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)