Reform improves Indonesia port management
Reform improves Indonesia port management
JAKARTA (JP): Organizational reform has enabled Indonesia to
improve the professional management of its ports to the same
level as Australia within 10 years, a World Bank report says.
"Ten years after the reform process started, the port
corporations face the market test," the bank said in its latest
report on world development.
The report continued to point out, however, that: "Competition
promises to be tough: A recent survey of foreign investors ranked
Indonesia's port infrastructure at about the same level as
Australia's but below others in the region, such as Hong Kong,
Malaysia and Singapore."
The report, entitled The World Development Report 1994,
praised the Indonesian government's efforts to introduce reform
of port management since 1983, under which it has "corporatized"
its business entities.
According to the report, "corporatization" means that an
entity is made subject to standard commercial and tax law,
accounting criteria, competition rules and labor law, and is less
susceptible to government interference.
The report, which was launched by Gregory K. Ingram, a World
Bank executive involved in its compiling in a seminar here
yesterday, said Indonesia has made significant progress in
decentralizing its 300 ports.
"In mid-1982 the government decided to decentralize the
management of 90 of its ports by creating four new public port
corporations, headquartered at the four largest ports," the
report noted.
Not smooth
Like other countries, Indonesia's transformation of business
entities did not run smoothly, the report said.
Managers, for example, did not yet have a clear understanding
of their responsibilities and accountability and lacked the
autonomy to implement reforms they thought were needed, it said.
"These problems had been addressed by 1988, when an effective
cost control program lowered expenses by five percent and
increased revenue by 20 percent for the largest port
corporation," it said, adding that between 1987 and 1992, revenue
grew almost twice as fast as expenses.
Ingram told the seminar that the government should be in
position both to maintain the "corporatization" and to create a
business climate which encourages private involvement.
He reminded those attending the seminar that according the
World Bank's survey, the causes of poor performance in the
infrastructure business in developing countries, among others,
are inadequate management, misallocated investments,
unresponsiveness to users and technical inefficiency.
He, therefore, suggested that a government manage its
infrastructure like a business, not a bureaucracy.
"The provision of infrastructure needs to be conceived and run
as a service industry that responds to customer demand," said
Ingram at the seminar which was organized by the Faculty of
Economics of the University of Indonesia.
Anwar Nasution, a lecturer at the university, expressed his
concern that the government is not transparent or open enough in
its treatment of the private business sector.
He said that in addition to the complicated bureaucracy,
another problem was the government's habit of giving special
treatment to certain business conglomerates in relation to
dealing with infrastructure projects.
"I believe that if disclosure is required in the licensing
procedures for the private sector, the infrastructure business
will grow in a healthy way," Anwar said. (fhp)