Hutchison still committed to RI despite criticism

Rendi A. Witular, The Jakarta Post, Jakarta

Hong Kong-based seaport operator Hutchison Port Holdings Group said it was still committed to developing the seaport in Tanjung Priok in North Jakarta owned by its subsidiary PT Jakarta International Container Terminal (JICT) into a regional shipping hub.

Managing Director of Hutchison John Meredith told The Jakarta Post on Monday that the commitment was still in place despite criticism by a senior governmental official who recently accused the company of failing to deliver on its promise to develop JICT.

Meredith said such an accusation had resulted from a lack of understanding about the port management.

"The problem is that they (the official) haven't really understood what we're doing here. JICT is under construction and therefore, until it's finished they can't really say we haven't done what we are supposed to do," said Meredith.

Meredith was speaking on the sidelines of an official launching ceremony of a new 513-meter deepwater quay which would link JICT facilities with the adjacent Koja Container Terminal.

JICT is 51 percent owned by Hutchison with another 48.9 percent held by state-owned Pelindo II and the remaining shares by the company's employee cooperative. Pelindo is also the majority shareholder of Koja Container Terminal.

Hutchison bought the 51 percent stake from the government in 1999 for US$215 million.

Under the 1999 deal, Hutchison promised to invest $340 million over a period of 20 years. However, last week, Ferdinand Nainggolan, a deputy at the State Ministry of State Enterprise, accused Hutchison of failing to make the investment as pledged in the 1999 deal.

For instance, he said Hutchison had promised to invest $28 million in information technology by 2001 but the company had yet to realize the investment.

However, the company denied Ferdinand's allegation, saying it had thus far invested up to $400 million in the port.

According to Ferdinand, although JICT is now controlled by Hutchison, the government still had the so-called "golden share", which gives it the right to annul the divestment and buy back the shares.

Ferdinand warned that the government would exercise that right, unless Hutchison complied with the 1999 deal.

Meredith said the investment issue was one of several problems confronting Hutchison in operating JICT.

He suspected that the problems were being orchestrated by certain competitors in the region who did not want to see Hutchison develop an international shipping hub in Indonesia.

"They (the competitors) will miss the transshipment business from this country. If our activities can be stopped they would be very happy," said Meredith.

He did not mention the competitors but Singapore and Malaysia are known as shipping hubs in the region.

Turning JICT into a full-service international seaport will help Indonesian exporters save time and money as cargo can be shipped from the port directly to overseas destinations without stopping over in Singapore or Malaysian ports.

Currently, 75 percent of ships carrying goods from Indonesia have to stop over in Singaporean and Malaysian ports, where the goods must be reloaded onto larger vessels which Indonesian ports are unable to accommodate.