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叵 ，〕 Public Disclosure Authorized Public Disclosure Authorized ASU G-Wormcc~ Public Disclosure Authorized →Public Disclosure Authorized ‘！叵 ，〕 Public Disclosure Authorized Public Disclosure Authorized ASU g-WORMcc~ MPJ fa Go R~ d~. Ev~ e Ck*~ May 1988 MPIS MMCR~E~~~ift FOWBu~co~ S.W. N= meylm MP28 nesmd~B~~P~ ~~bes~ndnild Cd~Ud=Dam~P~ (CUDPIINAKUDPM-AftAme~ F. X~ mua im MP35 h~ TGXP~Adv= Lmmand km Ada E~ IL FW4 1989 mm D~Twmffld~~~ An A. vmuffli Ame 1989 MP37 Ca~ T~ in 8~ ca~ in ~ Ena ud Ena Asia Affic 1989 MP38 Tax ~ å Dm~ C~ S~ R. mm~ ~ 1989 MP39 hd~* E~ 9~ ~ Rap~ cadAdju~pakmam 8. A~ ~ 1989 MP42 An A~ om* Nat= of Uneffi~ W.T. DU= and iftsdLmeb LLag my 1989 MP44 A~PM~Affiul~ offlffi~ m~ F. K~ 1989 MP51 Dwd~ in~ A C«~ vo &udy Fö~ ca Coa end 12. Taft ad Få~~ A ~ ~ber 1999 MP52 ChMm R~ Infinfim and te All~= ofbyg~ in a Sociew ~ 0. Yffid october 1989 Påb P~ to h~ muft~CL lU b~ oftbc End ~ IM and I m~ for Th~ D. Dolla May 1990 MP65 A Study of the Pm in M I aab C. Rmm ]une 1990 MP69 &ffi s~ Få~ in Asia c. ~ Augustiggo /1 ~ = ~ble Mpm n~ &m WVP (ChiefEoan~ Office). Ama Sam dmon~ followmg Do~ 1, 1991 me~ of the ~ PRIVATE SECTOR PARTICIPATION IN THE INDONESIAN PUBUC PORTS December, 1994 This Paper was prepared by J. Van der Ven. It is based on the report prepared by a team of port experts led by J. Lethbridge following a mission to Indonesia in May 1993. Team members were J. Arnold, G. De Monie, C. Doan, S. Sherer and B. Tang. The draft report was discussed with the Directorate General of Seacommunications in November 1993. D. Hawes and P. Guislain reviewed and commented on drafts of the Paper. PRIVATE SECTOR PARTICIPATION IN THE INDONESIAN PUBLIC PORTS Drawing on the experience of the expert team with private participation in ports, this Paper examines how the objective of the Indonesian Government to increase the role of the private sector in the public ports can best be achieved given the characteristics of port activities and functions in general, the institutional structure of the Indonesian port sector and the Indonesian legislative context. In view of the many opportunities for private participation and the varying degrees of complexity possible, the Paper advocates a progressive implementation of the policy starting with the simpler and well tested forms such as the provision of services to the port, following on with schemes for the operation of existing cargo terminals and schemes for the development of the superstructure and operation of new terminals. Because of the risks associated with major schemes involving the development of both the basic infrastructure and superstructure and the operation of new terminals, the Paper advises against pursuing such schemes in the initial stages. The Paper emphasizes that to secure effective private participation a number of key requirements need to be met, including: competition for or in the market, an enabling regulatory basis, the sharing among all parties of the efficiency gains, and consistency in objectives pursued by all levels of government. Because of the considerable scope for competition in the Indonesian port sector and the recent modernization of the shipping and port legislation, conditions for meeting these objectives are favorable. However, what matters most in the end is how the private sector partners are selected (which determines whether agreements are made with the most capable) and what precisely is entered in the agreements (which determines now the benefits of improved efficiency are shared among the port, the port users and the private sector party). The Paper, therefore, recommends that key components of model agreements and of a competitive selection procedure be developed in parallel with the building up of an institutional capability for preparing and negotiating effective agreements. It also argues that if private sector participation is to proceed on a larger scale, action must be initiated without further delay to bring port tariffs in line with costs, and to modernize port labor policies and practices so as to avoid that tariff and labor issues remain an obstacle when transferring port activities to the private sector. PRIVATE SECTOR PARTICIPATION IN THE INDONESIAN PUBLIC PORTS TAzL OF CONIN Page ExecutiveSanunary ................................ i 1 IntroductionandBackgrnd d ..... .................... 1 1.1 TeoIdonesian Ports Sector ........................ 1 1.2 IbisPaper ................................... 2 2 GOI Policies and Objectives in Relation to Private Sector PartiipatoninPorts ............................... 3 2.1 Overall Policles and Objectives of the GOI ............... 3 2.2 Specific Policy Objectives for the Ports Sector ............. 3 2.3 Operational Objectives of the Port Corporaons ............ 4 2.4 The Need to Consider the Objectives and Interests of Other Concerned1Parties .......................... 4 3 How much Private Sector Participation ? .................. 5 3.1 Port Functions and Private Sector Partcipation ............. 5 3.2 Opportunities for Private Sector Participation .............. 6 4 Key Requirements and Principles ...................... 8 4.1 The Need for Competition and a Competitive Process ........ 8 4.2 TheNee dforaRegulatoryBasis ..................... 9 4.3 All Parties ShouldGain ........................... 10 4.4 Government Commitment and Clarification of Objectives ...... 11 5 Establishing the lega nd Regulatory Basis ................ 11 5.1 General ..................................... 11 5.2 Laws and Regulations Directly Related to Ports and Shipping .... 11 5.3 The Port Corporation as a State-Owned Corporation (BUMN) ... 13 5.4 General Rules Regarding Economic Deregulation and Foreign Investment ............................. 13 5.5 The Indonesian Commercial Code of Law ................ 14 5.6 Recommended GOIActions ........................ 14 Page 6 Structuring and Implementing Agreements with the Private Sector 15 6.1 General ......... .. ......... ..... ....... 15 6.2 The MAor Components of an Agreement ................ 16 6.3 Types of Agreements ............................ 18 6.4 Approach for Evaluating Agreemnents ... n............... 20 6.5 The Competitive Bidding Procedure ................... 22 6.6 Structuring. ....... Payments.to . ... 23 the Portor 6.7 Structuring Charges to the Port Users .................. 24 6.8 Recommended001 Actions ........................ 25 7 The Port Tariff and Private Sector Partipation ............. 26 7.1 General ...... ............... .............. 26 7.2 Alternatae Tariff Adjustment Scenarlos ................ 26 7.3 The Indonesian Port Tariff Structure ................... 27 7.4 RecommendedAction ............................ 28 8 Port Labor and Private SectorParticilpation ............... 28 8.1 General .. ........... ........... ...... ...... 28 8.2 The Need for a Comprehensive Labor Reform Strate ....... 29 8.3 Recommended Action . .............. .... 31 9 Institutional Aspects in Relation to Increased Private Sector Particpation ....... ................... 31 9.1 The Strengths of the Puic Sector and Private Sector ......... 31 9.2 The Respective Roles of the Ministry and the Port Corporations 32 9.3 Developing a Capability for Guiding the Implementation ofthePolicy ............ .... ... o..... ...... 33 10 Opportunities for Private Sector Participation in the Indonesian Public Ports ............... .......... 34 10.1 General ..... ....................... ........ 34 10.2 Provision of Port Services ...................... 35 10.3 o perating of Existing cargo Term s. ......... 35 10.4 Development of Superstructure and Operation of New Terminals . 37 10.5 Development of a Systematic Procedure for Expanding Private Sector Participation ........................ 39 10.6 Securing Adequate Funds for the Development of the Sector .... 41 PRIVATE SECTOR iARTICIPATION IN THE INDONESIAN PUBLIC PORTS ExECUrVE SUMMARY I. INrODUCrON A. Government's Policies i Indonesia has assigned a key role to infrastructure towards its goal of sustained economic growth. Three key elements of its strategy for infrastructure services are: (a) providing adequate capacity to ensure that lack of infrastructure will not constrain growth of the productive sectors; (b) dismantling regulations which do not serve a useful purpose; and (c) obtaining private sector participation for the development and operation of facilities. Increased private sector participation is expected to bring greater efficiency and additional investment resources. As ports are a critical link in the trade logistics chain and will require substantial investments in the coming decade, this strategy is particularly relevant to the ports sector. It also represents a logical continuation of past policies in the sector. ii. Since the early eighties, Government has been actively pursuing efficiency improvements in the port sector through a series of policy measures covering successively corporatization, deregulation and commercialization.1/ Overall, these policy initiatives have been successful and performance of the port sector has continued to improve in the past ten years. There is scope, however, for further improvement, in particular through expanded private sector participation. The new maritime law enacted in 1992 and its Implementing Regulations, issued in September 1994, should provide the legal and regulatory basis for greater and effective private sector participation in the port sector. Until now, the role of the private sector in public ports has been limited to stevadoring services, but a pilot scheme to rationalize and expand the role of the stevedores for general cargo terminal operations
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