The Corruption Eradication Commission (KPK) is currently processing its reports on possible foul play in the extension of HPH’s concession in 2014 with state port operator Pelindo II for the operation of Jakarta International Container Terminal (JICT), also a joint venture between the two companies.

The Supreme Audit Agency (BPK) found indications that the contract extension, signed earlier than the contract expiration in 2019, has caused Rp 4.08 trillion (US$302.1 million) in state losses.

BPK also found that Pelindo II did not apply for government approval or a permit for the concession extension, including from the Transportation Minister and State-Owned Enterprises Minister. This led to the government’s decision to postpone the contract ratification.

HPH Group managing director Eric SC Ip stated that so far, the government has not followed through with certain aspects of the new concession agreement.

“If we can settle in Jakarta, we only promise the minister that we’ll look for other opportunities. The thing is that if you cannot solve Jakarta, which is our core investment in the country, then we will not go to other smaller projects,” he said.

The company also operates and invests in a nearby terminal in Tanjung Priok, Koja Terminal. So far, official company data shows that HPH investment in Jakarta in both JICT and Koja Terminal comes to a total of $450 million, with the investment in JICT reaching $330 million and Koja at $120 million.

JICT, which has been jointly operated by HPH and Pelindo II since 1999, houses more than half of the country’s export and import traffic, with the capacity to handle more than 3 million twenty-foot equivalent units (TEUs) annually.

The company boasted that it has an advanced operating system and invested in new equipment to boost the effectiveness of the terminal’s operation.

“We have made some further investment commitment under the new concession agreement terms. Once we resolve the outstanding matters we will do what we have promised to do,” he said, without elaborating on the details of the investment commitment.

Under the agreement, Pelindo II increased its stake in JICT to 51 percent from 49 percent, and HPH will have to pay $250 million in advance to Pelindo II.

Pelindo II, which sought to expedite the construction of Kalibaru Port in North Jakarta, has also raised HPH’s rent from $60 million to $120 million per year.

However, the signing incited backlash from JICT employees, who staged several protests, demanding the annulment of Pelindo’s decision to award a contract to Hutchison. In August, more than JICT 650 workers went on strike in Tanjung Priok to demand a fairer annual bonus, which was allegedly cut after the contract extension.

The union reported that they only received a total of Rp 47 billion in bonus for all employees last year, which was a 42.5 percent decrease compared to Rp 82 billion in 2015, despite a 4.6 percent increase in revenue in 2016.

Even so, the bonus is also based on 7.8 percent of the company’s profit before tax (PBT), while the company’s PBT was down 33.3 percent from $66.3 million in 2015 to $44.2 million in 2016.

Commenting on the matter, JICT workers union secretary general M. Firmansyah said that the union in principle is not against foreign investment.

“But the investment should go through the right procedures, [have a] reasonable price and [benefit] all parties,” he said.

The union workers submitted additional documents to the KPK last week to aid its investigation.

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