Volume 11 Number 3 2012 Port of Batam Revised: Options In The Middle of Policy and Market Dynamics Haemiwan Z. Fathony Agung Wicaksono School of Busines and Management, Institut Teknologi Bandung Abstract Despite having similar inherited factors such as strategic location doesn't make the Port of Batam to have similar performance and capability like its neighbouring ports in Malaysia and Singapore. This study explores the possible options for Port of Batam in the middle of market and policy dynamics for ports in the Malacca Strait. This study uses a combination of competitive advantage of the nations, market rivalry, and resource based theories to understand the phenomenon. The study develops several options based on main resources such as land and water area. There are several business opportunities in the water area such as ship to ship transfer and anchoring business. Port of Batam may also look at the terminaling opportunity on the water, i.e. by implementing the floating container, storage, and transshipment terminal (FCSTT) concept along with the implementation of the same concept in the form of floating, storage and offloading (FSO) for the liquid and gas cargo, thus tapping the oil transfer market in the Malacca Strait as well. Keywords: port of batam, malacca strait, sea port business, transhipment, floating container terminal Abstrak Pelabuhan Batam memiliki faktor warisan lokasi strategis yang sama seperti pelabuhan di Malaysia dan Singapura, namun tidak membuatnya memiliki kinerja dan kemampuan yang sama dengan para tetangganya tersebut. Studi bermaksud mengkaji opsi-opsi yang tersedia bagi Pelabuhan Batam di tengah dinamisnya kebijakan mengenai pelabuhan di Selat Malaka maupun dinamika pasar di kawasan tersebut. Penelitian ini menggunakan kombinasi pendekatan keunggulan kompetitif negara, persaingan pasar, maupun perspektif sumber daya internal untuk memahami persoalan yang terjadi. J u r n a l M a n a j e m e n T e k n o l o g i 295 Port of Batam Revisited: Options In The Middle of Policy and Market Dynamics Port of Batam Revisited: Options In The Middle of Policy and Market Dynamics Serangkaian opsi berdasarkan sumber daya utama berupa lahan dan area perairan menjadi pilihan This study wants to explore the possible options for Port of Batam to capture the market opportunity, yang mungkin bagi Pelabuhan Batam untuk melangkah ke depan. Potensi besar di kawasan perairan despite it faces the policy dynamics on its position as the international hub in the Western part of membuat Pelabuhan Batam bisa memasuki berbagai peluang bisnis di perairan seperti alih muatan Indonesia. The ability to provide ample supply to meet the demand in Malacca strait compare to its antar kapal (ship to ship) dan parkir kapal (anchoring). Potensi lainnya adalah peluang bisnis terminal di closest neighbours (Port of Singapore and Port of Tanjung Pelepas) is also the immediate business air, dengan mengimplementasikan terminal apung untuk kontainer, penimbunan, dan transhipment, challenge for Port of Batam. Several studies that correlates the Government policy variable in the yang memiliki konsep implementasi yang sama dengan terminal apung untuk muatan cair dan gas, transport industry put the policy as clear and deterministic in defining how the ports will compete in the sehingga juga bisa menangkap pasar alih muatan minyak di Selat Malaka. region (Arbak, 2010; Gordon et.al., 2005; Subhan & Gani, 2008; Wang & Hong, 2011). Port of Batam has its uniqueness since it has limited capacity and ability to meet the market demand and has to work in Kata kunci: pelabuhan batam, selat malaka, bisnis pelabuhan laut, transhipment, terminal apung the more dynamic political environment. This exploratory research will try to elaborate the possible options for Port of Batam to resolve the 1. Introduction capacity problem, in order to capture the market in Malacca Strait based on its limitation both in term of resources and its ability to influence the national and regional policies. Several interviews and literature Port of Batam, despite its strategic location in the Malacca Strait as one of the busiest sea lanes in the studies will be used to explore and analyse the situation. The research will put more focus on the world, only capture a small amount of approximately 50 TEUs of cargo passing by the strait (Komiss & Productive Factors in the Porter's diamond. Previous researches (Gordon et. al, 2005; Subhan & Gani, Huntzinger, 2011). While its neighbours, the Port of Singapore and Port of Tanjung Pelepas (Malaysia) 2008; Magala, 2004) have acknowledge the importance of internal factors (or resources) as the main has reported the ability to serve 32 million TEUs and 6.2 million TEUs per year respectively, the determinants for the competitive advantage in port business. maximum capacity of Batu Ampar Port (the biggest dry port in Batam) is only 230.000 TEUs per annum (Silalahi, 2011). That is not even sufficient to serve the need of Batam's own local industry, yet talking An elaboration from the perspective on the required resources (Dierickx & Cool, 1989; Barney, 1991; about capturing the business opportunity at the Malacca Strait that is estimated will reach 80 million Rumelt, 1991; Hamel & Prahalad, 1994) to compete will also be made to analyse the lack of resources TEUs in 2015 (Silalahi, 2011). Future development in Batam area will increase the capacity up to 4.8 problems being faced by Port of Batam. The market rivalry will be described using the classical Porter million TEUs, still far below the possible business opportunity in that busy strait. model (Porter, 2008). An appreciative reflection on the resource availability then will be used to determine the way forward for Port of Batam. The reflection will use insights from Levitt (1960) to look at Porter (1990) analyse why particular industries flourish or decline in particular locations and how over the window, not the mirror as well as Hamel (1999) to look and learn outside the port industry. Port of competitive advantages help a nation achieve international success. Porter develop the model for Batam could reflects on what happened across industries, strategic groups within port industry, chain of national competitive advantage (the “Diamond Theory”), which comprises four determinants of national buyers, as well as complementary product and service offerings as suggested by Kim & Marbougne competitiveness (Productive Factors, Demand Conditions, Related and Supporting Industries, and (1999). Firm, Strategy, Structure and Rivalry) and two variables (variables Government and Chance). While the Chance variable (that also correlates with the Demand Conditions) is relatively clear, the Government As of an exploratory study, this research has the risk of too general or too specific that may not be able to variable is the becoming the source of uncertainty in determining the strategy for Port of Batam. determine the possible solutions for Port of Batam. The use of Resource Based View that is used in various studies on port competitiveness may often be criticised as too inward looking and not capture the The island initially is positioned as the oil storage and bunker place for state-owned oil company, external dynamics. This study try to overcome this risk by combining it with the external analyses in both Pertamina. The purpose is as the intermediary place to facilitate the oil trading in and out of the country. the policy and market dynamics. As Barney (2001) has emphasized, that the RBV concept often The port business in that area is mainly to serve that purpose. When Batam transformed as the industrial misunderstood. It complements the Porter's framework in order to unveil the complete black box area, along with its free trade area facilities in the mid 1970s, there was a shift toward transhipment (Barney, 2001). The limited number of quantitative data hence make the result is limited in term of business and vessels anchoring. Another shift has been made in mid 2000, going back to the focus the quantitative recommendations. port as facility and utility to increase foreign investment. 2. The Policy and Market Dynamics Under the draft of national port master plan (IINDI, 2010), Batam is positioned as the international hub for sea transportation in the West. Its premium location is the main reason for this decision. But under There are several political, economics, and legal context that is relevant for Port of Batam, such as the Presidential Decree No. 32/2011 on the Master Plan for the Acceleration and Expansion of the cabotage principle and national logistics blueprint that are supported by the relevant laws and regulation Indonesian Economy 2011-2025 (known by its local abbreviation, MP3EI), the government plan to build as well. Some of the economic, social and environmental concerns also addressed in the studies on port a new port in Kuala Tanjung (North Sumatera) as the new international hub. In 2012, The Batam Free development and containerisation in the region (Syafi'i & Kuroda, 2004; Ueda et. al, 2005; Tan, 2007; Zone Authority signed a Memorandum of Understanding with state owned company Pelindo II to Lee, et. al, 2008; Lee & Ducruet, 2009; Arbak, 2010; Yang et. al, 2011). Studies on resource-based establish a new port at Tanjung Sauh, just a stone throw from Kabil, to capture the traffic at the Malacca perspective of the port business by Gordon et.al. (2005) and Subhan & Gani (2008) has elaborated the Strait (Hussain, 2012). 296 J u r n a l M a n a j e m e n T e k n o l o g i J u r n a l M a n a j e m e n T e k n o l o g i 297 Port of Batam Revisited: Options In The Middle of Policy and Market Dynamics Port of Batam Revisited: Options In The Middle of Policy and Market Dynamics role of technology for Port of Singapore and Port of Tanjung Pelepas respectively.