JP/19/MONTY2

Containing success at Surabaya's Tanjung Perak port

Shortly before he resigned, president Soeharto appointed businessman Tanri Abeng as the first minister for state-owned enterprises -- a job he held when president Habibie took over.

The assignment was to privatize or semi-privatize government- held industries and the Surabaya container terminal at Tanjung Perak was on Mr Abeng's list.

British-based multinational, Peninsular and Oriental Steam Navigation Company -- widely known as P & O -- won the bidding for 49 per cent of the terminal. It did so on the strength of its record in terminal management in Australia and 18 other countries. P & O was formed in 1837.

TPS has five commissioners, including two from P & O, and five directors. Three are Australian. The president director is an Indonesian, Adji Pamungkas.

Growth has slumped a little in the last year, a factor that TPS finds puzzling. Although the government says value of exports has risen, the number of containers has not. Maybe the contents are more expensive (TPS only knows if they are hazardous or perishable) or perhaps the exchange rate is a factor.

The 37-hectare terminal is mainly a feeder port for Singapore. It is spacious and well organized, and could almost double its capacity before further investment is required.

P & O brought in an Australian computer system. Now agents can check the progress of their cargo through the terminal by cell phone text messages.

Security has been tightened. Employees clock in and out using hand recognition machines that scan their palms -- a difficult system to corrupt.

Although TPS has no direct competition it is not just a licence to print money. As the majority partner the Indonesian government is keen to maximize the workforce -- while its commercial partner has a different objective.

A similar enterprise in Australia would be operating with one- third of the staff employed by TPS. Despite this, labor costs are low. About 75 per cent of running costs in Australian terminals are for labor; in Tanjung Perak they are 25 per cent.

-- Duncan Graham