 197 Design and execution of dredging and reclamation / certification of service providers

Government To be issued

Art 198 Designation of compulsory pilotage areas, training and examination of pilots and pilotage operations

Minister To be issued

70

This implies no new regulations conforming to the Law have been promulgated since 2007. Regulation may still occur in terms of rules predating the Law.


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Regulations Proposed for Law on Shipping


Art 210 Harbour Masters Government Issued under Govt Regulation No 61 of 2009

Art 212 Port Security Government To be issued

Art 216 Port Operations (ship repair, cargo transfer, towage, hazardous goods handling)


Art 238 Port Pollution Government To be issued

Art 272 Shipping (and Port) Information System Minister To be issued

7.3 SUBSIDIARY REGULATIONS REQUIRED UNDER GOVERNMENT REGULATION ON PORT AFFAIRS

While GR 61 contains a wide-ranging set of provisions giving effect to the Law, it in turn mandates the Minister of Transport to issue regulations with regard to a long list of topics (see Table 7-3). In some cases, GR 61 appears to merely restate the requirements of the Law, e.g. with regard to the licensing of port construction (compare Art 99 of the Law and Art 86 of GR 61).

Given the scope of potential regulations, the GoI clearly needs to prioritize its rule-making activity. Areas where regulations are most urgently needed are:

Definition of the proposed port hierarchy (in terms of Art 19 and 29);

Port planning (Art 29);

Port concessioning (Art 78); and

Licensing of Port Service Providers (Art 78).

Finally, it is recommended that options be investigated to revise the ministerial regulations such that port authorities exercise the autonomy reflected in modernized port organizations. Pursuing the status of Indonesia public service organization71 for port authorities is an obvious remedy for achieving the needed autonomy.

71

Badan Layanan Umum (Public Service Organization). A public service organization is a stand-alone organization within the public service with features that provide a measure of independence and financial self-sufficiency. This status would thus providing Port Authorities with the structure and autonomy enjoyed by the modernized port organizations previously described.



Table 7-3. Regulatory Mandates for the Ministry in Shipping Law 17 of 2008


Art 19 Port Location Regulations Minister To be issued

Art 29 Formulation and evaluation of Port Master Plans


Art 36 Formulation and evaluation of Port Working Areas and Port Interest Areas


Art 40 Organizational Structure and working Procedures of Harbour Master’s safety and security committee

Minister

(in coordination with MENPAN)

To be issued

Art 50 Organizational structure and working procedures of Port Authorities and Port Management Units

Minister

(in coordination with MENport 136uthority)

Issued under Ministerial Regulation No. 62, 63 and 65 of 2010

Art 67 Maintenance procedures, standards and specifications for breakwaters, port basins, navigational channels, road networks and port security and order


Art 78 Requirement and procedures for granting and revoking concessions


Art 86 Port construction licensing Minister To be issued

(overlap with Art 99 of the Law)

Art 93 Port Development Minister To be issued

Art 104 Port Operations licensing, operational improvement and capacity upgrades


Art 109 Location approval, construction and operational licenses (for mainland areas serving as ports)


Art 134 Special terminals (Location approval, construction and operational licenses, third party use, operational improvement, change of status to port, license revocation, transfer to government control)


Art 144 Approval of own-interest terminals Minister To be issued


137



Art 148 Type, structure and classification of Port Business Entity tariff for port services

Mechanism for determining tariff for use of port land and waters


Art 153 Procedures for determining foreign trade status of port and special terminals


Art 161 Organization of Port Information System and reporting and processing procedures


Art 164 Organization of ferry ports Minister To be issued

7.3.1 Port Hierarchy

There is a lack of clarity in the Law on the scope and intent of proposed port hierarchy. The main deficiencies are:

A specific port type is not matched to any institutional structure. For example, there is no guidance that a main port is necessarily to be administered by a port authority and a collector or feeder port by a PMU.

The sphere or level of government responsible for a specific port type is not clear. The Law is silent on how to determine whether a port falls under central or regional government authority72,73 .

It is unclear on what basis ports are to be classified as “commercial” or “non-commercial”.

These deficiencies need to be rectified in the Law, but in the short term the GoI can provide further guidance by issuing appropriate regulations or by clarifying these issues in the NPMP. Such guidance needs to cover criteria for classifying ports (in respect of which work has already been done74). It also needs to include (a) procedures for changing the designation of ports; (b) criteria for allocating oversight of ports to a specific sphere or level of government; and (c) criteria to inform decision-making with regard to the establishment of port authorities and PMUs.

72

One way to achieve this is to add a schedule to the Law which lists all ports and matches them to central government, local government or a regency / mayoralty.

73 Note it is possible that the decision to place a port under regional government control is

based entirely on the regional government’s desire to undertake this responsibility. Interviews could not clarify this point. In any event, the language of the Law should reflect the basis upon which one or the other government has jurisdiction.

74 See TR, Chapter 5.



7.3.2 Port Planning

The preparation of port master plans is a task assigned to port authorities and PMUs. The port master planning process would benefit from further regulatory guidance to direct planners with regard to the priority focus areas. While all ports must have master plans, these cannot be prepared simultaneously and there is a need to sequence the preparation of plans starting with priority ports. Regulations must also lay down realistic time scales for the task to be completed. Further guidance is needed on how to deal with existing master plans. Many countries adopt specific port planning regulations which, amongst others, should also provide for a rigorous consultation process and social and environmental impact assessments to ensure that plans are robust and enjoy widespread support.75

7.3.3 Port Concessioning

A host of factors influence the attractiveness of a PPP transaction opportunity. These factors include issues such as political stability, human development indicators, investment climate and incentives and the legal and regulatory framework. Indonesia has already created a legal framework for PPPs by adopting Presidential Regulation No 67 of 2005 (“PR 67”) (updated in 2010).

Indonesia’s PPP rules are not port specific (although the port sector is clearly identified as an area where PPP investment is required). As GR 61 has identified a need for concessioning regulations, it is clear the GoI appreciates that port-specific rules may be needed to advance the Law’s objective of increasing competition by enhancing private sector interest in port concessions. At the same time, regulations can help to strengthen government oversight.

Areas to be addressed in regulations include:

Creating linkages between the NPMP, individual port master plans and concessioning programs;

Clarifying responsibility for preparing concessioning programs (at present PR 67 requires ministries to prepare priority lists of PPP projects, while the Law assigns master planning responsibility to port authorities and PMUs);

Clarifying the status of projects with Pelindo investment (as discussed in Chapter 3, Indonesia’s rules define PPPs to include investment by SOEs, but there will be a

75

The Law does imply a consultation process in the process of master plan development. The

development of port master plans should be coordinated with national, province, and regency/city

spatial layout plans (Art 73(2)), and the Minister (Art 76(1)(a) or the Governor, Regent/Mayor

(Art 76(1)(b) and Art 76(2), as appropriate, are to approve the plans based on conformity to these

spatial layout plans, as recommended by the relevant governors, regents, and mayors (Art

76(1)(a)).


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need to facilitate the development of level playing fields vis-à-vis private firms to mitigate competition and other concerns);

Ensuring consistency in the procedures port authorities and PMUs follow to identify and assess projects;

Ensuring that port concessioning plans prepared by various port authorities (and PMUs) complement each other;

Clarifying requirements to be met in the case of subsidy concessions76 (which are likely in non-commercial ports) and conditions for government guarantees;

Institutional capacity to implement and manage PPP projects (in view of limited capacity within port authorities (and PMUs) and the need to address investor concerns related to the project implementation risks posed by poor project preparation); and

Creating a consistent monitoring and evaluation framework by ensuring that port authorities and PMUs implement complementary oversight mechanisms and procedures.

7.3.4 Licensing of Port Services

The Law (and GR 61) does not draw a clear distinction between concessions and licensing77. Nevertheless, it is international practice that the provision of port services such as stevedoring, waste services, cargo storage, and tug assist have been done via licenses. They differ from concessions in that they do not necessarily require large up-front investment infrastructure or lengthy periods to recover capital investments. Licensing regulations must:

Define services subject to licensing;

Procedures to be followed by the port authority (or PMU) to invite applications for licenses78;

Format of licensing applications and supporting documentation required;

Criteria for the assessment of licenses;

76

i.e. concessions which require government support as they are not fully financially-viable. 77

For example, Art 92 of the Law merely states that activities performed by the PBEs are carried out based on “concessions or other forms set out in agreements”. At the same time, Art 91 requires PBEs to have a “business permit”, but it is unclear whether this refers to a license issued by a port authority or a general permit to conduct business normally issued by a commerce or revenue office.

78 This is not to suggest that governments may limit the number of licenses to be awarded. On

the contrary, to do so may constrain market entry and hence limit competition. For services that do not imply infrastructure investment, such as tug assist and even pilotage, market entry can be relatively simple, provided crew and pilots hold pertinent masters licenses and hold sufficient liability insurance.



Assessment procedure and grounds for rejecting a license application (including requirements to provide a statement of reasons);

Additional information that may be requested by the licensing authority to assess an application;

Duration of license;

License fee payable (and methods and intervals of payment)79;

Standard license conditions (including reporting requirements of license holder and inspection rights of port authority or PMU);

Special conditions attached to service to be performed;

Grounds for suspension or cancellation of licenses; and

Dispute resolution procedures.

7.3.5 Organizational Structure of Port Authorities and Port Management Units

The current provisions of the Law limit the GOI’s options to adopt a suitable institutional structure for port authorities and PMUs (which have been set up as technical executing units in terms of the MENPAN regulations). As discussed in Chapter 2, this decision has foisted a pre-determined organizational structure on port authorities and PMUs without considering the nature of the functions they must perform. Ideally, the Law must be amended to allow PA and PMU managers the flexibility to decide an appropriate organizational structure (and to adopt the goal of moving towards autonomous and private-sector driven landlord port authorities in the longer term). As a first step, this goal must be clearly articulated in the NPMP.

In the short term, Indonesia can pursue two options for achieving autonomy: 1) seek status as a BLU; 2) amend the MENPAN regulations, which are subsidiary laws, to allow sufficient autonomy relative to structure. However, the latter option is not achieve the other autonomous features of modernized port organizations, such as having a board of directors, making budget and investment decisions, having its own merit compensation system, and so on.

7.3.6 Subsidiary Regulations Identified by Consultants’ Analysis

There are a number of areas where we have identified a need for further regulations. These cover topics not stipulated in the Law on Shipping or topics where the regulations proposed in the Law are too limited in scope. They are:

79

Note that beyond a charge for a license application and renewal, many countries do not require any other charges for licenses. However, additional charges may be exacted in other ways; terminal operators, for example, will charge an “infrastructure fee” for use of a berth area by tugs or for access to the berth area by other cargo handling service providers.


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Port Competition Regulations;

Tariff Regulations; and

Land Use Management Regulations.

A fourth area relates to existing regulations that have not been updated since the Law was passed. In particular, there is a need to revise the Regulations on the Organization and Working Procedures of the Ministry of Transport in so far as they relate to ports. This is needed, in view of the establishment of port authorities and PMUs, to realign the assignment of functions between the DGST, port authorities, and PMUs.

7.3.7 Port Competition Regulations

Competition regulation is not covered in the Law. The Commission for the Supervision of Business Competition (KPPU) has the authority over matters related to predatory pricing, market and pricing collusion, and other forms of monopolistic behavior. While the Law has jurisdiction over port business entities, state-owned enterprises (including Pelindos) are immune from the reach of the Competition Law, having specifically been granted antitrust immunity80, though joint venture companies of which Pelindos are a part are not immune from the Competition Law. Obviously, given the Pelindos are in a position to exercise dominance even without joint venture companies, the Competition Law should be amended to remove the exemption of the Pelindos. For example, the Pelindos, because of contradictory law governing land management responsibility between PAs and Pelindos, could create barriers to market entry simply by declaring available land as off-limits due to environmental sensitivities in their Master Plans, reflecting a similar situation when ports (of which estuaries were a part) were privatized in the United Kingdom.

Regulations need to be further developed that establish the rules under which dominant firms may expand their activities. Chile and Mexico, for example, limit the percentage equity that concessionaires in one port have in a company with a concession in another port. As of today, Pelindos can even engage in the territories of other Pelindos. And while (non-state-owned enterprise) port business entities are subjected to the competition rules, state-owned ones are not. This has the effect of creating market distortions.

In addition to the amendment removing the Pelindo antitrust exemption in the Competition Law, regulations need to be developed that establish the basis for awarding concessions from a competition perspective. Percentage equity and associated market share rules need to be formulated, and other rules need to remedy situations where Pelindos and other port business entities can extend their

80

See Law on the Prohibition of Monopolistic Practices and Unfair Business Competition (Law No. 5 of 1999), Art 51.



dominance.81 Further, rules governing the formulation of master plans should consider port development strategies that encourage competition.82

Given the KPPU experience thus far, we believe it is possible for them to continue the regulatory role they have had in the port sector. But regulations and procedures would need to be reviewed in the context of:

The basis for which ports (or port service providers) are designated as subject to regulation (the competitive environment and/or the purpose and operations of a specific port or terminal are factors determining whether regulation is required and what the nature of such regulation should be);

Services subject to regulation (generally this will apply to uncontested services, but it may nevertheless be prudent to introduce a market monitoring mechanism in areas where the market is only contested by a few firms or where there is potential for anti-competitive practices such as price collusion);

Types of regulation required (such as complaint and dispute resolution mechanisms which reflect an ex ante regulatory approach); and

Ancillary support functions (this refers to activities undertaken by the regulator in support of its main functions and includes promotion of competition, monitoring of market conditions, tariff filings, collection of price data, and undertaking mediation and dispute resolution).

7.3.8 Tariff Regulations

The scope of tariff regulation is inadequate if Indonesia hopes to encourage market based tariff setting by port business entities. The Minister of Transport determines the tariff of Port Authorities for commercial ports and non-commercial ones under central government jurisdiction83, while local or regional governments determine tariffs for ports under their control84 (see Table 7-4). However, port business entities can set their own tariffs in accord with the type, structure, and category of tariff prescribed by

81

The ongoing efforts to build the new North Kalibaru container terminal in Tanjung Priok is a case in point. Because the terminal will be built on reclaimed land (in open waters), the Pelindos have no ability to build the terminal without competing for a concession. However, under Indonesia’s procurement rules, if an entity initiates the idea (which is the case with the Pelindo), then the entity is accorded a 10 percent “preference” score in the evaluation. The problem with this approach is that the Pelindo is already a monopoly and, as such, is receiving monopoly rents for its current assets. Accordingly, the extraordinarily higher prices (than fully competitive markets would otherwise indicate) they are able to now charge can enable the Pelindo to offer a price substantially lower than competing bids, preserving the Pelindo monopoly status in Jakarta.

82 For example, hypothetically, if the master plan calls for the development of a four-berth

terminal, then this could be split into two separate concessions. 83

Art 110(1) of the Law and GR 61 Art 42(2)(g), Art 61, and Art 147. 84

Art 110(4) of the Law.


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the government85. So while on the one hand government sets tariffs for monopoly services that port authorities or PMUs provide, port business entities that may also be monopolies have the freedom to set their own tariffs, reflecting the incongruent tariff regulation framework that exists in Indonesia. Yet this is an area where there is a real danger that market power may be exploited. The Minister appears to not have the power to set tariffs in a port entity monopoly environment. And it seems KPPU has no authority to intervene by setting Pelindo tariffs even if engaging in monopolistic practices.

Table 7-4. Tariff Regulation under Shipping Law 17 and Indonesia’s Competition Law

Entity Tariff Approval

Required Approving Authority Comment

Port Business Entity No NA Need only comply with prescribed tariff structure; subject to provisions of competition law

Pelindo No NA Need only comply with prescribed tariff guidelines; exempt from competition law

Port Authority Yes Ministry of Transport NA

Port Management Unit Yes Ministry of Transport NA

NA = Not applicable


The logic of the exemption reflects similar treatment of port authorities in other countries. Port authorities, as public organizations, are exempt in many countries from antitrust provisions. This relates to the ports traditionally being considered “natural monopolies”. But during the port reform wave of the 1980s and 1990s, where many ports became landlord organizations, the flow of charges by port authorities were narrowed (see Figure 7-1), shifting from port authorities to private operators, diminishing the dominance of port authorities over the range of charge flows while shifting the majority of charges to private sector control. While port authorities may continue to enjoy antitrust exemption, competition regulators do have jurisdiction over private operators. As earlier noted, Pelindos are defined in the Law to be port business entities holding monopoly positions. It is perplexing, given ports are no longer natural monopolies in regards to cargo and vessel handling operations, that Pelindos would be granted antitrust exemption. As a result, the KPPU cannot intervene and set tariffs in this monopoly environment.

While it is desirable that the regulator should have access to the full spectrum of regulatory powers generally needed to mitigate against abuses of market power, it is

85

Art 110(2) of the Law and GR 61 Art 147(2).



also true that requiring the regulator to set tariffs is not ideal. Firstly, the setting of tariffs is complex. Because of information asymmetry (i.e. limitations on the information available to the regulator about industry costs), there is always a danger that a tariff will be set either too high or too low. Secondly, the evaluation of service providers’ base costs require high-level cost structure analysis capabilities not currently residing in the Ministry. For these reasons, tariff regulation is difficult to get right. It is preferable to ensure that there is adequate competition to reduce the need for active regulation of port tariffs, as rules of supply and demand will ensure that optimal prices are set.

The regulator should plan to set tariffs only where monopolies prevail, but even in these cases, use can be made of additional mechanisms which reduce the actual regulatory burden. First, in a competitive environment, the regulator can focus on tariff monitoring, requiring port business entities to submit tariffs (and service agreements as applicable) each time it is amended to allow the regulator to observe the price setting behaviour of port business entities. Second, in an oligopolistic market, the regulator can introduce a complaints mechanism allowing users to seek redress when tariffs (or related provisions in service agreements86) are too high. This obviates the need for the regulator to assess each and every tariff revision. Rather, the regulator relies on users – who are directly exposed to the tariff – to monitor pricing and to raise concerns over perceived abuses.

Both approaches would enable less intrusive forms of regulation, requiring the filing of a tariff (or tariff revision) with the regulator accompanied by the publication of the tariff for public notice. This is a form of “light touch” regulation based on an in-built corrective mechanism. As the tariffs are known, customers will be quick to note a deviation from, or “unfair” application of, the tariff and can alert the regulator to the need to investigate.

86

A service agreement is an agreement between the operator and the carrier that typically relate to service productivity guarantees from the operator, minimum volume guarantees from the carrier, and an agreed upon price relative to these guarantees. The regulator needs to assure non-discriminatory pricing in such agreements and, hence, the need to file them with the regulator.


145


Figure 7-1. Pre-PPP (top) and Post-PPP Environment Flow of Charges


Port Authority

Carrier

Vessel stevedoring

Channel and navigation fees

Tug assist

Line handling

Shipper

Terminal

handling

charge

Dockage

Yard storage

Stuffing-Destuffing

Warehousing

Cargo wharfage

Empty handling/storage

Crane service

Pilotage

Port Authority/

Government

Carrier

Vessel stevedoring

Channel and navigation fees

Tug assist

Line handling

Shipper

Terminal handling charge

Dockage

Yard handling/storage

Stuffing-destuffing

Warehousing

Concession/Lease Empty handling/

storage

Crane service

Pilotage

Terminal Operator

Other Operators

Dockage

Lease



7.3.9 Land Use Management Regulations

There are gaps in existing laws related to the responsibilities of port authorities and PMUs for managing land and water in the port and procedures for preparing and implementing land concessions. Land use management regulations would address issues such as powers of port authorities to inspect premises, to verify land use, to launch proceeding to alter land use (and thereby alter rights of existing land title holders), scope of the port authorities’ responsibility to act as default port operator, etc.

7.3.10 Revision of the Regulation on the Organization and Working Procedures of the Ministry of Transport

Now that port authorities and PMUs have been established, it is axiomatic that the DGST should shed certain functions (or at least that they be redefined). To date, the regulation on the Organization and Working Procedure of the Ministry of Transport87 has not yet been updated.

One example relates to the requirement that the Minister (through DGST (DPD)) license terminals in the port working area. If one assumes that the construction of a new terminal is part of the port master plan approved by the Minister, the question arises why the port authority for that port cannot be entrusted with the responsibility to itself issue the license. The hierarchical nature of the relationship provides the assurance that the port authority must and will act within the bounds of the masterplan. Alternatively, if the port authority does not have the power to license, the question arises as to the real extent of its role. Does it merely act as the Minister’s eyes and ears, does it merely review a license application or does it act as post office? If it is required to review the license application– as for example the task definition of the Tanjung Priok port authority suggests – then the role of the DGST also needs to be reconsidered. It appears unnecessary – in such a scenario – that the DGST review the application again. These – and similar – issues would need to be reviewed so that the working procedures of the DGTS are sensibly aligned with those of port authorities (and PMUs).

7.4 TRANSITION ARRANGEMENTS FOR PORT AUTHORITIES TO ASSUME PELINDO RESPONSIBILITIES

A range of transition arrangements are required for Port Authorities to assume Pelindo non-operational responsibilities. In practice, the Pelindos currently perform various functions for which they have a statutory mandate, but which have now also been assigned to port authorities (see Table 7-5). Additionally, there are a number of other

87

Ministerial Regulation No. 43 of 2005


147


functions which Pelindos appear to have assumed by default, but which are also activities that are now entrusted to port authorities. Functions in this category include undertaking master planning and providing port security.

Table 7-5. Redundant Port Authority and Pelindo Functions

Port Authority Functions

(under Law on Shipping)

Pelindo Functions

(under Government Regulations 56 – 59 of 1991)

1.1 Provision of land and water areas in port

1.2 Provision of port basin and shipping lanes

1.1 Provision of land for port superstructure

1.2 Provision of port basin and water area for traffic and anchorage

2. Provision of road network 2. Provision of road network and, bridges

3. Regulate pilotage 3. Provision of pilotage and towage

Transitional arrangements so that port authorities can assume Pelindo functions revolve around the following main actions:

Resolving the port land issue;

Resolving conflict in the Law on Shipping and between the Law and earlier Pelindo legislation; and

Building the institutional capacity of port authorities.

7.4.1 Resolving the Port Land Question

Ensuring that port authorities have actual control over port land so that they can act as landlords will ultimately require a legal measure to transfer land to the stewardship of port authorities. Depending on how this matter is resolved, such transfer may - or may not – include land under Pelindo control88.

The GoI must resolve the inherent conflict created by the Law which requires port authorities to provide land and water areas for ports (Art 83), while Art 344 suggests that the position of the Pelindos to operate ports under their control and perform the business activities at such ports remains unchanged. The situation has been further complicated by the Transport Minister who recently issued a letter (No. HK 003/1/1 Phb/2011 of 6 May 2011) informing all of the Pelindos that they retain the right to manage the land area of the port, contradicting the Law’s provision that Port Authorities shall manage land and utilization of waters in accordance with statutory

88

It has been highlighted that all significant port land is under Pelindo control; hence, not transferring some or all of such land to port authorities will effectively undermine the port authority’s landlord role.



regulations (Art 85). Additionally, Indonesia’s Land Law also assigns port land management responsibility to the Pelindos.

Irrespective of whether some or all land under Pelindo control is transferred to port authority stewardship, it remains necessary to clarify existing land rights. State agencies have not always been required to register their interest in land, and it may be possible that the Pelindos have acquired lands under their title since their creation in 1992.89 Such titles, if they exist, may be held by Pelindos, other state-owned corporations, local and regional governments and private individuals or firms. As a first step, a comprehensive register of port land, its classification and associated ownership or use rights must be developed. Given the large scope of the port sector and this task, this activity will need to be phased commencing with the main strategic ports90. Without this step, it will be difficult to reach clarity on which land – if any – can ultimately be placed under control of port authorities and PMUs.

Based on the findings of the land audit, an asset register must be developed documenting available port land, and indicating for what purposes land is currently being used for and by whom. The data system, which can compose a part of the Law’s mandated port information system, must also identify vacant land, potential uses of vacant land or land used for non-port purposes. As the development of an asset register covering all ports will be an extensive (and expensive) task, it is proposed that a register initially be developed for one (or two) port authorities and that it focus only on one or two commercial ports. If the basic approach is successful, it can serve as a template to be progressively rolled out on a national basis.

In parallel, the Land Law needs to be amended to reflect the intent of the new Shipping law; that is, the establishment of a landlord system of port authorities and the allocation of land management responsibility to them. Until such time this is done, there will likely be jurisdictional disputes between the port authorities, the MoT, the Pelindos, and ultimately the MSOE.

7.4.2 Resolving the Conflict between Pelindo Legislation and the Law on Shipping and its Regulations

As the comparative table of Pelindo and port authority functions shows, there is also a conflict between the 1991 regulations establishing the Pelindos and the provisions of the Law on Shipping entrusting certain functions to port authorities.

As the Law is a superior and newer instrument than the law establishing the Pelindos, it could be argued that the Law overrides the latter. However, as incumbents with

89

In most countries, lands acquired by state-owned enterprises are done so on behalf of the state and hence the Pelindos hold stewardship responsibility (not ownership) of the lands acquired on behalf of the state.

90 All port master plans will need to clearly identify port land, individual land rights and the

nature of such rights.


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significant assets and institutional capacity, the Pelindos are in a strong position to resist any transfer of their authority to the port authorities. Resolving this conflict so that relevant functions can be transferred to port authorities requires the Pelindo regulations to be updated in line with the proposed role of the port authorities. At the same time, the transitional provisions in the Law must be clarified.

7.4.3 Building the Institutional Capacity of Port Authorities

It is fruitless to attempt a transfer of functions to port authorities while they remain under-resourced and are organized in a way which does not support an effective performance of their functions.

The institutional strengthening requirements of port authorities are addressed in the INDII Port Authority Scoping Activity Organizational Matrix and Transition Plan. For the purposes of this report, it should be noted that it also requires port authorities and PMUs to adopt a new institutional structure (see discussion on Organization Structure of Port Authorities and Port Management Units) in the previous chapter.



CHAPTER 8: PORT SECTOR FINANCING

As presented in the Chapter 6, Indonesia will have to mobilize somewhere between US$ 20-30 billion in port sector financing in order to meet the requirements for developing necessary port capacity through 2030. It is clear that the majority of the financing will have to be generated by the private sector. Public sector investment will need to be targeted towards strategic investment that can leverage private sector funding or provide port infrastructure for common use that should not be under the control of the private sector, such as port access channels and breakwaters. In this chapter, we examine options for generating private sector and public sector financing for port sector development.

8.1 VEHICLES FOR ATTRACTING PRIVATE SECTOR INVESTMENT

In some developed countries with abundant access to capital financial markets, a highly profitable project may have no difficulty attracting private sector investment. In these cases, traditional project financing vehicles such as loan syndications prepared with multi-lateral investment bank support may be obtained. Other vehicles include loans from international commercial banks and equity and debt participation by specialized infrastructure investment funds.

However, in developing markets, attracting private sector financing and investment is often a critical hurdle to overcome due to perceptions about project, market and country risks, lack of depth of capital markets and competing requirements for scarce project financing.

8.1.1 Conditions for Attracting Private Sector Investment in Ports

A successful strategy for attracting private sector investment in Indonesian ports depends on an amalgam of general factors which influence the investment environment and specific policy, regulatory and institutional measures which governments must implement to provide an enabling environment. In this section, we identify attributes that are conducive to attracting private sector investment in ports.

Generally, a country’s policy, legal and regulatory framework can be regarded as reflecting best practice if it meets the following criteria:

A formal private sector investment policy is in place. An approved, documented policy is important in signaling government’s commitment to develop a stable and attractive investment environment. This enhances the interest of potential investors and also influences their perception of risk positively.


151


Comprehensive enabling laws. Legislation is an important vehicle to translate government’s policy commitments into practice. Generally, countries should adopt a general private sector investment law or sector-specific laws in order to place its investment regime on a sound legal footing.

Clear project identification and preparation procedures. Good project preparation is critical for attracting private sector investment. The law must require a project proposal to be thoroughly screened to verify that it is affordable, represents value for money and is financially- viable. A well prepared project will, in turn, once it is bid, attract the interest of qualified investors with sufficient technical and financial resources to implement a project successfully.

Competitive bidding procedures. As a general rule, private sector investment in public ports must be competitively bid to ensure that government derives the full benefit from the competitive process in terms of price, services and quality. Additionally, provision should be made for equal treatment of potential investors, opportunity to challenge rules and bid awards and specific rules on unsolicited proposals.

Clear identification of contracting authorities. The law must specifically identify the government entities which are empowered to enter into private sector investment arrangements.

Freedom of contract. Legislation should not impose unnecessary restrictions on the ability of the parties to negotiate contractual terms. This is important to allow flexibility in the allocation of risks to ensure a financially efficient approach and secure the best possible value for money for government.

Performance monitoring framework. Legislation must establish a clear management and monitoring framework. As many private sector port investments have a lifespan of many years or even decades, it is important that government allocate clear responsibility for monitoring implementation and contract compliance. At the same time, the private investor should be fully aware of the oversight procedures that will apply and of the frequency and nature of its performance monitoring obligations.

Statutory authority for tariff collection (and/or payments by government). The ability to collect user charges or fees from port users is critical to the investor’s perception of the financial risks associated with a project (where applicable). The law must, therefore, expressly permit the private investor to collect tariffs (or alternatively, make clear provision for the investor to be reimbursed through payments by government).

Clear rules on tariff regulation. Port sector investments can be long term in nature (20 – 30 years). Over this period there will be a need for regular adjustment in the tariffs or charges levied by the private party for the service. While procedures for tariff adjustment can be regulated by contract, the law must provide clear guidelines on how tariffs may be adjusted and what criteria will be applied, as discussed in Chapter 1.



Comprehensive regulatory framework for safety and environmental regulation. As private sector investments in ports entail the provision of a public service, it is necessary that the public interest be protected through effective safety and environmental regulation. The private investor must be fully aware of which safety and environmental standards apply and how they will be enforced.

Effective protection of investor’s rights. The law must protect the investor against arbitrary government action that may impact revenue flows, restrict access to finance or otherwise or deprive him of the benefit if his investment. This includes a requirement that the parties should be free to agree on appropriate methods of dispute resolution. A country’s membership to MIGA helps to provide such guarantee.

Institutional capacity. The identification, preparation, procurement and management of private sector investments require a combination of high-level legal, financial and technical skills. The ability of government to manage its program is an important factor influencing investors both in their decisions to invest and in their perception of the project risks. Countries that have established dedicated private sector investment units in order to build capacity have generally been more successful in attracting private investment.

Independent regulation. The law must provide for regulators that are sufficiently autonomous to ensure that regulatory decisions are not influenced by political interference or pressure from interest groups.

In the section that follows we examine Indonesia’s legal and regulatory framework that sets the environment for attracting private sector investment in ports.

8.1.2 Indonesia’s Legal Framework for Private Sector Investment in Ports

As Indicated in the Chapter 2, the Law introduces the concept of private sector participation, but fails to give strong direction to ensure a concerted effort in developing time-bound plans to secure greater private investment. PAs (and PMUs) face a particular challenge to develop capacity to implement private investment programs, especially given their limited capacity, uncertainty about the future role of Pelindos, and lack of clarity about their control over port land. Pelindos need to be restructured to assume the role of PBEs, but the Law fails to spell out how this is to be achieved.

The investment required for development of new or expanded liquid bulk and dry bulk terminals in Indonesia would typically come from private sector businesses or associations of companies that seek to handle their own bulk cargo. However, several restrictive and inflexible provisions are likely to discourage private investors from investing in special terminals. These include:

The short validity period of a special terminal permit. As mentioned in Chapter 2, five years is too short for investors to recover investments of this magnitude, especially given the risk that a permit may not be renewed. This risk is exacerbated


153


by the fact that the legislation does not stipulate the specific grounds permits will not be renewed or provide for a transparent review procedure.

The ban on handling non-proprietary cargoes.

Large up-front investment in planning and preparation costs to obtain a construction license. The potential investor is required to invest in preparing engineering drawings for both land and water side facilities, construction plans, an environmental impact assessment and related documents without any guarantee that the license application will be favorably considered.

Inflexible provisions governing construction. Regulations oblige the special terminal operator to complete construction no longer than one year after the license is issued91. This may well not be feasible in the case of many terminals.

Constraints on operational flexibility. The operator must seek the Minister’s approval to embark on 24 hour operations92.

Proprietary cargo handling is authorized for Own Interest Terminals93, but cargo handling can be extended to third party cargoes only after obtaining a concession from the Port Authority or Port Management Unit.94 But the concession cannot be awarded unless it is shown additional capacity is needed95, among other requirements. However, this avenue could be a solution to enhancing competition as long as the Law regarding Pelindo jurisdiction is clarified.96

8.1.3 Availability of Long-Term Project Financing

It is estimated that about 70-75 percent of the investment in new Indonesian container terminals could be provided by the private sector under long-term concession arrangements. The remaining 25-30 percent of the investment for common port infrastructure such as channel deepening and breakwaters will need to be provided by the public sector. Table 8-1 provides an indication of the amount of funding that may need to be generated by the private and public sectors during the 2011-2030 period.

91

Art 119 (GR 61) 92

GR 61 Art 126 93

GR 61 Art 139(1) 94

GR 61 Art 140(1) 95

GR 61 Art 140(2)(a) 96

The position of the Pelindos on this issue is perhaps characterized by one Pelindo principal’s comment, in referring to the plan for a new terminal, that competition can be accomplished if terminals compete only on the basis of service, as opposed to both cost and service. In fact, competing on only one or the other does not promote competition and attempts to justify monopoly pricing. Additionally, by definition, a monopoly operator has monopoly control over information provided to regulators. Applications for tariff increases can be justified on the basis of information provided by the operator, but regulators are hard-pressed to determine the accuracy of the information provided.



Table 8-1. Indicative Funding Requirements by Private and Public Sector for Development of Port Facilities, 2011-2030 (US$ millions of 2010)

Certain port facilities such as container terminals that are often situated within a broader port with other cargo facilities, typically have the government providing funding for shared items such as breakwaters, channel dredging and access, turning basins and road access. Depending on the circumstances, these items may represent 25-30 percent of container terminal development costs. On the other hand, specialized dry and liquid bulk terminals may often be developed separate from other port cargo facilities. As such, the government role may typically be limited to provision of road and land access. Passenger facilities such as a cruise or ferry terminal that serve multiple port users, typically need a greater degree of public sector participation often up to 50 percent of the total investment. As shown in Table 8-1, as much as 80 percent of the total port sector investment requirement of US$ 19.2 billion may be expected to be provided by the private sector.

As long-term investments, private sector participation in port development and construction requires access to long-term financing. However, the lack of prior experience and expertise to assess port infrastructure projects and the maturity mismatch between assets and liabilities hinder Indonesian banks from providing the financing.

While foreign port sector investors can get access to long-term financing in the capital markets, it is often difficult for potential Indonesian investors to get long-term financing from banks. Recognizing this problem, Indonesia established PT Indonesia Infrastructure Finance (PT IIF), a non-bank financial institution focused on providing long term funding for infrastructure projects. PT IIF was established on January 15, 2010 by the Ministry of Finance through PT SMI97. The purpose of PT IIF is to enhance funding options for infrastructure projects by providing funding towards commercially feasible, mainly private, infrastructure projects through debt instruments, equity participation or infrastructure financing guarantee for credit enhancement. Its financing capacity is supported by equity commitments of its founding shareholders: PT

97

PT IIF via PERPRES No.9/2009 on Finance Institution and MOF Decree No.100/PMK.010 /2009 concerning Infrastructure Finance Company.

Estimated

Type of Capital Private Private

Facility Requirements Sector Gov't Sector Gov't

Container 11,517 75% 25% 8,638 2,879

CPO 1,649 85% 15% 1,402 247

Petroleum 3,470 85% 20% 2,950 694

Coal 2,491 85% 20% 2,117 498

Cruise 122 50% 50% 61 61

Total 19,249 15,168 4,380


Share Likely Funded by Amount Required from


155


SMI (Rp600bn); ADB (Rp400bn); IFC (Rp400bn) and DEG (Rp200bn) (a total of US$176mn). The fund may seek more cash infusions to ramp up its initial capital to Rp 2 trillion (US$220mn)98.

PT IIF will also receive ADB and World Bank loans, each worth the equivalent of Rp1 trillion (US$110mn). Debt issuance to raise another Rp 2 trillion (US$220mn) is planned. PT IIF can leverage its funding by taking on up to Rp 30 trillion (US$3.3bn) in debt, normally taking a 25 percent portion of the total cost for projects99.

In many developed countries, long-term financing can also be provided by the pension and insurance sectors. As Indonesia continues to develop its capital markets, these sectors may also serve as an alternative funding source.

Inadequate project preparation has been an impediment for private investors. The ability to hire international consultants for feasibility studies and prepare bidding documents of international standards through a new facility developed by BAPPENAS should help in this arena. BAPPENAS’ Project Development Facility (PDF) is in operation and has an initial funding of US$33mn from ADB and the Dutch government. The function of PDF is to conduct project preparation with detailed feasibility studies and internationally recognized bidding documents before it is offered to the market. PDF funds project preparation and transaction under the various government contracting agencies.

8.2 POSSIBLE SOURCES OF FUNDING FOR PUBLIC SECTOR INVESTMENT100

The intention of Shipping Law No. 17 is that basic infrastructure investment in ports will be undertaken by the Port. The new Indonesian Port Authorities, however, will be new institutions that will have little in the way of financial assets and no track record of operations. They will generate little cash flow and have essentially no borrowing capacity in their early years of existence. We therefore believe the only main source of infrastructure funding in the short term is the Government of Indonesia.

Until the Port Authorities have established strong cash flows and balance sheets, the possible sources of funding for port infrastructure investment are:

Government of Indonesia fiscal income.

General Government of Indonesia borrowing.

Loans from international financial institutions.

Loans from bilateral financial institutions.

98

Morgan Stanley, Indonesia Infrastructure, A US$250bn Opportunity, May 2011. 99

Ibid. 100

Portions of this section are adapted from DWA, 2010 INDII Technical Report on Development of the National Port Master Plan.



The first two sources of financing are in the category of Government general revenue. The second two ‐ loans from international and bilateral financial institutions ‐ involve commitments by the institutions and probably some form of sovereign guarantee. International and bilateral financing will probably also involve Government payments of principal and interest on the loans although if structured properly the Port Authorities may be able to service the loans out of their cash flow. Even if the Port Authorities do make the loan payments, however, it is still Government revenue because Port Authority income is defined as Government revenue in both the Law and GR 61 regarding Port Affairs.

In the longer term sources of Port Authority infrastructure financing should evolve from increasingly strong financial statements of the Port Authorities. This will of course only happen if they are allowed to retain their earnings, including those from port authority charges (e.g. port dues), leases, and concession fees. If so, the Port Authorities could accumulate retained earnings and develop cash flow that can support borrowing.


157

ANNEXES

ANNEXE 1: INDONESIAN TRAFFIC BY CARGO TYPE IN 2009

Table A-1: Indonesia’s Top 50 Ports for General Cargo by Trade Flow, 2009 (000’s tons)


Pontianak 13 210 224 7,510 17,012 24,522 24,745

Perawang 102 4 106 17,016 7,572 24,588 24,694

Tg. Perak 3,511 588 4,099 7,278 1,254 8,533 12,632

Tg. Priok 3,113 2,199 5,312 4,961 - 4,961 10,273

Kuala Tungkal 46 48 94 12 6,673 6,685 6,779

Bitung 21 106 126 3,079 3,173 6,252 6,378

Merak 452 78 531 22 5,515 5,537 6,067

Dumai 94 84 178 5,536 202 5,737 5,916

Ambon 0 19 20 2,797 2,826 5,623 5,642

Samarinda 18 390 408 49 3,769 3,818 4,227

Cigading 2,950 170 3,120 2 248 250 3,370

Belawan 1,424 417 1,842 370 274 644 2,486

Cilacap 341 970 1,311 - - - 1,311

Makassar 451 204 656 158 353 510 1,166

Batu Ampar 265 789 1,054 - - - 1,054

Ciwandan 835 193 1,029 - - - 1,029

Karang Talun - - - 503 481 985 985

Nusa Kambangan - - - 481 503 985 985

Teluk Bayur 103 546 649 43 235 278 927

Balikpapan 53 744 798 87 40 127 925

Tarjun 64 628 692 47 119 165 857

Kaliwungu - - - 430 408 838 838

Banjarmasin 18 410 428 153 228 381 809

Kuala Tanjung 595 192 787 2 - 2 789

Panjang 380 261 642 43 76 119 760

Tg. Emas 306 99 405 124 175 299 704

Bacan - - - 331 331 662 662

Biringkasi - 26 26 334 289 622 648

S. Pakning 271 367 638 - - - 638

Sampit - - - 274 306 579 579

Sekupang 325 202 526 - - - 526

Kota Baru 1 196 197 144 131 275 472

Kabil 371 95 466 - - - 466

Futong 131 295 425 - 25 25 450

Taboneo - 27 27 205 216 421 448

Anyer 424 21 445 - 0 0 446

Tg. Pandan 2 288 289 81 73 154 444

Tg. Balai Karimun 1 438 438 - - - 438

Klanis - - - 212 214 426 426

Tuban 14 99 113 293 - 293 406

Lhok Nga 392 - 392 - - - 392

Arar - - - 134 230 363 363

Halmahera - - - 331 1 333 333

Tarakan - 307 307 11 10 21 327

Sorong - 8 8 30 282 311 319

Celukan Bawang - - - 159 158 317 317

Cirebon 27 - 27 178 101 279 306

Palembang 43 126 169 65 63 128 296

Lhokseumawe 182 75 256 15 9 24 280

Tg. Bara 78 184 262 - - - 262

Top 50 ports 17,418 12,103 29,521 53,499 53,573 107,072 136,594

All other ports 18,628 14,212 32,840 55,430 55,430 110,859 197,272

Total All Ports 36,046 26,316 62,361 108,929 109,003 217,932 333,866





Table A-2: Indonesia’s Top 50 Ports for Cement by Trade Flow, 2009 (000’s tons)


Tg. Priok - 97.5 97.5 309.8 3,453.9 3,763.7 3,861.2

Bintuni - - - 3,000.0 - 3,000.0 3,000.0

Teluk Bayur - 38.0 38.0 589.2 698.9 1,288.1 1,326.1

Pontianak - - - 953.2 14.9 968.1 968.1

Sunda Kelapa - - - - 949.6 949.6 949.6

Belawan - - - 456.1 419.9 876.0 876.0

Biringkasi - - - 158.3 201.9 360.3 360.3

Tg. Perak - - - 153.5 166.0 319.5 319.5

Makassar - - - 126.8 178.2 305.0 305.0

Dumai - - - 124.8 80.7 205.4 205.4

Batam - - - 103.0 81.8 184.8 184.8

Panjang - - - 92.6 81.2 173.8 173.8

Tarjun - - - 72.8 97.9 170.7 170.7

Tuban - 8.4 8.4 68.3 86.2 154.5 162.9

Ciwandan - - - 69.2 69.2 138.5 138.5

Lhokseumawe - - - 73.0 53.7 126.7 126.7

Langkawi - - - 57.8 63.1 120.8 120.8

Banjarmasin - - - 63.4 52.0 115.4 115.4

Cigading - - - 56.9 55.5 112.4 112.4

Cirebon - - - 53.1 52.2 105.3 105.3

Tg. Emas - - - 49.5 35.8 85.3 85.3

Malahayati - - - 42.2 39.2 81.4 81.4

Palembang - - - 48.9 26.7 75.7 75.7

Bengkulu - - - 41.9 32.3 74.2 74.2

Sriracha - - - 23.6 47.6 71.1 71.1

Palu - - - 35.5 28.5 64.0 64.0

Samarinda - - - 45.9 17.9 63.8 63.8

Tobelo - - - 44.1 13.6 57.7 57.7

Banyuwangi - - - 30.2 24.6 54.8 54.8

Gresik - - - 14.6 29.8 44.3 44.3

Celukan Bawang - - - 26.9 9.2 36.1 36.1

Lumut - - - 18.0 18.0 36.0 36.0

Lembar - - - 22.0 13.3 35.3 35.3

Ternate - - - 18.2 16.2 34.4 34.4

Kijang - - - 14.4 14.4 28.7 28.7

Bitung - - - 16.3 12.0 28.3 28.3

Batu Licin - - - 1.0 26.8 27.7 27.7

Sei Pakning - - - 16.4 10.9 27.4 27.4

Sorong - - - 17.7 9.4 27.1 27.1

Kota Baru - - - 12.3 13.8 26.0 26.0

Ambon - - - 16.8 9.2 26.0 26.0

Bangka - - - 20.0 2.7 22.6 22.6

Bontang - - - 15.1 6.5 21.6 21.6

Kendari - - - 13.1 7.7 20.8 20.8

Kuala Tanjung - - - 3.0 16.5 19.5 19.5

Landas - - - 18.7 - 18.7 18.7

Jayapura - - - 6.6 11.5 18.0 18.0

Perawang - - - 5.8 10.0 15.8 15.8

Jamut - - - 14.5 - 14.5 14.5

Balikpapan - - - 9.5 4.0 13.5 13.5

Top 50 ports - 143.9 143.9 7,244.2 7,364.7 14,608.9 14,752.8

All other ports - - - 214.5 118.0 332.5 332.5

Total all ports - 143.9 143.9 7,458.7 7,482.7 14,941.5 15,085.4




159

ANNEXES

Table A-3: Indonesia’s Top 50 Ports for Coal by Trade Flow, 2009 (000’s tons)


Samarinda 94.7 51,983.2 52,077.9 4,920.0 8,641.1 13,561.0 65,638.9

Tg. Bara - 40,818.1 40,818.1 - - - 40,818.1

Taboneo 103.0 35,614.6 35,717.6 - - - 35,717.6

Adang Bay 72.0 24,947.3 25,019.3 - - - 25,019.3

Bontang - 19,366.9 19,366.9 0.9 - 0.9 19,367.8

Kota Baru 70.0 17,119.2 17,189.2 - 1,241.9 1,241.9 18,431.1

Banjarmasin 52.0 11,035.5 11,087.5 5,677.9 - 5,677.9 16,765.4

Balikpapan - 13,120.0 13,120.0 2,292.3 - 2,292.3 15,412.3

Muara Pantai - 14,339.5 14,339.5 - - - 14,339.5

Tarakan - 5,924.1 5,924.1 3,772.5 3,954.7 7,727.2 13,651.3

Muara Satui 58.0 7,701.9 7,759.9 1,601.7 1,609.8 3,211.4 10,971.3

Pontianak - - - 3,851.8 6,171.9 10,023.7 10,023.7

Tg. Emas - - - 3,022.5 6,573.4 9,595.9 9,595.9

Falabisahaya - - - 8,319.2 - 8,319.2 8,319.2

Makassar - 19.0 19.0 5,354.1 1,947.3 7,301.4 7,320.4

P. Laut - 5,518.2 5,518.2 - - - 5,518.2

Tg. Priok - 274.0 274.0 1,685.6 3,365.0 5,050.6 5,324.6

Tarahan 66.0 3,849.1 3,915.1 665.4 581.5 1,246.9 5,162.0

Tg. Pemancingan 50.0 5,014.8 5,064.8 - 48.1 48.1 5,112.9

Sei Putting - - - 2,356.0 2,258.0 4,614.0 4,614.0

Merak - - - 1,955.1 2,326.0 4,281.1 4,281.1

Muara Berau - 3,487.3 3,487.3 2.2 756.6 758.8 4,246.1

Tg. Perak 5.5 - 5.5 1,503.5 2,533.5 4,037.0 4,042.5

Tuban - - - - 3,538.6 3,538.6 3,538.6

Tg. Batu - 188.6 188.6 503.0 2,634.2 3,137.3 3,325.9

Krasi - - - 2,712.1 503.0 3,215.1 3,215.1

P. Sambu - - - 2,867.2 325.1 3,192.3 3,192.3

Palembang 7.2 576.6 583.8 831.1 1,468.2 2,299.3 2,883.1

Bunyu - 2,624.4 2,624.4 - - - 2,624.4

Kintap - 161.0 161.0 651.3 1,601.7 2,253.0 2,414.0

Sebuku - 2,185.6 2,185.6 - - - 2,185.6

Jety Sure R - - - 2,050.2 - 2,050.2 2,050.2

Marunda - - - - 2,050.2 2,050.2 2,050.2

Belawan - - - 2,033.0 - 2,033.0 2,033.0

Tg. Batu Hitam - - - 1,465.7 500.7 1,966.4 1,966.4

Jurong - 1,953.3 1,953.3 - - - 1,953.3

Sarmuya - - - - 1,800.0 1,800.0 1,800.0

P. Bangka - - - 814.4 814.4 1,628.7 1,628.7

Lubuk Tutung - 1,429.0 1,429.0 - - - 1,429.0

Toli-Toli - - - - 1,293.0 1,293.0 1,293.0

Semulya - - - - 1,250.0 1,250.0 1,250.0

Suralaya - - - 581.5 665.4 1,246.9 1,246.9

Kelanis - 8.0 8.0 - 1,178.0 1,178.0 1,186.0

Kabil - - - 1,154.2 11.8 1,166.0 1,166.0

Tembilahan 12.5 1,135.8 1,148.3 - - - 1,148.3

Rengat - - - - 1,121.3 1,121.3 1,121.3

Pare-Pare - - - - 1,105.1 1,105.1 1,105.1

Cirebon - - - 1,050.0 - 1,050.0 1,050.0

P. Baai 9.5 1,031.8 1,041.3 - - - 1,041.3

Klanis - 8.0 8.0 - 1,000.0 1,000.0 1,008.0

Top 50 ports 600.4 271,434.6 272,035.1 63,694.3 64,869.3 128,563.6 400,598.6

All other ports 85.0 7,183.5 7,268.4 5,980.2 4,805.2 10,785.3 18,053.8

Total all ports 685.4 278,618.1 279,303.5 69,674.4 69,674.4 139,348.9 418,652.4





Table A-4: Indonesia’s Top 50 Ports for Iron Ore by Trade Flow, 2009 (000’s tons)


Sampit - 2,348.6 2,348.6 - - - 2,348.6

Cigading 1,443.5 380.2 1,823.7 - - - 1,823.7

Tg. Mangkok - 1,083.5 1,083.5 - - - 1,083.5

Kota Baru 40.0 948.5 988.5 - - - 988.5

Manggar - 382.3 382.3 - - - 382.3

Kendawangan - 339.6 339.6 - - - 339.6

Tg. Pemancingan - 334.3 334.3 - - - 334.3

Dabo - 280.2 280.2 - - - 280.2

Taboneo - 272.2 272.2 - - - 272.2

Sebuku - 238.1 238.1 - - - 238.1

Tg. Priok 117.1 102.7 219.8 8.5 4.0 12.5 232.2

Bau-Bau - 220.0 220.0 6.7 - 6.7 226.7

Banjarmasin - 197.0 197.0 - - - 197.0

Tg. Perak 93.0 78.3 171.3 0.9 8.6 9.6 180.8

Muara Satui - 174.2 174.2 - - - 174.2

Teluk Bayur - 173.6 173.6 - - - 173.6

Panjang - 154.5 154.5 - - - 154.5

Kolonedale - 105.0 105.0 - - - 105.0

Bintan - 98.3 98.3 - - - 98.3

Sorong - 97.3 97.3 - 0.2 0.2 97.4

Tarakan - 89.6 89.6 - - - 89.6

Kumai 32.0 43.7 75.7 - - - 75.7

Batu Ampar 60.0 - 60.0 - - - 60.0

Gebe - 60.0 60.0 - - - 60.0

Telang - 60.0 60.0 - - - 60.0

Sabang - 54.5 54.5 - - - 54.5

Tg. Pandan - 54.0 54.0 - - - 54.0

Muara Pantai - 53.8 53.8 - - - 53.8

Molawe - 50.0 50.0 - - - 50.0

Pomala - 49.5 49.5 - - - 49.5

Samarinda - 45.0 45.0 - - - 45.0

Tg. Gunung 40.0 - 40.0 - - - 40.0

Kabil 31.0 8.0 39.0 - - - 39.0

Adang Bay - 36.0 36.0 - - - 36.0

Sei Pakning - - - 14.0 13.0 27.0 27.0

Gresik - 20.0 20.0 - - - 20.0

Belawan 5.0 - 5.0 4.0 10.8 14.8 19.8

P. Baai - 15.0 15.0 - - - 15.0

Ciwandan - 11.0 11.0 - - - 11.0

Makassar - - - 2.9 6.7 9.6 9.6

Jepara - 7.0 7.0 - - - 7.0

Malahayati - - - 5.0 - 5.0 5.0

Sekupang - 3.5 3.5 - - - 3.5

Rengat - - - 3.0 - 3.0 3.0

Dumai - - - - 1.7 1.7 1.7

Palu - - - 0.8 0.8 1.5 1.5

Tg. Pinang 0.6 - 0.6 - - - 0.6

Top 47 ports 1,862.2 8,668.9 10,531.2 45.7 45.7 91.5 10,622.6

All other ports - - - - - - -

Total all ports 1,862.2 8,668.9 10,531.2 45.7 45.7 91.5 10,622.6




161

ANNEXES

Table A-5: Indonesia’s Top 50 Ports for Fertilizer by Trade Flow, 2009 (000’s tons)


Pontianak 2.6 - 2.6 51.2 8,957.0 9,008.2 9,010.8

Teluk Melano - - - 8,946.1 - 8,946.1 8,946.1

Sunda Kelapa - - - 2,660.9 162.2 2,823.1 2,823.1

Kuala Tungkal - - - 151.6 2,660.6 2,812.2 2,812.2

Gresik 1,840.6 171.8 2,012.4 258.8 411.0 669.8 2,682.1

Bontang 42.6 1,170.5 1,213.1 259.7 534.3 794.0 2,007.1

Palembang 29.3 39.5 68.9 444.9 496.8 941.7 1,010.5

Tg. Perak 207.9 1.6 209.5 246.0 376.1 622.1 831.7

Panjang 51.0 - 51.0 414.8 241.4 656.2 707.2

Belawan 288.6 53.9 342.5 219.1 142.5 361.6 704.0

Dumai 176.4 11.6 188.0 135.3 85.2 220.5 408.5

Teluk Bayur 14.9 - 14.9 138.6 125.4 264.0 278.9

Banjarmasin 62.3 1.0 63.3 106.1 105.7 211.8 275.1

Lhokseumawe - 203.2 203.2 30.7 13.7 44.4 247.6

Tg. Priok 41.4 - 41.4 73.6 130.6 204.2 245.6

Tg. Pandan - - - 100.3 100.0 200.3 200.3

Cigading 161.2 25.0 186.2 2.7 2.7 5.3 191.5

Samarinda 129.9 1.0 130.9 42.8 17.5 60.3 191.2

Celukan Bawang - - - 94.1 94.1 188.2 188.2

Tg. Emas - - - 99.3 69.5 168.7 168.7

Tg. Bara 143.4 4.4 147.8 - - - 147.8

Pelintung 95.2 13.0 108.2 8.6 9.7 18.3 126.4

Lembar - - - 102.8 8.0 110.9 110.9

Makassar - - - 86.0 16.2 102.2 102.2

Adang Bay - 100.0 100.0 - - - 100.0

Cirebon - - - 49.7 44.7 94.4 94.4

P. Kijang - - - 87.2 - 87.2 87.2

Arar - - - - 87.2 87.2 87.2

Balikpapan 59.0 - 59.0 5.4 4.8 10.2 69.3

S. Danau - - - 26.8 40.1 66.8 66.8

Kijang - - - 1.7 65.1 66.7 66.7

Kaliwungu - - - 63.2 - 63.2 63.2

Serongga - - - 36.7 22.0 58.6 58.6

Tg. Wangi - - - 11.0 43.3 54.3 54.3

Cilacap - - - 20.5 27.5 47.9 47.9

Jambi - - - 17.1 17.1 34.2 34.2

Kintap - - - 12.8 20.0 32.8 32.8

Bitung 1.7 - 1.7 11.0 14.6 25.7 27.4

Sampit - - - 13.0 12.1 25.2 25.2

Asike - - - 20.8 4.0 24.8 24.8

Banyuwangi - - - 11.2 11.2 22.4 22.4

Bengkulu - - - 15.1 4.8 19.9 19.9

S. Jelai - - - 8.0 9.5 17.5 17.5

Batam - - - 16.1 0.6 16.8 16.8

Taboneo - - - 7.8 7.8 15.6 15.6

Tarakan - - - 4.4 10.8 15.2 15.2

Kendari - - - 9.5 5.5 15.1 15.1

Bangka - - - 8.1 6.7 14.8 14.8

Kuala Tanjung - - - 7.0 7.0 14.0 14.0

Kumai - - - 8.1 5.7 13.8 13.8

Top 50 ports 3,347.9 1,796.4 5,144.4 15,146.0 15,232.4 30,378.5 35,522.8

All other ports 11.9 6.0 17.9 184.9 102.1 286.9 304.8

Total all ports 3,359.8 1,802.4 5,162.2 15,330.9 15,334.5 30,665.4 35,827.6





Table A-6: Indonesia’s Top 50 Ports for Grains by Trade Flow, 2009 (000’s tons)


Tg. Perak 1,117.8 65.2 1,183.1 81.0 264.1 345.1 1,528.2

Tg. Priok 1,447.9 204.9 1,652.8 17.3 28.1 45.4 1,698.1

Makassar 475.1 91.4 566.5 4.9 532.3 537.2 1,103.6

Samarinda - - - 573.8 6.9 580.8 580.8

Cilacap 227.2 - 227.2 - - - 227.2

Tg. Emas 160.9 - 160.9 13.4 14.9 28.3 189.2

Belawan - - - 64.7 0.6 65.3 65.3

Panjang 40.0 - 40.0 0.7 6.0 6.7 46.7

Palembang - - - 24.0 16.8 40.8 40.8

Ternate - - - 33.0 1.4 34.5 34.5

Maumere - - - 17.3 16.2 33.5 33.5

Pare-Pare - - - 12.7 14.1 26.8 26.8

Bitung - - - 23.1 3.0 26.2 26.2

Sorong - - - 13.5 10.8 24.4 24.4

Ambon - - - 14.6 9.3 23.9 23.9

Fak-Fak - - - 14.0 9.2 23.2 23.2

Luwuk - - - 11.6 11.0 22.6 22.6

Tual - - - 12.1 9.5 21.6 21.6

Lhokseumawe - - - 12.4 9.0 21.4 21.4

Muara Satui - - - 10.3 10.8 21.0 21.0

Waingapu - - - 10.6 10.3 20.9 20.9

Pontianak - - - 13.2 7.4 20.6 20.6

Atapupu - - - 10.6 9.8 20.4 20.4

Timika - - - 10.2 9.5 19.7 19.7

Kupang - - - 8.1 8.0 16.1 16.1

Reo - - - 8.2 6.7 14.9 14.9

Teluk Bayur - - - 5.0 7.5 12.5 12.5

Jambi - - - 7.6 4.4 12.0 12.0

Biringkasi - - - 4.3 7.2 11.5 11.5

Gorontalo - 1.7 1.7 1.9 7.8 9.7 11.4

Sarongga - - - 5.2 4.9 10.1 10.1

Batu Licin - - - 5.0 5.0 10.1 10.1

Pelintung - - - 3.2 6.4 9.6 9.6

Gresik - - - 4.4 5.2 9.5 9.5

Banyuwangi - - - 0.5 8.8 9.4 9.4

Jayapura - - - 5.1 3.5 8.6 8.6

Banjarmasin - - - 8.0 0.6 8.6 8.6

Bima - - - 4.3 4.2 8.5 8.5

Balikpapan - - - 4.8 3.6 8.4 8.4

Badas - - - 2.1 6.2 8.2 8.2

Palopo - - - 2.6 5.4 8.0 8.0

Namlea - - - 4.9 3.0 7.9 7.9

Sibolga - - - 3.6 3.6 7.2 7.2

Bengkulu - - - 2.7 4.1 6.8 6.8

Kaimana - - - 4.5 2.1 6.7 6.7

Nabire - - - 4.1 2.6 6.6 6.6

Tenau - - - - 6.3 6.3 6.3

Larantuka - - - 3.7 2.4 6.1 6.1

Kintap - - - 0.5 5.2 5.7 5.7

Ciwandan - - 2.7 2.7 5.4

Top 50 ports 3,469.0 363.2 3,832.1 1,106.1 1,138.8 2,239.5 6,077.1

All other ports 0.1 - 0.1 4,265.4 4,232.7 8,503.6 8,498.3

Total all ports 3,469.0 363.2 3,832.2 5,371.5 5,371.5 10,743.1 14,575.3




163

ANNEXES

Table A-7: Indonesia’s Top 50 Ports for Other Dry Bulks by Trade Flow, 2009 (000’s tons)


Kendawangan - - - 15,631.7 15,631.7 31,263.4 31,263.4

Perawang - - - 11,831.4 6.0 11,837.5 11,837.5

Tg. Perak 89.6 296.9 386.4 54.6 11,383.5 11,438.1 11,824.5

Batu Ampar - 2,557.5 2,557.5 - - - 2,557.5

Tg. Balai Karimun - 2,415.4 2,415.4 - 3.0 3.0 2,418.4

Batam - 629.7 629.7 1,008.5 518.1 1,526.6 2,156.3

Tg. Priok 74.8 1,622.5 1,697.2 193.7 87.4 281.2 1,978.4

STS Karimun - 966.8 966.8 - - - 966.8

Anyer - 739.7 739.7 - - - 739.7

Suge - - - 360.0 360.0 720.0 720.0

Marunda - - - 405.5 150.2 555.7 555.7

Balikpapan - 517.0 517.0 2.6 2.2 4.8 521.8

Pekanbaru - 12.0 12.0 - 500.0 500.0 512.0

Tembilahan - - - 4.5 500.0 504.5 504.5

Sekupang - 500.4 500.4 - - - 500.4

Lobam - 396.5 396.5 - 11.3 11.3 407.8

Gresik 9.5 - 9.5 190.7 160.8 351.5 361.0

Belawan 5.2 287.9 293.1 14.3 8.9 23.2 316.3

Tuban - 299.3 299.3 - - - 299.3

Benjina - 216.5 216.5 - - - 216.5

Avona - 166.2 166.2 - - - 166.2

Benoa - 152.5 152.5 - - - 152.5

Tarakan - 148.0 148.0 0.3 0.2 0.5 148.5

Wanam - 144.7 144.7 - - - 144.7

Pomala 120.0 - 120.0 - - - 120.0

Tg. Pandan - 35.2 35.2 41.0 41.2 82.2 117.4

Panti Onar - - - - 111.6 111.6 111.6

Senoni - - - 26.0 74.2 100.2 100.2

Ambon - 96.0 96.0 - - - 96.0

Kijang - 88.8 88.8 - 1.7 1.7 90.5

Bitung - - - 30.0 60.0 90.0 90.0

Merak - 85.5 85.5 - - - 85.5

Sorong - 84.0 84.0 - - - 84.0

Dumai - 80.5 80.5 1.6 1.9 3.5 84.0

Kabil - 80.9 80.9 - - - 80.9

Kampit - - - - 79.8 79.8 79.8

Bontang - 70.0 70.0 0.2 - 0.2 70.2

Banggai - 68.8 68.8 - - - 68.8

Panjang - 34.1 34.1 19.0 14.9 34.0 68.1

Palembang - 54.5 54.5 6.3 5.5 11.8 66.3

Tg. Emas - - - 34.3 30.0 64.3 64.3

Derawan - 64.2 64.2 - - - 64.2

Tulang Bawang - - - - 61.2 61.2 61.2

Camplong - 61.0 61.0 - - - 61.0

Membalong - - - - 60.0 60.0 60.0

Samarinda - 6.0 6.0 49.1 2.5 51.6 57.6

Makassar - 56.5 56.5 - - - 56.5

Maratua - 55.0 55.0 - - - 55.0

Baruputih - - - 26.0 26.0 52.1 52.1

Asam-Asam - 50.0 50.0 - - - 50.0

Top 50 ports 299.1 13,140.4 13,439.5 29,931.6 29,893.9 59,825.4 73,264.9

All other ports 43.5 396.4 439.9 130.3 168.0 298.2 738.1

Total all ports 342.5 13,536.8 13,879.4 30,061.8 30,061.8 60,123.7 74,003.0





Table A-8: Indonesia’s Top 50 Ports for Petroleum and Petroleum Products by Trade Flow, 2009 (000’s tons)


Bontang 601.2 25,014.6 25,615.8 - - - 25,615.8

Tg. Balai Karimun 5,440.0 7,435.7 12,875.7 - - - 12,875.7

Dumai 408.0 8,684.6 9,092.5 - 0.2 0.2 9,092.7

STS Karimun 3,347.4 3,353.5 6,700.9 - - - 6,700.9

Cilacap 5,431.7 195.8 5,627.5 - - - 5,627.5

Balikpapan 2,695.1 942.7 3,637.8 17.1 12.8 29.9 3,667.7

Lawi-Lawi 3,493.5 159.7 3,653.2 - - - 3,653.2

Balongan 2,829.4 - 2,829.4 2.7 2.3 5.0 2,834.4

Tg. Priok 1,341.7 1,379.8 2,721.5 0.6 2.6 3.2 2,724.7

Tg. Perak 1,641.8 101.5 1,743.3 6.2 13.0 19.2 1,762.4

Blang Lancang - 1,567.3 1,567.3 - - - 1,567.3

Belanak - 1,446.5 1,446.5 - - - 1,446.5

Natuna 113.4 1,151.9 1,265.2 - - - 1,265.2

Anyer 764.6 118.2 882.8 - - - 882.8

Tuban - 872.4 872.4 4.5 2.0 6.5 878.8

Arun - 825.3 825.3 - - - 825.3

Belawan 730.5 45.5 776.0 0.2 0.3 0.5 776.5

Senipah 0.6 744.3 744.9 - - - 744.9

Muntok - 531.3 531.3 - - - 531.3

Bintuni - 497.0 497.0 - - - 497.0

Tg. Uban 384.4 0.0 384.4 20.8 27.2 47.9 432.4

Widuri - 416.6 416.6 - - - 416.6

Jambi 1.5 369.6 371.1 0.2 0.2 0.3 371.4

Merak 219.0 79.5 298.5 4.5 32.1 36.6 335.1

Kodeco - 332.9 332.9 - - - 332.9

Cinta - 318.8 318.8 - - - 318.8

Belida - 296.8 296.8 - - - 296.8

Madura 40.0 223.1 263.1 - - - 263.1

Kota Baru 233.6 - 233.6 6.1 8.9 14.9 248.5

Balanak - 246.9 246.9 - - - 246.9

Teluk Semangka 245.2 - 245.2 1.6 - 1.6 246.8

Kalbut 243.8 - 243.8 - - - 243.8

Gresik 166.8 56.2 222.9 1.5 0.5 2.0 224.9

Santan - 220.5 220.5 - - - 220.5

Arjuna - 216.0 216.0 - - - 216.0

Tg. Santan - 187.7 187.7 - - - 187.7

Situbondo 170.4 - 170.4 - - - 170.4

Panjang 150.3 6.0 156.3 - - - 156.3

Plaju 30.0 123.5 153.5 - - - 153.5

Amamapare 88.0 50.2 138.2 - - - 138.2

Sorong - 115.0 115.0 - - - 115.0

Cigading 114.3 - 114.3 0.1 - 0.1 114.4

Kuala Tanjung 92.9 21.3 114.2 - - - 114.2

Tg. Jabung - 107.4 107.4 - - - 107.4

Manggis 107.0 - 107.0 - - - 107.0

P. Sambu 73.3 21.3 94.6 - 2.9 2.9 97.5

Benoa 66.0 23.5 89.5 1.0 1.5 2.5 92.0

Pelsus Pertamina Balongan 87.0 - 87.0 - - - 87.0

Pelintung 79.2 - 79.2 - - - 79.2

Tg. Emas 67.3 - 67.3 - - - 67.3

Top 50 ports 31,498.5 58,500.3 89,998.8 67.0 106.3 173.3 90,172.1

All other ports 302.6 808.9 1,111.5 125.5 86.2 211.7 1,323.2

Total all ports 31,801.1 59,309.2 91,110.3 192.5 192.5 385.0 91,495.3




165

ANNEXES

Table A-9: Indonesia’s Top 50 Ports for CPO by Trade Flow, 2009 (000’s tons)


Dumai 70.5 9,175.9 9,246.4 345.8 480.4 826.2 10,072.6

Satui - 14.1 14.1 36.4 8,945.7 8,982.1 8,996.1

Kuaro - - - 8,932.6 - 8,932.6 8,932.6

Tg. Perak 0.3 178.3 178.6 6,865.6 434.0 7,299.6 7,478.2

Belawan 4.9 3,613.6 3,618.5 222.9 264.8 487.7 4,106.2

Kumai 0.6 191.9 192.5 553.8 2,241.0 2,794.7 2,987.2

Teluk Bayur 31.2 1,962.2 1,993.4 1.7 7.7 9.4 2,002.8

Selaru - - - 36.0 1,954.7 1,990.6 1,990.6

Serongga - - - 1.1 1,961.6 1,962.7 1,962.7

Kuala Tanjung 25.0 1,641.5 1,666.5 36.0 98.0 133.9 1,800.5

Panjang 11.5 1,137.3 1,148.8 23.9 19.3 43.1 1,191.9

Pontianak 0.7 39.5 40.2 90.8 910.2 1,001.0 1,041.3

Bitung - 758.6 758.6 109.5 120.1 229.6 988.3

Palembang 14.7 589.8 604.5 139.4 130.5 269.8 874.3

Kabil - 458.3 458.3 62.2 145.3 207.5 665.8

Lubuk Gaung 6.0 605.5 611.5 - - - 611.5

Tg. Priok 6.6 95.3 101.9 291.6 131.4 423.0 524.9

Rengat - - - 310.6 201.3 511.9 511.9

Pelintung - 333.6 333.6 19.6 114.3 133.9 467.5

Jambi - 5.6 5.6 176.6 265.8 442.4 448.0

Tg. Emas 4.5 84.0 88.5 83.6 68.4 152.0 240.5

Balikpapan - 191.9 191.9 - 1.1 1.1 193.0

Tarjun - 180.5 180.5 - - - 180.5

Kuala Enok - 45.5 45.5 88.9 7.1 96.0 141.5

Kota Baru - 137.2 137.2 - 3.0 3.0 140.2

Tg. Pandan - 25.1 25.1 100.8 2.7 103.5 128.6

Amurang 5.4 115.3 120.7 - - - 120.7

Sei Pakning - - - 109.1 - 109.1 109.1

Benoa - - - 59.7 40.2 99.9 99.9

S. Guntung - - - 18.3 75.7 94.0 94.0

Makassar - 10.0 10.0 20.7 62.5 83.2 93.2

Batu Licin 70.0 20.0 90.0 1.2 0.8 2.0 92.0

Cirebon - - - 80.9 11.0 91.9 91.9

Tg. Bakau - 30.2 30.2 28.9 32.5 61.4 91.5

Batu Ampar - 82.8 82.8 - - - 82.8

Luwuk - - - 39.8 39.8 79.5 79.5

Batam - 19.0 19.0 5.4 50.6 56.0 75.0

Banjarmasin - - - 17.6 47.6 65.1 65.1

Pantoloan - 62.8 62.8 - - - 62.8

Banyuwangi - - - 38.9 22.3 61.2 61.2

Tembilahan - - - 52.7 3.1 55.8 55.8

Tg. Rising - - - 0.9 52.7 53.6 53.6

Santan - 51.0 51.0 - - - 51.0

P. Baai - 50.8 50.8 - - - 50.8

Pangkal Balam - 13.8 13.8 3.4 30.2 33.6 47.4

Bengkulu - - - 25.2 22.0 47.1 47.1

Palopo - - - 21.4 25.6 47.0 47.0

Nunukan 0.4 44.7 45.1 - - - 45.1

Demta - - - 29.0 15.6 44.5 44.5

Siak - - - 3.7 36.0 39.6 39.6

Top 50 ports 252.3 21,965.5 22,217.8 19,086.0 19,076.3 38,162.2 60,380.0

All other ports 16.6 203.4 220.1 156.8 166.4 323.2 543.3

Total all ports 268.9 22,168.9 22,437.9 19,242.7 19,242.7 38,485.4 60,923.3





Table A-10: Indonesia’s Top 50 Ports for Other Liquid Bulks by Trade Flow, 2009 (000’s tons)


Balikpapan 341.7 3,321.3 3,662.9 - - - 3,662.9

Merak 2,710.3 809.8 3,520.2 - 2.4 2.4 3,522.5

Tg. Balai Karimun 545.6 800.7 1,346.4 - - - 1,346.4

Anyer 625.4 524.9 1,150.3 - - - 1,150.3

STS Karimun 1,058.5 87.7 1,146.3 - - - 1,146.3

Tg. Priok 869.4 103.5 972.9 17.5 19.7 37.1 1,010.0

Bontang 33.4 900.3 933.7 - 8.1 8.1 941.7

Tg. Santan - 929.0 929.0 1.6 1.6 3.2 932.2

Cilacap 344.6 557.5 902.1 - - - 902.1

Tg. Perak 444.9 173.4 618.3 101.8 14.7 116.5 734.8

Gresik 359.5 334.2 693.6 - - - 693.6

Senipah - 605.0 605.0 - - - 605.0

Balongan 122.0 475.5 597.5 - - - 597.5

Dumai 107.8 423.9 531.7 - 13.4 13.4 545.2

Plaju 12.7 430.8 443.5 - 6.9 6.9 450.3

Samarinda 11.1 428.0 439.1 - 0.9 0.9 440.0

Teluk Semangka 398.4 - 398.4 - - - 398.4

Tg. Uban 315.8 25.4 341.2 22.9 22.9 45.8 387.0

Tuban 69.5 300.8 370.3 - - - 370.3

Muara Sabak - 319.7 319.7 - - - 319.7

Situbondo 231.8 - 231.8 - - - 231.8

Panjang 193.5 32.0 225.5 - - - 225.5

Belawan 127.2 70.2 197.3 - 15.6 15.6 212.9

Adang Bay - 195.0 195.0 - - - 195.0

Blang Lancang - 160.6 160.6 - - - 160.6

Kalbut 160.2 - 160.2 - - - 160.2

Tangguh - 155.0 155.0 - - - 155.0

Tg. Bara - 144.0 144.0 - - - 144.0

S. Pakning 31.6 106.5 138.1 - - - 138.1

Amamapare 88.0 50.0 138.0 - - - 138.0

Taboneo - 128.9 128.9 - - - 128.9

Tg. Emas 127.6 - 127.6 - - - 127.6

Kota Baru 97.2 26.0 123.2 - - - 123.2

Santan - 99.0 99.0 - - - 99.0

P. Laut 25.0 70.0 95.0 - - - 95.0

Nipah 31.5 51.6 83.1 - - - 83.1

Kabil 18.5 59.7 78.2 - - - 78.2

Ciwandan 51.2 13.1 64.3 - - - 64.3

Kasim - 64.0 64.0 - - - 64.0

Sekupang 48.3 8.0 56.3 - - - 56.3

Palembang 16.0 36.7 52.7 - 3.0 3.0 55.7

Perawang - - - - 45.0 45.0 45.0

Tg. Jabung - 43.8 43.8 - - - 43.8

Tg. Manggis 36.0 - 36.0 3.3 2.9 6.2 42.2

Tg. Pemancingan - 37.5 37.5 - - - 37.5

Sei Pakning - - - - 35.3 35.3 35.3

Belanak - 31.3 31.3 - - - 31.3

Cigading 28.8 - 28.8 - - - 28.8

Lawi-Lawi - 26.0 26.0 - - - 26.0

Malili 25.4 - 25.4 - - - 25.4

Top 50 ports 9,708.2 13,160.2 22,868.4 147.1 192.3 339.4 23,207.8

All other ports 175.6 130.7 306.3 92.5 47.2 139.7 446.0

Total all ports 9,883.8 13,290.9 23,174.7 239.5 239.5 479.1 23,653.8




167

ANNEXES

ANNEXE 2: CONTAINER TERMINAL INVESTMENT COSTS BY PORT

Container Terminal Investment Costs by Port (US$ 2010)

Source: DWA, 2010 IndII Technical Report on the Development of the National Port Master Plan.

No Description Unit Quantity Unit Price Total Quantity Unit Price Total Quantity Unit Price Total Quantity Unit Price Total Quantity Unit Price Total

1

Preparation & Earth

Work

Land Acquisition Ha 100 200,000 20,000,000 10 200,000 2,000,000 100 50,000 5,000,000 0 0

Reclamation Ha 0 0 0 225 5,000,000 1,125,000,000 200 825,000 165,000,000

Break Water m 0 0 0 0 2,000 100,000 200,000,000

Dredging m3 0 0 0 0 6,000,000 7 42,000,000

2 Quay Side 0 0 0 0 0

Concrete Slab m2 0 15,000 2,500 37,500,000 0 0 0

Approach Trestle m2 0 0 0 40,000 15,000 600,000,000 0

Trestle, 1 Unit m2 0 0 0 0 0

Trestle, 2 Unit m2 3,000 2,000 6,000,000 0 1,500 3,000 4,500,000 0 0




Jetty/Wharf m2 10,000 3,000 30,000,000 10,000 3,500 35,000,000 10,000 4,000 40,000,000 150,000 2,000 300,000,000 100,000 2,000 200,000,000

Dolphin m2 0 0 0 0 0

3 Storage and Pavement 0 0 0 0 0

Pavement Ha 15 500,000 7,500,000 15 500,000 7,500,000 15 500,000 7,500,000 200 500,000 100,000,000 80 500,000 40,000,000

4 Buildings m2 1,000 300 300,000 1,000 300 300,000 1,000 300 300,000 5,000 300 1,500,000 5,000 300 1,500,000

5 Handling Equipment unit 3 8,000,000 24,000,000 3 16,300,000 48,900,000 3 8,000,000 24,000,000 30 16,300,000 489,000,000 35 16,300,000 570,500,000

Jetty length 200 200 200 3,000 2,000

Depth of yard 250 250 250 600 350

Cost per m of jetty ($000s) 439 656 407 872 610

Ambon Tg. Perak (Lamong) Tg. PriokBitung Sorong






1

Preparation & Earth

Work

Land Acquisition Ha 0 100 55,000 5,500,000 0 400 200,000 80,000,000 0

Reclamation Ha 500 130,000 65,000,000 0 50 4,000,000 200,000,000 50 200,000 10,000,000 50 200,000 10,000,000

Break Water m 0 85,000 2,500 212,500,000 0 0 0

Dredging m3 0 0 1,500,000 8 12,000,000 0 0

2 Quay Side 0 0 0 0 0

Concrete Slab m2 0 0 0 0 0

Approach Trestle m2 0 0 0 0 0



Trestle, 3 Unit m2 13,500 2,500 33,750,000 0 0 0 0

Trestle, 4 Unit m2 0 0 0 0 12,000 1,500 18,000,000


Jetty/Wharf m2 15,000 5,000 75,000,000 50,000 4,000 200,000,000 50,000 3,000 150,000,000 25,000 2,500 62,500,000 25,000 3,000 75,000,000



Pavement Ha 20 500,000 10,000,000 40 500,000 20,000,000 40 500,000 20,000,000 30 500,000 15,000,000 30 500,000 15,000,000

4 Buildings m2 2,000 300 600,000 3,000 300 900,000 3,000 300 900,000 2,000 300 600,000 1,000 300 300,000


Jetty length 300 1,000 1,000 500 500

Depth of yard 333 300 300 400 500


PanjangBalikpapan (tg. Kariangau) Banjarmasin Belawan Makasar (Garongkong)


169

ANNEXES



No Description Unit Quantity Unit Price Total Quantity Unit Price Total

1

Preparation & Earth

Work

Land Acquisition Ha 0 50 150,000 7,500,000

Reclamation Ha 300 200,000 60,000,000 0

Break Water m 0 0

Dredging m3 0 0

2 Quay Side 0 0

Concrete Slab m2 0 0

Approach Trestle m2 0 0

Trestle, 1 Unit m2 0 0

Trestle, 2 Unit m2 0 9,000 1,500 13,500,000

Trestle, 3 Unit m2 90,000 2,500 225,000,000 0



Jetty/Wharf m2 62,500 4,000 250,000,000 25,000 4,000 100,000,000

Dolphin m2 0 0

3 Storage and Pavement 0 0

Pavement Ha 40 500,000 20,000,000 30 500,000 15,000,000

4 Buildings m2 3,000 300 900,000 2,000 300 600,000

5 Handling Equipment unit 25 16,300,000 407,500,000 7 16,300,000 114,100,000

Jetty length 1,250 500

Depth of yard 240 400

Cost per m of jetty ($000s) 771 501

Palembang (S. Punggul) Pontianak (S. Pemuju)






1

Preparation & Earth

Work

Land Acquisition Ha 0 0 50 150,000 7,500,000 75 125,000 9,375,000 15 100,000 1,500,000

Reclamation Ha 300 200,000 60,000,000 15 200,000 3,000,000 0 0 0

Break Water m 0 0 0 0 0

Dredging m3 0 0 0 0 0

2 Quay Side 0 0 0 0 0

Concrete Slab m2 0 0 0 0 0

Approach Trestle m2 0 0 0 0 0

Trestle, 1 Unit m2 0 0 0 3,000 2,500 7,500,000 0

Trestle, 2 Unit m2 0 0 9,000 1,500 13,500,000 0 0

Trestle, 3 Unit m2 90,000 2,500 225,000,000 0 0 0 0

Trestle, 4 Unit m2 0 12,000 1,400 16,800,000 0 0 12,000 1,500 18,000,000


Jetty/Wharf m2 62,500 4,000 250,000,000 25,000 3,000 75,000,000 25,000 4,000 100,000,000 15,000 5,000 75,000,000 25,000 2,000 50,000,000



Pavement Ha 40 500,000 20,000,000 15 500,000 7,500,000 30 500,000 15,000,000 10 100 1,000 15 500,000 7,500,000

4 Buildings m2 3,000 300 900,000 1,000 300 300,000 2,000 300 600,000 5,000 300 1,500,000 1,000 300 300,000


Jetty length 1,250 500 500 300 500

Depth of yard 240 200 400 167 200


BintanPalembang (S. Punggul) Teluk Semangka Pontianak (S. Pemuju) Sangkurilang


171

ANNEXES



Pare-pare

No Description Unit Quantity Unit Price Total Quantity Unit Price Total Quantity Unit Price Total Quantity Unit Price Total

1

Preparation & Earth

Work

Land Acquisition Ha 0 200 500,000 100,000,000 100 100,000 10,000,000 10 200,000 2,000,000

Reclamation Ha 125 500,000 62,500,000 0 0 25 200,000 5,000,000

Break Water m 300,000 1,500 450,000,000 160,000 2,500 400,000,000 0 0

Dredging m3 5,000,000 7 35,000,000 5,000,000 7 35,000,000 0 0

2 Quay Side 0 0 0 0

Concrete Slab m2 0 0 0 15,000 2,500 37,500,000

Approach Trestle m2 0 0 0 0

Trestle, 1 Unit m2 0 0 0 0




Trestle, 5 Unit m2 0 0 75,000 1,500 112,500,000 0

Jetty/Wharf m2 125,000 2,000 250,000,000 100,000 2,000 200,000,000 37,500 2,000 75,000,000 10,000 3,500 35,000,000

Dolphin m2 0 0 0 0

3 Storage and Pavement 0 0 0 0

Pavement Ha 125 500,000 62,500,000 40 500,000 20,000,000 60 500,000 30,000,000 15 500,000 7,500,000

4 Buildings m2 6,000 300 1,800,000 4,000 300 1,200,000 4,000 300 1,200,000 1,000 300 300,000

5 Handling Equipment unit 25 16,300,000 407,500,000 20 16,300,000 326,000,000 15 16,300,000 244,500,000 3 16,300,000 48,900,000

Jetty length 2,500 2,000 750 200

Depth of yard 460 150 667 250

Cost per m of jetty ($000s) 508 541 631 681

Bojonegara Tangerang Bitung (P. Lembeh)



ANNEXE 3: REFINEMENT OF DGST PORT TRAFFIC DATA AND REVISIONS TO TRAFFIC FORECASTS AND INVESTMENT REQUIREMENTS

Refinement of DGST Port Traffic Data and Revisions to Traffic Forecasts and Investment Requirements

The national shipping data sets maintained by DGST provided the historical base for the preparation of the port traffic forecast and investment requirement assessment included in this report.

Despite efforts to clean the DGST data set, a subsequent review of the traffic tables generated for and presented in this report were found to still contain clearly erroneous data for some ports, particularly for general cargo and some dry bulk commodities. Overall, the data for container movements is considered the most accurate.

Further work to clean the DGST traffic dataset could yield a more accurate basis for preparation of the traffic forecasts and corresponding assessment of investment requirements. The cleansed dataset would also provide government and private sector analysts with a solid and comprehensive profile of Indonesian foreign and domestic traffic in 2009 that could be used in a range of subsequent planning and analytical studies.

The following tasks will need to be performed:

Eliminate all clearly erroneous data entries for port traffic by conducting a thorough review of port traffic generated by each vessel call relative to the dwt capacity of the vessel. A special focus should be placed on general cargo volumes and key dry bulk cargo volumes such as coal, iron ore and fertilizer.

Review the categorization of port traffic by cargo type to identify mis-categorized volumes such as dry-bulk cargo being labeled as general cargo.

Standardize the name for a specific port and combine multiple entries for the same port into a single entry.

Review the reported split of container traffic between international and domestic trade for major container ports.

Review the resulting estimate of port traffic with DGST staff and industry specialists.

Incorporate the revised 2009 base traffic into the regression analyses to prepare revised forecasts of port traffic through 2030.

Prepare revised estimates of port investment requirements using the revised port traffic forecasts.


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Prepare a set of procedures, techniques and guidelines for DGST to use for refinement of the port shipping dataset for 2010 and subsequent years.

The work will require the following specialists:

National Port Sector Data Analyst

International Port Traffic Forecasting Specialist

National Port Sector Planning Specialist

Expected duration: 3 months



ANNEXE 4: ACTIVITY FINAL COMPLETION REPORT

1. Activity Final Completion Report

IndII activity reference #: 182 Date of report: June 30, 2011

Activity name: National Ports Master Plan Revision

Total budget: $AUD 181,533

PART 1: Executive summary

As part of its continuing port reform efforts, Indonesia mandated the Directorate General of Sea Transportation (DGST) to prepare a National Ports Master Plan by June 2010. The Plan, the recent draft of which was prepared in September 2010, was supported by a consultant (DWA) retained by IndII. Though DWA submitted a Technical Report accompanied by a series of technical annexes, IndII in the course of its review determined the latest revision failed to meet expectations, as documented in IndII’s Consolidated Comments on the Technical Report of December 10, 2010. Accordingly, IndII retained Nathan Associates to provide assistance to improve upon the work done by the consultant in response in part to the Consolidated Comments. Rather than redo the work that has been done, IndII has requested that the team of consultants to review the DWA work, complete data collection and analysis in view of IndII’s Consolidated Comments, and prepare four new Background Papers that consolidate and improve the DWA work along with a brief summary report. The four Background Papers include:

1. Baseline Report 2. Traffic Forecast Report 3. Investment Requirements Report – 4. Institutional Development and Financing Report

PART 2: Background and context to activity

(A brief outline of the activity history and linkages to IndII objectives / outcomes in the IndII M&E Plan)


A similar collaboration theme was envisioned two years earlier in the port reform efforts initiated through Shipping Law 17 of 2008. The Law changes the role of the central government in the conduct of port affairs, establishing a framework for landlord port authorities. Local governments play a more prominent role in the port sector, with smaller ports being transferred to local government jurisdiction and the master plans of all ports being subjected to local government approval before they can be implemented. The creation of landlord port authorities by definition means that the private sector will play a greater role in port investment and operation. The Law also indicates the Pelindos will continue to exploit the terminals they had operated prior to the Law’s passage. So the new port system will have a number of port sector “players” whose roles are established in the Law.


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PART 3: Key results of activity

(Provide details for each relevant key result area related to the activity; and a summary of achievements to date below.)

IndII Monitoring and Evaluation Framework Goal for project: Greater investment in Special Railways and the coordinated integration with Special Railways with PPPs and public railways,

Objectives Output/ Performance

Indicator

Achievements

to date Remarks

M&E Output 1: Baseline Report

Summary of main provisions of Shipping Law 17/2008 and examination of implications for institutional change

Completed and included in Baseline Report and Final Report. A review of the Shipping Law was conducted and where relevant also examines how its provisions have been fleshed out further by various implementing regulations (in particular the Government Regulation on Port Affairs No 61 of 2009).

The Law changes the role of the central government in the conduct of port affairs, establishing a framework for landlord port authorities. Local governments play a more prominent role in the port sector, with smaller ports being transferred to local government jurisdiction and the master plans of all ports being subjected to local government approval before they can be implemented. The creation of landlord port authorities by definition means that the private sector will play a greater role in port investment and operation. The Law also indicates the Pelindos will continue to exploit the terminals they had operated prior to the Law’s passage.

Brief description of existing institutional arrangements;

Completed and included in Baseline Report and Final Report. Arts 79 – 95 set out an institutional framework for Indonesia’s port system. The key participants in the port system are identified as: (a) port operators (PAs or PMUs), and (b) Port Business Entities (PBEs). The Law defines “port business entities” as entities

The analysis of the law includes a description of institutional arrangements for the ports, as set out in Ministerial Regulations Nos 63 and 64 of 2010, which respectively establish Port Authorities and Port Management Units. A diagnostic of sector problems as they



undertaking the business of exploiting a terminal or other port facilities. The Law also defines “business entities”. These are described as state-owned business entities (such as the Pelindos), regionally-owned business entities and “Indonesian” business entities.

relate to policy, legal and institutional issues forms part of the review as well as a review of planning procedures and the relationship between the NPMP and public and private plans for port development.

Diagnostic of sector problems;

Completed and included in Baseline Report and Final Report. The main sector problems and challenges identified by our analysis in the context of institutional and legal frameworks are:

Incomplete and deficient legal framework.

Uncertainty regarding transitional arrangements to achieve landlord status.

Weak direction on private sector participation.

Deficiencies in the institutional design of Port Authorities..

Mixed messages on encouraging competition.

Lack of a comprehensive framework for competition regulation.

Conflicting government agency objectives.

The Law on Shipping and subsidiary government and ministerial regulations do not provide a comprehensive legal framework for the ports sector. The Law lacks implementation detail, especially in relation to crucial issues relating to the landlord role of PAs (i.e. transfer of land to PAs, relinquishing of functions to PAs, future control over Pelindo assets, the relationship between Pelindos and PAs, mixed messages regarding the Pelindos’ future monopolies, etc). Subsidiary regulations do not yet adequately fill all gaps. In some areas, e.g. the relationship between the DGST, PAs and Harbour Master, the Law creates the potential for jurisdictional overlap and institutional conflict.


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Description of planning procedures, in particular relationship of NPMP to public and private sector plans for port development;

Completed and included in Baseline Report and Final Report. The provisions of the Law governing port planning are set forth in Arts 71 – 78. A National Port Master Plan (NPMP) must be prepared based on a 20 year planning horizon. It is intended as a guideline on port location, construction, operation and development. The NPMP must contain the (a) national ports policy, (b) port location plans, and (c) a designation of the hierarchy of ports. Art 71 further stipulates that the preparation of the NPMP must be guided by national, provincial and local spatial layout plans and driven by socio-economic priorities, the natural resource potential of the country and individual regions and strategic environmental considerations.

The GOI has issued further guidance on the preparation of port location plans in regulations (Government Regulation No. 61 of 2009 on Port Affairs, hereinafter cited as GR 61). Separate criteria are stipulated for main, collector, feeder and river/lake ports. These criteria relate mainly to issues such as geographic proximity to markets, availability of shipping services, and topography. While not stated explicitly, the NPMP must encompass both existing ports and new (planned) ports. With regard to the latter, the proposed port location must be approved by the Minister. GR 61 further stipulates:

A procedure to be followed in approving the location of ports. Approval is granted by the Minister acting on an application from “the Government” or a regional government; and

The information and data to be provided to the Minister to motivate the application (GR 61 Art 18).



Compilation of basic data on port infrastructure, operational practices

.

Completed and included in Baseline Report and Final Report. The NPMP Revision Team put forth a concerted effort to obtain data pertaining to port traffic from a variety of sources. These sources include data maintained by the DGST, by individual Pelindos, and from other recent studies of the Indonesia port sector. Information was collected on traffic for ports within the Indonesia port system, and trends in foreign and domestic traffic volumes by type of cargo and commodity/commodity group. Data on foreign trade (imports and exports) and domestic shipping (loadings and unloading) were presented.

A review was conducted of Indonesia’s two main container ports: Tanjung Priok, Jakarta; and Tanjung Perak, Surabaya. The review focuses on these two ports because of their significant role as Indonesia’s commercial gateways and the expected container terminal capacity shortages in the near term future. The review included an assessment of their present productivity and utilization, and the expansion measures considered by the local port authorities and Pelindos. The proposed short-term measures for improving capacity were also evaluated..

For 2009, the domestic trade data set contains more than 72,000 records of cargo/commodity shipments in Indonesia domestic trade between ports. The NPMP Revision Team worked extensively with these data sets to clean them of inconsistencies and obvious errors, including the following:

Indonesia port names were harmonized to a single spelling and to a single name for a particular port;

Commodity (e.g. coal) or commodity group (petroleum and petroleum products) classifications were harmonized to a single commodity or commodity group name and spelling;

Obvious errors in reported cargo volumes were corrected when the cargo volume grossly exceeded the carrying capacity of the vessel;

Container shipments in TEU and vehicle shipments in units were separated from other cargo reported in tons.

The clean DGST data sets provide the single most comprehensive view of the cargo handled in Indonesian ports during 2009.


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M&E Output 2: Traffic Forecasts

Twenty year projections, by major commodity group, identifying international, domestic and trans-shipment traffic, by major port zone.

Completed and included in Traffic Forecast Report and Final Report. The forecast were prepared by the top-down approach, working first at the national level based on macroeconomic trends and conditions in Indonesia, the region and its trading partners. Forecasts at the national level are then allocated to individual ports based on historical patterns adjusted for special conditions such as implementation of the economic development corridors, variable economic growth by region, and the depletion or expansion of some resource-based port activity within a particular region. Components of trade such as international container traffic and domestic container traffic that have different determinants of growth are forecasted separately taking into consideration customized regression models developed for this study.

In preparing the port traffic forecast, the NPMP Revision Team reviewed documents and/ or met with representatives of other economic, spatial and logistical planning efforts currently being implemented in Indonesia. These include:

Masterplan of Acceleration and Expansion of Indonesia Economic Development 2011-2025 (MP3EI)

National Transportation System (SISTRANAS)

Blueprint of Intermoda /Multimoda Transport and National Logistics System

Strategic Plan of National Transportation Development

M&E Output 3: Investment Requirements

Broad brush estimates of total investment requirements in physical terms for 2011 – 2020 and 2021 - 2030, taking account of existing capacity and the potential for improvements to operational efficiency;

Completed and included in the Investment Requirements Report and Final Report. The NPMP Revision Team collected information on container and general cargo port facilities from several sources. The primary source was an inventory of 231 port facilities provided DGST, organized by region and province. This inventory included current data on berth length and depth for each port and specific facilities within the port.

Port productivity factors were applied to estimates of existing meters of berth by type at each of the 22 main container ports.



Identification of any need for new ports;

Completed and included in the Investment Requirements Report and Final Report. The analysis indicates that many of Indonesia’s main port are approaching the limits of their effective capacity given current productivity factors. For containers, the ports of Belawan, Tanjung Emas, Tanjung Perak, Tanjung Priok are each operating at around 90 percent of effective capacity, while the ports of Pekanbaru and Samarinda, are each operating at around 80 percent of effective capacity.

With the exceptions of Balikpapan and Belawan, general cargo operations generally have sufficient or excess capacity.

Estimates of total investment costs, with a clear and justified statement of assumptions for unit costs.

Completed and included in the Investment Requirements Report and Final Report. Total direct unit cost per meter of berth for development and construction of container terminals in each of the 22 main container ports were presented with clear assumptions regarding unit costs.

Through 2030, an estimate of the total port investment is US$ 19.2 billion, 60 percent is needed for container traffic, 18 percent for petroleum and petroleum products, 13 percent for coal, and 9 percent for CPO.


As identified in the Investment Requirements Report, a more detailed study assessing the

Feasibility of establishing integrated off-dock Inland Container Depots

This is intended as a near term solution for addressing impending near term congestion in Jakarta until the new container terminal is built in 2014. The solution is a relatively low cost solution as the storage sites already exist.


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M&E Output 4: Institutional Development and Financing

Identification of the legal, regulatory and administrative actions needed to implement Shipping Law 17/2008 effectively

Completed and included in the Institutional Development and Financing Report and Final Report. The GoI has undertaken various actions to ensure the implementation of the Law. The first was to adopt implementation regulations contained in Government Regulation No.61 of 2009 on Port Affairs (GR 61). Further steps were taken at the end of 2010, when the Minister of Transport adopted a series of regulations setting up port authorities, port management units (PMUs), and harbor masters’ offices.Implementation action is required in the following areas:





The Law on Shipping and subsidiary government and ministerial regulations do not provide a comprehensive legal framework for the ports sector. The Law lacks implementation detail, especially in relation to crucial issues relating to the landlord role of PAs (i.e. transfer of land to PAs, relinquishing of functions to PAs, future control over Pelindo assets, the relationship between Pelindos and PAs, mixed messages regarding the Pelindos’ future monopolies, etc). Subsidiary regulations do not yet adequately fill all gaps. In some areas, e.g. the relationship between the DGST, PAs and Harbour Master, the Law creates the potential for jurisdictional overlap and institutional conflict.

Transition arrangements as Port Authorities take over some of the Pelindo responsibilities for port management

Completed and included in the Institutional Development and Financing Report and Final Report. A range of transition arrangements are required for Port Authorities to assume Pelindo non-operational responsibilities. In practice, the Pelindos currently perform various functions for which they have a statutory mandate, but which have now also been assigned to port authorities. Additionally,

Transitional arrangements so that port authorities can assume Pelindo functions revolve around the following main actions:

Resolving the port land issue;

Resolving conflict in the Law on Shipping and between the Law and earlier Pelindo legislation; and



there are a number of other functions which Pelindos appear to have assumed by default, but which are also activities that are now entrusted to port authorities. Functions in this category include undertaking master planning and providing port security.

Building the institutional capacity of port authorities

Identification of appropriate vehicles for attracting private sector investment in the port sector;

Completed and included in the Institutional Development and Financing Report and Final Report. A successful strategy for attracting private sector investment in Indonesia ports depends on an amalgam of general factors which influence the investment environment and specific policy, regulatory and institutional measures which governments must implement to provide an enabling environment. Attributes that are conducive to attracting private sector investment in ports were identified and described.

While foreign port sector investors can get access to long-term financing in the capital markets, it is often difficult for potential Indonesian investors to get long-term financing from banks. Recognizing this problem, Indonesia established PT Indonesia Infrastructure Finance (PT IIF), a non-bank financial institution focused on providing long term funding for infrastructure projects. Also, BAPPENAS’ Project Development Facility (PDF) is in operation and has an initial funding of US$33mn from ADB and the Dutch government. The function of PDF is to conduct project preparation with detailed feasibility studies and internationally recognized bidding documents before it is offered to the market. PDF funds project preparation and transaction under the various government contracting agencies.


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Examination of the likely scale and possible sources of funding for public sector investment in ports; and

Completed and included in the Institutional Development and Financing Report and Final Report.

The intention of Shipping Law No. 17 is that basic infrastructure investment in ports will be undertaken by the Port. The new Indonesian Port Authorities, however, will be new institutions that will have little in the way of financial assets and no track record of operations. They will generate little cash flow and have essentially no borrowing capacity in their early years of existence. We therefore believe the only main source of infrastructure funding in the short term is the Government of Indonesia.

Until the Port Authorities have established strong cash flows and balance sheets, the possible sources of funding for port infrastructure investment are:

Government of Indonesia fiscal income.

General Government of Indonesia borrowing.

Loans from international financial institutions.

Loans from bilateral financial institutions

In the longer term sources of Port Authority infrastructure financing should evolve from increasingly strong financial statements of the Port Authorities. This will of course only happen if they are allowed to retain their earnings, including those from port authority charges (e.g. port dues), leases, and concession fees. If so, the Port Authorities could accumulate retained earnings and develop cash flow that can support borrowing.


As defined in detail in the Institutional Development and Financing Report:

Re-Drafting of Shipping Law 17 of 2008 (or related amendments) and preparation of associated regulations to address noted gaps and clarify

While the Law will require substantial time for legislative approval, the shortcomings in the Law as passed requires a substantial re-drafting for further clarity and to address the legal gaps in the Law identified in the report. Regulations



contradictions

Preparation of Land Law and KPPU amendments

Preparation of Regulations identified in the Law or in Government Regulation 61 of 2009 that have to be issued by the Ministry.

also have to be prepared in accord with the Law’s provisions requiring the Ministry to do so; the needed regulations are also identified in the report. The Land Law and KPPU Law amendments are intended to 1) repeal the land management assignment responsibility accorded to the Pelindos; and 2) remove the antitrust exemption given to Pelindos.

Discuss and analyse key activity achievements objectives/outcomes – using the Activity Design and/or IndII M&E Plan’s key result areas as a guide; i.e.: What has the activity contributed to program key result areas? Also identify inhibiting & contributing factors to achievements. ** For Section 3.1-3.5 – Please only complete the section relevant to your activity. If your activity is primarily policy with capacity building, please only complete those sections (Refer to your activity design and results frameworks for more details) **. Provide evidence where possible.

3.1 Capacity building initiatives Individual and work unit

The NPMP Revision team held several workshops with DGST to review the progress and findings of the study. In addition, at least a dozen one-on-one meetings were held between NPMP Revision Team members and DGST officials. The result of the workshops and meetings is an understanding, and appreciation for the study findings and support for their future implementation.

3.2 Partnership building and performance Linking with other departments, institutions and donors

No other foreign assistance agencies or development banks were involved in this project. A number of national and Provincials/regency offices were consulted in this project, including at the national level, the Investment Coordinating Board (BKPM), the Coordinating Ministry for Economic Affairs (CMEA), the National Development Planning Agency (Bappenas). In addition, constructive discussions were held with relevant private sector stakeholders to seek a consensus on the most appropriate way to proceed.

3.3 Policy setting and implementation

Many actions that are identified are intended to overcome vagueness in Shipping Law 17 with regard to its implementation. The GoI has already undertaken various actions to ensure the implementation of the Law. The first was to adopt implementation regulations contained in Government Regulation No.61 of 2009 on Port Affairs (GR 61). Further steps were taken at the end of 2010, when the Minister of Transport adopted a series of regulations setting up port authorities, port management units (PMUs), and harbor masters’ offices.

Legislation needs to be developed to create a framework for tariff regulation (legal), and the regulator needs to regulate tariffs (regulatory) and develop supporting systems and procedures (administrative). Often, there is also a logical progression in these tasks. The adoption of legislation paves the way for regulatory implementation and administrative action. This report proposes implementation actions in


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PART 4: Activity implementation

4.1 Progress Outline progress for the period and discuss achievements listed in the table above in Section 3; Is the activity on schedule? If not what are the implications?

The project was completed on schedule.

4.2 Sustainability Factors contributing to sustainability overall

Project sustainability will be enhanced by the close relationship between consultant and DGST which should be a precedent for interactions required for drafting changes in regulation.

4.3 Activity expenditure Outline expenditure for the period; note any significant underspend/overspend;

specify the $A amount and % variance

The project was completed on budget.

relation to specific topical areas, rather than as strict legal, regulatory and administrative subsets.

Finally, the adoption of the National Port Master Plan (NPMP) is itself a legal and administrative action that is required to implement the Law. Amongst others, the NPMP must give policy direction in numerous areas such as the construction of new ports, private sector participation, etc. It is also a prerequisite for various actions required under the Law, such as the preparation of individual port master plans.






A range of transition arrangements are required for Port Authorities to assume Pelindo non-operational responsibilities. In practice, the Pelindos currently perform various functions for which they have a statutory mandate, but which have now also been assigned to port authorities. Additionally, there are a number of other functions which Pelindos appear to have assumed by default, but which are also activities that are now entrusted to port authorities. Functions in this category include undertaking master planning and providing port security.

3.4 Access

Not applicable

3.5 Cross-cutting issues Gender, environment, disability

Not applicable:



PART 5: Program management

5.1 Management arrangements Discuss management arrangements between partner ministry, stakeholders and IndII. Were management approaches effective and efficient? Include administrative issues, staffing, etc. If relevant, highlight innovative approaches to managing the activity.

The support of the highly qualified local consultant team and assigned IndII staff was a critical factor in the success of the project in terms of ensuring the analyses were grounded in the realities of Indonesia’s port sector, providing access to key data and officials and assisting with the preparation of reports.

5.2 Lessons learned What lessons have been learned to date and what impact have these lessons had upon the activity; i.e. What has changed?

The activity was conducted during a relatively short two-month period from late April to late June 2011. As such, lessoned learned during the activity will be used to guide the preparation of future activities rather than to directly impact the present activity. Some of the key lessons learned include:

The development and passage of a parent law governing a sector needs to be very thoroughly prepared. Resolving conflicting goals, responsibilities, policies and strategies afterwards is difficult, time consuming and generates uncertainty in the sector that affect investment and performance.

As stated above, the support of the highly qualified local consultant team and assigned IndII staff was a critical factor in the success of the project in terms of ensuring the analyses were grounded in the realities of Indonesia’s port sector, providing access to key data and officials and assisting with the preparation of reports.