'Congestion, chaos, graft' in port

Zakki P. Hakim, The Jakarta Post, Jakarta

The overlapping management of state port operator PT Pelabuhan Indonesia (Pelindo) II and 11 separate terminal handling firms (PBMs) in Tanjung Priok port has caused chaos and corruption, a special government team says.

"In pursuit of a profit for Pelindo, the 11 dock operators compete with each other to get the most vessels to use their docks, regardless of their respective abilities and capacity," Indonesia Exporters Association (GPEI) secretary-general and the head of the government-led team investigating the management of the port, Toto Dirgantoro, said.

"Such a practice, eventually, has caused congestion and chaos in the port's overall management," Toto said.

The state break-bulk port operator Pelindo has outsourced the management of its 20 docks in Tanjung Priok to the 11 PBMs since 1999. There are a total of 160 individual operators working at the port.

In theory, the dock operators should stick to their area of expertise and pass on a significant proportion of their profits to Pelindo II, which would then go into the state budget, Toto said.

However, many operators were also trying to handle containers to increase their profits, when the port did not have the infrastructure, causing congestion, chaos and corruption, he said.

In a recent visit to the port, The Jakarta Post saw containers piled haphazardly around the docks, blocking access to the ships.

If the imperfect outsourcing system continued, exporters and importers would continue to be disadvantaged by a high-cost, inefficient system, Toto said.

Dock operators previously had to pay Pelindo an annual fee of Rp 40 billion (US$4.21 million) for each dock they used for a five-year period. However, this year, Pelindo plans to quintuple the fee to Rp 200 billion per annum, per dock, for the next five years. The existing dock operators' contracts expire this year.

However, while the fees were significant, none of the money collected was being used to build the necessary port infrastructure, and neither were companies required to build it themselves, Toto said.

The lack of proper facilities had led to congestion and this in turn fueled the practice of illegal fee charging as shipping firms sought preference for their containers to expedited the process, he said.

The team has recommended the government immediately reinstate Pelindo as the sole direct operator of all docks in the port.

"The government should have made the port benefit-oriented instead of profit-oriented," Toto said.

It should not merely exist as a revenue earner, he said. Instead, Indonesia should learn from China, Thailand and Malaysia; countries that perceived ports as an important economic investment, he said.

A recent report made public on Monday from the Ministry of Transportation revealed illegal fees in Tanjung Priok increased the exporting costs of a 20-foot and 40-foot-equivalent unit (TEUs) container by 105 percent and 112 percent, respectively.

Importing costs for the same containers, meanwhile, were increased by 56 percent and 58 percent.

A recent survey by the Indonesian Textile Association (API) shows that exporters of 20-foot containers on average have to pay an additional Rp 1.04 million (US$109) in illegal fees, compared to the legal Rp 989,600 tariff.

Importers, meanwhile, paid an extra Rp 976,900 in addition to a Rp 1.48 million tariff per 20-foot container, it says.

Indonesia lost $715.79 million last year because of inefficiencies due to illegal fees on 5.5 million TEUs of containers through Tanjung Priok, it says.

Indonesia's total non-oil and gas trade stood at $88.68 billion last year, with non-oil and gas exports reaching a record high of $54.13 billion.

Toto had said earlier that lack of infrastructure in ports prompted local exporters and importers to use Singapore as a hub for international trade, causing a loss of $270 million of transshipment costs annually.

Coordinating Minister for the Economy Aburizal Bakrie formed the special team to look into the country's ports on April 13 after complaints by many private sector firms about the high costs they have encountered.

The team -- comprising senior officials from government ministries, port operators, associations and other stakeholders -- will present its findings to Aburizal on Thursday.