Improving Port Competitiveness<br />Nathan Associates Inc.<br />IndII Wrap-up Conference<br />14th June 2011<br />
Requirements for Improving Port Sector Competitiveness<br /><ul><li>Increase competition
Continue institutional and regulatory reform
Provide sufficient port capacity
Institute near term measures to mitigate congestion</li></li></ul><li>Increase Competition<br />Government Regulation 61 d...
Remedies for Increasing Competition<br />Revise Land Law to eliminate port land management rights assigned to Pelindos to ...
Continue Institutional and Regulatory Reform<br />Issue Port Policy – national port policy does not exist<br />Mitigate la...
Provide Sufficient Port Capacity<br />Projected cargo growth is robust for all projection scenarios, especially for contai...
Reasons for Projected High Growth of Container Traffic<br />Government of Indonesia and IMF forecast real GDP growth of 6....
Implications of Traffic Forecast <br />By 2020 Indonesia container traffic will be more than double 2009 volumes and will ...
Short Term Capacity Expansion Measures – Tanjung Priok<br />Present Situation<br />Vessel Handling Productivity Reasonable...
Short Term Capacity Expansion Measures – Tanjung Perak<br />Present Performance<br />Vessel handling productivity reasonab...
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Nathan associates inc improving port competitiveness june 14 2011

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Transcripts - Nathan associates inc improving port competitiveness june 14 2011

  • 1. Improving Port Competitiveness<br />Nathan Associates Inc.<br />IndII Wrap-up Conference<br />14th June 2011<br />
  • 2. Requirements for Improving Port Sector Competitiveness<br /><ul><li>Increase competition
  • 3. Continue institutional and regulatory reform
  • 4. Provide sufficient port capacity
  • 5. Institute near term measures to mitigate congestion</li></li></ul><li>Increase Competition<br />Government Regulation 61 declares objective of “eradication of monopolies”, but provisions in the Shipping Law<br />Preserve Pelindo “exploitation” monopoly, though monopoly is limited to:<br />Currently provided facilities and services<br />Constrain the development of competition <br />Special terminals prohibited from handling third party cargoes<br />Except under certain conditions (emergency or facilities and services in the port are ineffective or inefficient)<br />Permits for handling third party cargoes given only for 5 years and are extended only if conditions under which they were given continue <br />Negative investment list limiting ownership interest to 49% for foreign investment<br />Pelindos have antitrust immunity, though their JVs fall under KPPU jurisdiction<br />No prohibition against Pelindo “ownership” of additional facilities within and outside their jurisdictions <br />
  • 6. Remedies for Increasing Competition<br />Revise Land Law to eliminate port land management rights assigned to Pelindos to reflect Shipping Law no. 17’s intent port authorities to have land management responsibility<br />Revise Special Terminal regulations to allow permit extension on the basis of meeting certain performance standards <br />Remove maritime terminals from Negative Investment List to encourage investment from foreign firms (in partnership with local firms)<br />Assert the Law’s limitation on Pelindo activities<br />Pelindo activity limited to exploitation of current facilities (Art 344(3))<br />Exploitation defined in the Law as providing port services and port related services (Art 90(1)), including services to vessels, passengers, and cargo (Art 90(2)) and providing facilities (Art 90(3))<br />Eliminate Pelindo antitrust immunity<br />Restrict the extent of ownership Pelindos and other port business entities may have if it means they would otherwise extend their market dominance <br />
  • 7. Continue Institutional and Regulatory Reform<br />Issue Port Policy – national port policy does not exist<br />Mitigate lack of clarity and contradictions in Shipping Law no. 17 by enhancing Government and Ministerial regulations<br />Transform port authorities and port management units to General Service Organisationsto reflect global best practice in port administration:<br />Governance by board of directors<br />Autonomy in decision-making relative to budgeting and finance, tariff setting, personnel compensation systems<br />Organisationalstructure<br />Develop institutional capabilities of port authorities<br />Prepare port authority operations toolkit, to include:<br />Model port operational regulations<br />Model concession and lease agreements<br />Tariff analysis model<br />“Experiential” capacity development exercises, including<br />Actual preparation of 1 or 2 local port master plans<br />Implementation of 1 or 2 PSP transactions<br />Institute “thematic” training programs <br />
  • 8. Provide Sufficient Port Capacity<br />Projected cargo growth is robust for all projection scenarios, especially for containers<br />Congestion highly likely in the near term in Tanjung Priok and Tanjung Perak<br />Increased highway congestion also expected from economic corridor development<br />Indonesia Container Forecast, 20015-2030 (000’s TEU)<br />
  • 9. Reasons for Projected High Growth of Container Traffic<br />Government of Indonesia and IMF forecast real GDP growth of 6.5-7.0%<br />Economic development corridors (MP3EI) will accelerate growth and also directly affect the volume of container traffic due to:<br />overall higher GDP growth of at least 1% per year<br />policies for promoting increased value-added will shift some commodities exported in bulk to processed materials shipped in containers<br />Indonesia has had high growth of container traffic since 1990<br />Substantial potential for domestic and some international general cargo to shift to containers<br />Favorable demographic conditions in a larger productive workforce and lower dependency ratios<br />Increases in GDP per capita will generate a burgeoning middle class that in the next 10 years could double or triple<br />
  • 10. Implications of Traffic Forecast <br />By 2020 Indonesia container traffic will be more than double 2009 volumes and will double again by 2030<br />New and expanded container terminals is urgently required in many locations<br />Increased container volumes will likely lead to need for new container hub ports such as in Kuala Tanjung and Bitung -- feasibility of development of a new container hub ports needs further study<br />Slower growth of dry and liquid bulk traffic means that total cargo tonnage will only increase by 50% by 2020 and another 50% by 2030<br />Additional bulk port capacity will be needed in some locations and may be undertaken by private sector<br />
  • 11. Short Term Capacity Expansion Measures – Tanjung Priok<br />Present Situation<br />Vessel Handling Productivity Reasonable<br />No Meaningful Ship and Truck Waiting<br />Limited Availability of Berthing Windows<br />Shortage in Storage Space (CY)<br />Development of North Kalibaru Terminal<br />Technical Obstacle – Massive Deep-Sea Reclamation; New Breakwater; Elevated Access Road<br />Financial Obstacle – Likely cannot be financed with existing tariff levels<br />Capacity from new terminal not available for 3-5 years<br />Short term solutions needed<br />Short Term Solution<br />Integrated Off-Dock CYs & Dock Rehabilitation<br />Convert Marunda Depots to Shipping Line-Controlled CYs<br />Direct Ship-Side Transfer to CYs<br />Ship-Side Buffer Operated by Off-Dock Toploaders<br />Special (Automated) Gate<br />Special Tariff<br />
  • 12. Short Term Capacity Expansion Measures – Tanjung Perak<br />Present Performance<br />Vessel handling productivity reasonable<br />No meaningful ship and truck waiting<br />Shortage in storage space (container yard)<br />Development of Lamong Terminal <br />Technical obstacle– deep-sea reclamation; deep-sea (-17 m) wharf; 2.7 km causeway/bridge; new access road<br />Multipurpose – not providing capacity for international containers<br />Short term solutions needed<br />TPS Longer-Term Expansion<br />Extend Berth from 1,000 to 1,500 m<br />Convert adjacent area now used as depot for storage of containers<br />Short Term Solution<br />TPS Immediate Expansion<br />Allows Mixed Export/Import Storage<br />Convert warehouse to container yard <br />Develop 7 ha area in front<br />
  • 13. Other Short Term Capacity Enhancement Measures<br />Institute truck appointment system and congestion pricing/discount program<br />Institute intelligent logistics system consisting of<br />Electronic track and trace of trucks<br />Secured truck staging areas/distribution centers on highway corridors<br />Control truck movements along routes<br />Truck entry control to urban areas around ports<br /> Coastal RoRo Ferry system to complement highway corridors<br />
  • 14. Improving Port Competitiveness<br />Thank you!<br />Terimakasih!<br />Nathan Associates Inc.<br />IndII Wrap-up Conference<br />14th June 2011<br />

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