'Congestion, chaos, graft' in port

'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.