Richard Lino, President-Director, IPC II: Interview

Interview: Richard Lino

How will the expansion of the Kalibaru Port project contribute to addressing problems in Indonesia’s sea transportation sector?

RICHARD LINO: Currently, the container throughput in the Port of Tanjung Priok is 45% of national throughput, making it the biggest port in Indonesia. With the existing capacity of 9m twenty-foot equivalent units (TEUs), our calculations show that this port can only serve demand until 2015. The Kalibaru Port project, or NewPriok, is a $4bn project to expand the Port of Tanjung Priok. This investment will boost the efficiency of the national logistics chains and raise our productivity levels to those of other major ports worldwide. The first container terminal of NewPriok will start operating in the third quarter of 2014 with a capacity of 1.5m TEUs and four additional terminals are expected to be ready by 2017.

In addition to deploying capital, how can Indonesia bring domestic logistics costs down to levels similar to those in other South-east Asian countries?

LINO: To reduce logistics costs we must start with internal improvements. Our priority is to optimise our existing capacity without investing large amounts. Rather, we improved on soft infrastructure – which is cheaper and easier to realise – that included handling methods, human resources, and operation and terminal management. Indonesia’s position in the World Bank’s Logistics Performance Index jumped from 75th in 2010 to 59th in 2012. This was partly due to new hard infrastructure, though it was largely a result of increased efficiency and improvements in the soft infrastructure.

Another area of improvement is cargo optimisation at terminals, where we are working in collaboration with local company Telkom to create the Indonesian Logistics Community Services (ILCS) – an integrated online platform that will streamline shipment traffic in Tanjung Priok. Following global standards, ILCS will allow logistics companies to monitor and arrange container traffic, documentation and electronic payments.

Another area in need of progress is Customs; clearance takes an average of six days, whereas in other countries it is done in only three. These extra three days increase company inventory costs. We are working to ensure that human capacity in the industry is developed so that natural growth will be accompanied by an increase in the number of skilled personnel. The government alone cannot carry out the transformation that the country needs; private and public companies must contribute their experience and expertise to improve the logistics chain in each of their respective sectors, particularly with regards to sea transportation.

What other projects do you consider crucial for Indonesia to improve its connectivity, particularly to link Java with remote regions?

LINO: Our main initiative to improve connectivity between archipelago’s islands and to reduce logistics cost with the Pendulum Nusantara project, or the “Pendulum of the Archipelago”, which is part of the national logistics system. This will be a kind of sea highway that will create a single corridor from west to east, linking Belawan, Batam, Tanjung Priok in Jakarta, Tanjung Perak in Surabaya, Makassar in South Sulawesi and Sorong in West Papua. Terminal Petikemas, a newly created subsidiary of IPC I, II, III and IV, will operate each of the terminals at these ports. The pendulum project will create a main route, which will be supplied by a mother vessel that will travel regularly throughout the six ports of the corridor, and additional routes, which will link each of the six ports to secondary destinations. All shipping companies will be invited to bid for each of the new routes, which will be tendered at different prices based on their characteristics.

Pendulum Nusantara is supported at every level of government and it is part of the maritime transport reforms needed in the country. It will engage different stakeholders such as the state, private companies and experts from top universities around the world, while lowering logistics costs in the nation.