Port Partnership Seminar - Jakarta

Port Partnership Seminar, Jakarta

21st and 22nd March 2005By Capt. Kees WeststrateSr.Business DevelopmentManager

Port Partnership 2005

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Content

1. Introduction

2. Findings of Port Analysis Model per theme

3. Cobwebmodel

4. Issues, Challenges and Recommendations

5. Conclusions


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Introduction

City of Rotterdam and the City of Jakarta have a sister city relation since 1983

The Port of Rotterdam is a corportised organisation: 100% of its shares are owned by the City

City of Rotterdam and the Port of Rotterdam have offered the Port Analysis Model to the City of Jakarta: City paid all expenses Port provided manpower


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Port Analysis Model (1)

The Port Analysis Model (PAM) is a strategic analysis and benchmarking instrument for ports within their surroundings

Different units and dimensions of analysis are combined in PAM


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Port Analysis Model (2)

The core of the model is a quantified checklist is built up using a tree-structure

The theme’s of the PAM Jakarta study are: general characteristics, port characteristics, institutional environment, investment climate, geography and hinterland connections


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Content

1. Introduction


3. Cobwebmodel


5. Conclusions


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General Characteristics

Indonesia still faces some economical development challenges (IMF, trade facilitation et cetera)

Indonesia has enormous potential due to huge national resources

Cheap labour is a major competitive advantage for production and processing industries

Tj. Priok has a central location on Java near the main production and consumption centres

Tj. Priok has the potential to operate as a hub


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Port Characteristics (1)

Variety of cargo activities as:

Containers

General cargo

Ro-ro

Dry and liquid bulk

Passengers


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General:

Two container terminals up to international standards

One multi-purpose terminal (containers and general cargo) and several general cargo terminals

Variety of nautical/maritime services such as dry dock, ship’s cleaning and repair yards


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Nautical accessibility:

Port entrance too small for the larger container vessels

Number of anchored vessels nearby entrance channel and between the breakwaters can create dangerous situations

ISPS approved, however no restrictions to enter several facilities without identification


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Port characteristics (4)

Infrastructure:

Land access problems with only two gates (container terminals have their own)

Infrastructural challenges

Multitude of conflicting port development plans


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Institutional environment (1)Objectives Port of Rotterdam High quality and a reliable services Good nautical accessibility Sufficient space for developments Realisation of sufficient economies of scale Safe and secure port Sustaining and developing clusters of activities:

stimulating co-siting and innovation Un-locking of multi modal connections to the

hinterland (dedicated rail and inland shipping)

→ In order to achieve these collective goals all the stakeholders have to be involved and be in agreement with each other: stakeholder management!→ Both the local and central government are actively involved in the port→ The Port does what is has to do to stimulate and facilitate business, but leave to the market what can be done by the market


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Institutional environment (2)

Role Pelindo is not clear; conflict of interest:

Pelindo acts as landlord port manager

Pelindo acts as terminal operator: competing with own clients

Within the Pelindo organisation various ports are competing with each other


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Institutional environment (3)

Government involvement is not in balance:

Central government controls Pelindo

Local provincial government is not involved

Co-operation and co-ordination between different government agencies is limited

Challenge: according to publications in Kompas (18-02-05) all Pelindo organisations will be merged into one organisation and it will be possible for local government (s) to participate through shareholding


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Investment climate

Favourable taxes and incentives for foreign investor

High number of Asian foreign direct investors

Port seems to be less open for foreign investor (exceptions for HPH)

Jakarta provincial Government is investor-friendly

Legally uncertainty is still a major issue (example: ownership of land only for Indonesian nationals)


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Geography

Port is surrounded by the city

The only opportunity to extend the port is through land reclamation

For the port extension it is necessary to reorganise the infrastructure in the Koja-area


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Extension plans Jakarta New Port


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Hinterland connections (1)

By road:

From the province of West Java, (Bandung area) the main producing area for garments, textile and food approx. 80% of export is via Tj.Priok mainly by road.

Small truck deliver non-containerised cargo via Puncak pass with dense traffic

Container trucks are routed on toll road via Cikampek


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Roads on Java


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Road and traffic Jakarta


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Hinterland connections (2)By rail:

There is an excellent rail connection between Bandung Dry Port and Kampung Koja.

There is no rail connection from Kampung Koja to the container terminals in Tj.Priok

Transit from rail terminal to container terminals vary between 7 and 14 days

Rail transport is more expensive than by truck (due to more handlings and higher lifting costs)

Only normal 20´and 40´containers can make use of rail highcubes are not accepted (tunnels)

No governmental incentive system for modal shift


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Rail terminal Bandung


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Hinterland connections (3)

Inter-insular traffic:

Most of operations take place at smaller terminals, mixed with international cargoes

Volume in 2004: 29.1 million tons

Most cargo is not containerized

Customs have problems with identifying international and domestic cargoes


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Content

1. Introduction


3. Cobwebmodel


5. Conclusions


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Cobweb model: scores per themeCobweb model

Total score

0123456789

10General characteristics

Port characteristics

Institutional environment

Investment climate

Geography

Hinterland connections

Tanjung Priok


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Content

1. Introduction


3. Cobwebmodel


5. Conclusions


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Issues, Challenges and Recommendations Nine topics have been selected:

1. Strategy2. Legal framework3. Comprehensive co-ordination4. Cost and benefit allocation5. Port ownership and control6. Access improvement7. Transportation efficiency8. Land acquisition9. New port development


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Deciding upon one national strategy for the transportation and port sector Clear policy framework stating concrete goals,

strategic considerations and pre-conditions for development;

Providing criteria for deciding on the priorities for port and infrastructure development;

Local (master)plans on provincial and municipal level have to fit within policy framework;

Concrete goals and plans make good planning and control possible!

①


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Improvement of legal framework for transport sector Reduce lack of clarity: providing security for private

sector (especially foreign investors);

Clear allocation of tasks and responsibilities for different governmental organisations: government governance*;

Short term issues: extension of toll roads require governmental licences which is time-consuming and the central government has marked the port as a vital asset, preventing local government involvement.

②

* the processes and systems by which a government operate


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Balancing acts: trying to reach an equilibrium in central and local government control over the port

Today central government involvement is too

extensive and local government is too limited

②


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Creation of a comprehensive co-ordination structure for the municipality/provincial government and central government

Intensify and secure information exchange (knowledge management);

Governmental planning & control (co-ordination, registration and evaluation of activities);

Discussion platforms (continuous consensus building).

③


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Cost and benefit allocation

Financial arrangements to fairly distribute costs/benefits;

Local involvement, local financing, local flexibility;

Example Rotterdam: Collects port dues from shipping lines Rental income from port premises Port of Rotterdam does not pay any taxes over

their income

Port of Rotterdam pays a fixed contribution of € 41.6 million to the Municipality of Rotterdam.

④


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Port ownership and control Good port governance: landlord port (facilitate and stimulate);

Secure stakeholders interest as: Local government Central government NGO’s (Environmental, labour unions etc) Private sector parties

Organising proper control (checks and balances)

Resolve conflict of interest Pelindo II (terminal participation)

Rotterdam example: No involvement and participation in terminal operations Keeping neutrality to all customers Proper supervision structure for port management

organisation (balance between autonomy and accountability)

⑤


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Port Management Models⑤

Most ports in the world, like the Port of Rotterdam,

operate like a landlord port.


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Improve port access

A major bottleneck is the land-side access: solve this problem and the competitiveness will be increased significantly.

⑥


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An efficient transportation sector contributes to the competitiveness of a nation

⑦


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An efficient transportation sector contributes to the competitiveness of a nation Trucking: quality, insurance, legislation;

Rail: availability, government incentives;

Rely on economic / business imperatives (costs, time, reliability);

Example: feeder service Tj. Priok – Cirebon Economic advantages by reducing transport

time to Europe; Lower costs; Custom export document in Cirebon (not in

Jakarta).

⑦


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Land acquisition possibilities for infrastructure development Jakarta Raya is faced with several infrastructural

challenges related to quality and availability;

Speedy infrastructure development is crucial;

‘Fast and clean’ land acquisition is a pre-condition to speedy infrastructure development;

Japanese government and private companies pushing to speed up infrastructural developments by financing study and financing toll road accesses.

⑧


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New port development: possible planning

Short-term Mid-term Long-termShort-term Mid-term Long-term

Optimise Tj.Priok

Improve land- and sea side access

Development of complementaryport facilities like in Marunda

Realisation of comprehensive infrastructurenetwork

Start constructionof Jakarta New Port(phased development)

Realisation of Jakarta New Port:Jakarta as mainport

Positioning Jakarta as a world port

⑨


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Multiporting

DeepseaCarrier A

DeepseaCarrier B

port 1

port 2

port 3

port 4

Mainporting

DeepseaCarrier A

DeepseaCarrier B

port 1

port 2

port 3

port 4

⑨


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Content

1. Introduction


3. Cobwebmodel


5. Conclusions


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Finding the right solutions means bringing all the building blocks together

Strategy

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Knowledgeexchange

LegalFramework

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Governancestuctures Port

managementmodel

…..

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Infrastructuredevelopment

Planning &control

Communication

Co-operation

Port development

Co-ordination

….

….

Jakarta-Raya has an enormous potential. If all stakeholders can agree on common goals and co-operate efficienly, this potential can be unlocked.


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Implementing improvements requires having a cohesive phased plan of approach (program management)

Port Partnership Seminar - Jakarta

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