Govt to cut port fees

Govt to cut port fees

Anissa S. Febrina and Urip Hudiono, The Jakarta Post/Jakarta

Indonesian exporters and importers have been cut some slack amid
recent economic downturns as the government plans to soon reduce
the cost of container handling charges (CHC) at ports by an
average of 30 percent.

After weeks of negotiations, industry associations, port
operators and several related ministries set in a meeting on
Friday a CHC of US$70 per 20-foot container with a maximum
terminal handling charge (THC) of around 35 percent.

The new estimation would bring down the total THC cost from
$150 to $95 per 20-foot container, said Indonesian Shipowners
Association chairman Oentoro Surya who attended the meeting.

CHC is the main component for foreign shipping companies in
deciding the amount of the terminal handling charge (THC), which
represents a burden to exporters and importers apart from actual
shipment costs.

THC is a kind of surcharge a shipping line imposes on its
customers, over and above the overall ocean freight rates, to
help cover extra operational costs in terminals such as paying
illegal fees to port operators and security officers.

Separately, Minister of Transportation Hatta Radjasa explained
that the finalization of the new scheme was scheduled for Monday
after talks with port operators.

Previous data on container handling costs reveals that a 40-
foot container would cost $40 more, while a charge of 75 percent
of the full cost was applicable for an empty container.

The decision was welcomed by industry players, who said it
could be the start of the realization of the long-promised
reduction in Indonesia's high-cost economy.

With an annual total of 6 million 20-foot containers coming in
and out of the country's ports, exporters and importers could
save at least $350 billion from the reduction.

The new scheme would boost the competitiveness of Indonesian
products on the global market. As a comparison, exporters would
pay a THC of $90 for a 20-foot container and $135 for a 40-foot
container in Malaysia, or $107 and $158 respectively in
Singapore.

Textile Producer Association chairman Benny Soetrisno said
that the reduction would help the textile industry be more
competitive. "It could save some 250,000 textile workers from
possible layoffs," he added.

Meanwhile, Indonesian Furniture Producer Association chairman
Sae Tanangga Karim explained that even if the lower CHC reduced
operating costs by only 2 percent, it could still help industries
to survive.

The furniture industry ships between 15,000 to 20,000 20-foot
containers every month, from both exports of products and imports
of raw material.

"We see this as a good start, as long as the government is
consistent in monitoring its implementation by making sure that
there will not be any more extra charges," Tanangga said.