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Govt in policy flip-flop over trade hub plan

The government has decided to delay a plan to introduce Kuala Tanjung Port in North Sumatra as Indonesia’s new international marine freight hub in the western part of the country amid concerns about the cost of logistics and the limited infrastructure

Farida Susanty (The Jakarta Post)
Jakarta
Tue, January 24, 2017

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Govt in policy flip-flop over trade hub plan

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he government has decided to delay a plan to introduce Kuala Tanjung Port in North Sumatra as Indonesia’s new international marine freight hub in the western part of the country amid concerns about the cost of logistics and the limited infrastructure.

The decision, made legal by the issuance of Transportation Ministerial Decision No. KP 901/2016 on national ports planning (RIPN), contradicted previous regulations that designated Kuala Tanjung as the country’s international port hub, including Presidential Regulation No. 26/2012 on the national logistics system (Sislognas).

The ministerial decision, which was signed on Dec. 30, 2016, but only made public recently, has also designated Jakarta’s Tanjung Priok, the nation’s busiest seaport, as the new international port hub in western Indonesia, replacing Kuala Tanjung.

The ministry argued that the previous choice to make Kuala Tanjung Port the international hub was “unfit” because of the predicted 1.31 percent surge in logistics costs with the traffic to the port, as well as the lack of supporting infrastructure.

Transportation Minister Budi Karya Sumadi, however, said that the change was just a matter of timing.

“[The decision] will change nothing in the Sislognas,” he told reporters on Monday. “It’s only a matter of which one we will put first [as a hub] and the pilot project will take place in Jakarta.”

With the new approach, the ministry hopes the export, import and transshipment activities would take place mainly at Tanjung Priok.

Budi also said that he expected the state port operator, Pelindo II, which managed Tanjung Priok, would consolidate the goods from the other ports in the western area of Indonesia.

Tanjung Priok port has long been the largest container port in Indonesia and handles almost half of the total Indonesian container volumes. Its container traffic last year increased to 5.4 million twenty-foot equivalent units (TEUs) from 5.2 million TEUs in 2015. Of that figure, international traffic made up to 3.8 million TEUs in 2016, an increase from 3.7 million TEUs in 2015.

The ministry itself has anticipated an 11.1 percent surge of goods traffic in the country’s ports to 929.8 million tons annually by 2020 from 836.4 million tons annually in 2015. By 2030, the figure is expected to jump to 1.1 billion tons annually.

According to the regulation, the port will also be complemented by the operation of a deep sea port to be built in Patimban, West Java, which is a flagship project involving both Indonesia and Japan.

Kuala Tanjung Port, meanwhile, which is currently being developed by another state port operator, Pelindo I, is 68 percent complete. Pelindo I itself has so far received support from the Netherlands-based Port of
Rotterdam Authority to develop the port.

Pelindo I corporate secretary M. Eriansyah said that Kuala Tanjung would remain important for its strategic location. He denied the change of status would disrupt investments.

“The infrastructure for Tanjung Priok already exists, the supporting [industry] as well. To develop that, Kuala Tanjung will need five to 10 years,” he said.

Meanwhile, Indonesian Logistics Association (ALI) chairman Zaldy Masita criticized the government’s abrupt change of plan, as the unclear direction of its long-term development plan might affect the business climate.

“The Sei Mangkei industrial area, located near Kuala Tanjung, already saw some major companies such as Unilever invest in the area as they assumed that the port would be an international hub. The change of plan is very dangerous as it gives uncertainty to business players,” he said.

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