Sixth Symposium(Presentation of Tanjung Perak: Tanjung Perak Indonesia Port Corporation III）

PRIVATIZATION IN TANJUNG PERAK PORT:
THE EXISTING AND FUTURE FIGURE

I. INTRODUCTION

Indonesia is an archipelago country with 17,000 islands spanning over 3,000 miles of the ocean area. That is why the sea transportation and ports’ roles become strategic for supporting national and international trade.

Indonesian port management has a long history. Started from the Indonesian Independence day in 1945, the ports were fully managed and operated by government through establishing a business entity such as State Company, Public Company and Limited Company.

Based on Government Regulation No.70 in 1996, ports in Indonesia are a part of the national system and divided into two kinds of port, public and special ports. The Indonesian Government established and managed all public ports, whereas the special ports are established and managed by private sectors. The government offloaded the commercial ports to the PT. (PERSERO) Pelabuhan Indonesia I, II, III and IV (hereinafter referred to as Indonesian Port Corporation), which has head office in Medan, Jakarta, Surabaya and Ujung Pandang, to operate them. The government operates the rest of the ports, which is intended for non-commercial purposes.

PT. (PERSERO) pelabuhan Indonesia III or Indonesian Port Corporation III was established in Surabaya and manages 19 branches ports and 3 subsidiary companies, which spread over eight provinces namely Central Java, East Java, Bali, West-South East Nusa, East-South East nusa, South Kalimantan and Central Kalimantan.


II. PRIVATIZATION IN PT. (PERSERO) PELABUHAN INDONESIA III

Along with an urgent need to fulfill the dynamism of business environment changes and to create a high level of efficiency, a powerful port management, and excellent performance as well, Indonesian Port Corporation III execute privatization program or involves the private sector for participating in its port activities.

In accordance with state law and government regulation, there are many segments in port management could be cooperated with private sector except navigational channel, port basin, and land management.

The following are the privatization models that are generally implemented in Indonesian ports:
1. Partial Activities Privatization, involving the private sector to take over a part of port business activities such as stevedoring, trucking, stacking, and others.
2. Partial Facilities Privatization or Terminal Operator which is the state-owned company hand a part of the terminals over to the private sector to manage it as a Terminal Operator through competitive bidding or appointing a strategic partner. It permits the private sector to operate all activities and management at certain terminals in a port in the long term.
3. Capital Privatization has two kinds of strategies:
Ø Direct Private Placement, in which the private sector is permitted to purchase a part of the port share, usually get 49% of the share, and we are involved in managing the port.
Ø Go Public, which is the state-owned company offers its share to the public through the Initial Public Offering (IPO) and continue it by Right Issues.
4. It is permitted that the private sector makes an investment to build and manage some new ports.
5. A port as a part of a state-owned company is totally sold to the private sector so that the private sector will has 100% share of that company and the management.
6. The others: it is permitted that private sector manages the port state-owned company so that the government authority as a single stockholder can be minimized.

There are many purposes which could be attained by executing privatization program as follows:
・ Increasing state income
・ Increasing income of State-owned Enterprises (SOE) which is utilized for new investment
・ Increasing the SOE efficiency and competitiveness
・ Creating a transparency of corporate management
・ Encouraging the growth of national capital market
・ Transferring and upgrading of know how, technology, and networking from strategic partners.

To enlarge the company profit and increase public service the Indonesian Port Corporation III has divested a number of shares of the most prospective business units by establishing a subsidiary company. The policy permitting private sector managing several port activities through a privatization program is concreted by executing two kinds of strategy. First, direct private placement strategy, and second, operational cooperation strategy.

II.1 DIRECT PRIVATE PLACEMENT STRATEGY FOR PT. TERMINAL PETIKEMAS SURABAYA

The container terminal in Surabaya opened for business in 1992 when the first container gantry cranes were commissioned on the new 500-meters container wharf. Since then the facility has established a justifiable reputation as an efficient and most effective terminal ably servicing the needs of the importers and exporters of Eastern Java and Eastern Indonesia. In 1997, it was realized that the terminal would have to expand to meet the growing demands of trade and a program to double its existing capacity was put in place.

In April 1999, the container terminal division of Indonesian Port Corporation III was cooperated as PT. Terminal Petikemas Surabaya and then privatized with P&O Australia Ports purchasing a 49% shareholding in the Company. Today the terminal has 1,000 meters of quay line with a depth alongside of 10.5 meters (capable of being dredged to 12 meters) and 450 meters of quay line with a depth alongside of 7.5 meters. The container yard has been expanded and has a holding capacity in excess of 20,000 TEU per day. A major equipment procurement program was completed in early 2002 and now the terminal is ready to handle up to 2 million TEU per year.

The Company’s Commissioners and Directors, nominated from both shareholders, are working toward improvement in productivity and levels of service, which will be in line with world’s best practice. The Company is building on this foundation to create an organization that not only provides guaranteed levels of service but where the customer’s expectations are at least met if not exceeded.

II.2 FUTURE FIGURE IN THE PORT OF TANJUNG PERAK BRANCH

Indonesian Port Corporation III has a plan to make Tanjung Perak Port into Terminal Operator. This concept offers cooperation figure with private sector in managing wharfs, terminals, warehouses, and other port facilities.

It is intended to create a healthier and more transparent competition because this opportunity could be attained by the private sector, which has competence in capital structure and managerial capability only. It is expected that the private sector could be more active in decision-making and more perceptive toward the consumer’s interests.

The Terminal Operator concept, which will be applied at Tanjung Perak Port, is a combination of two concepts, Tanjung Priok Port-like concept and Tanjung Perak Port one. This concept takes all succeeding in Terminal Operator implementation at Tanjung Priok Port and abandons the bad ones.

III. ISPS CODE IMPLEMENTATION at TANJUNG PERAK PORT

The International Maritime Organization has realized for a long time ago that ships are most seriously affected by pirate attack and terrorism, so it was motivated to generate the International Ships and Port Facility Security Code (ISPS Code).

ISPS code is a main part of SOLAS Chapter XI-2 in 1974 and gives an inspiration for IMO to separate an understanding of safety on one side and security on the other side and include port facility security into the maritime sphere.

The Code is an accreditation toward service standards in the port area. Therefore, it is expected it will produce a better service for all consumers and efficiency in services.

The IMO Convention has got ratification by the Indonesian Government through a Presidential Decree No. 65/1980 and Conclusion of Communication Minister No. KM 33/2003 concerning ships and port facility security in the region.

We, Port of Tanjung Perak, are ready to apply this Code on July 1st, 2004, have started appointing an RSO (Recognized Security Organization) who has a duty to perform the implementation, evaluation and review toward ship and port security. We have provided physical equipment to support ISPS Code implementation, these are:
Ø Monitoring instruments: Closed Circuit Television (CCTV) with 32 cameras and additional 20 cameras in the near future
Ø Additional illumination lamps
Ø Fence construction
Ø Enter/exit gates
Ø Security officers

Now we have the Statement of Compliance (SoC) from the Indonesian Directorate General of Sea Communication. However, to comply with the ISPS Code, Tanjung Perak Port does not accomplish it as comprehensive but partial. The SoC is only subjected toward three terminals, North Jamrud terminal, passenger terminal of Gapura Nusantara and Gapura Surya, and East Berlian terminal, whereas the other terminals, like South Jamrud, East Nilam, West and North Berlian, Mirah, and Kalimas terminal, servicing non-SSC (Ship Security Certificate) vessels, have not complied with the ISPS Code yet. It was in order that the terminals, which have the SoC already, keep sterile and comply with the ISPS Code.

In addition, PT. Terminal Petikemas Surabaya and the other four-port facility providers in the area get the certificate, too. As a follow up, we will raise the standard of operations for people and equipment in the compliant locations.