New Regulation Throws Open Ports to Private Competition
Faisal Maliki Baskoro
Medan. Saturday will bring an end to state seaport operator Pelabuhan Indonesia’s dominance of the country’s ports as private competitors join the fray.
Law No. 17/2008 on port operation, which goes into effect this week, limits seaport operators Pelindo I, II, III and IV from acting as regulators. They previously regulated the nation’s ports, but the law made the Transportation Ministry the new regulator.
The government and private companies have complained that a lack of competition left Indonesia’s port operators without the vision to improve their ports, resulting in long loading times and overcrowded ports.
“The new law will open up competition. Private companies will be allowed to manage ports in Indonesia. We need to gear up and increase our standards,” said Bambang Cahyana, Pelindo I’s commercial and business development director.
The Belawan port in North Sumatra is one of the country’s busiest ports after Tanjung Priok in North Jakarta, Indonesia’s busiest port. As much as 60 percent of palm oil exports pass through Belawan, but it lacks the standards of a world-class port and struggles with poor services.
It is located near Malaysia’s Port Klang, and Bambang admitted that Pelindo was losing customers to Klang.
“An international port should be 1,200 meters in length, but Belawan is only 850 meters long. Loading time here is poor by logistics standards,” he said.
Shipments to the port’s international terminal can take as many as five days to be unloaded, he continued, while domestic shipments may take up to a week. Belawan, which contributes 60 percent of Pelindo I’s revenue, is also at maximum capacity with 850,000 ton equivalent units.
“We are going to expand by adding another 350 meters in length in Belawan this year if we get government approval. We also have invested in new cranes to improve productivity. They will halve loading times,” he said. Better cranes will increase Belawan’s loading capacity from 18 containers per hour to 25 containers per hour. Expansion will increase the port’s capacity to 1.2 million TEUs each year.
Bambang said Pelindo I had planned to expand Belawan since 2008 and had presented its plan to the Transportation Ministry.
“We could have started the expansion by now, but we couldn’t because the government has yet to open the tender for our expansion,” he said.
Meutya Hafid, a Golkar Party lawmaker from North Sumatra, said infrastructure development in the region had lagged due to poor planning, overlapping red tape and land acquisition issues.
“Pelindo should be able to carry out expansion of Belawan, but it needs to wait for the central government’s permission. It also lacks supporting infrastructure,” she said. “Belawan used to have a supporting industrial zone, but a dispute over the land’s status scared off investors. They had to pack up and now the zone is deserted. The toll road connecting Medan to Belawan is also empty because companies prefer to use ordinary public roads.”