Pelindo's integration team proposes establishment of four subholdings

This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

Investor Daily - Tim Integrasi Pelindo Usulkan Pembentukan Empat Subholding

29 May 2021

By: Amrozi Amenan

 

Surabaya – The SOE (State-owned Enterprise) Synergy and Integration in Port Services Team is proposing to establish four subholdings from the integration of PT Pelabuhan Indonesia /Pelindo I-IV (Persero). The subholding that consists of Pelindo Petikemas, Pelindo Non Petikemas, Pelindo Marine and Equipment, and Pelindo Logistik is also proposed to maintain its headquarter in Pelindo’s area, according to their current business size.

SOE Synergy and Integration in Port Services Team Head and PT Pelindo II (Persero) President Director, Arif Suhartono, said that, in the future, Pelindo I-IV would be merged into one and their operation will be clustered into four subholdings under Pelindo Sinergi. Later, several branch ports that managed various activities will be merged into one company, which are the four subholdings. The purpose is so that they can provide similar services and performance.

“That is the short-term target and the business model that are currently prepared. Next, the long-term target will be the task of each subholding. It will be too difficult if we think too far ahead, but how do we decide the future condition will be like? Alhamdulillah (Praise be to God), Pelindo is not named after Jakarta, Medan, Surabaya, and Makassar, so the attachment between Pelindo and its location is not too significant,” Arif said during the discussion between the board of directors of Pelindo I-IV with the media in Surabaya on Thursday (27/5) night.

“However, from the team, we are proposing and encouraging the establishment of the four subholdings. For example, Pelindo Petikemas will be encouraged to maintain its head office in Surabaya as the size of the container business is currently not on par with Pelindo III. So, Surabaya will lose Pelindo III as there will be no Pelindo III, but there will be Pelindo Petikemas with international coverage in the container business,” Arif added.

Moreover, the subholding Pelindo Non Petikemas will be encouraged to have its headquarter in Medan as there are many non-container businesses in the area. Hence, pelindo Marine and Equipment will be encouraged to move to Pelindo IV’s area in Makassar as there are suitable businesses in the area.

“So, Pelindo I-IV will no longer exist, but they will be replaced by Pelindos that are more national and more focused on their activities,” Arif said.

Due to the establishment of subholdings such as Pelindo Petikemas, container services from one end of Indonesia to the other will have the same level of service. Meanwhile, if there are subsidiaries from companies in the subholding, their status will change to subsidiaries of subsidiaries, and they will be owned by Pelindo Petikemas.

“This is what will ensure similar services from one end to the other. The reason is that maybe around 70% to 80% of the containers are served by the same customers, so they will be linked with Pelindo Petikemas. If there is an operator, they will only act for operation and maintenance, but the link is with Pelindo Petikemas,” he revealed.

If there is a problem somewhere, it will be the task of the subholding. For example, if there is a container issue in Medan, then the subholding will take care of it. They have clear line of command and communication.

“But, the obvious KPI (key performance indicator) is that [ports of] the same class must have similar performances,” Arif said.

Logistics efficiency

Furthermore, Arif said that Pelindo’s integration plan is the policy and the decision of the government with the economy as the main consideration, as well as logistics efficiency.

“Regarding logistics, the best are containers. Fortunately, around 70% to 80% of customers of Pelindo I-IV for container services are the same. Obviously providing similar services, performances, and business processes will positively impact the customers,” he explained.

He hopes that, in the future, the integration target will be to ensure on par services, improve service efficiency, as well as support port services outside of ports and outsides of current areas.

“However, the most important thing is how we support domestic services by providing similar services in terminals of the same class. Of course, services in class 2 ports and class 1 ports will be different, but class 1 ports will have similar services,” Arif said.

Furthermore, Pelindo’s integration will make logistics costs more efficient, but it will take process. For example, Arif said that, after transforming, one port of Pelindo II took one day for loading and unloading, while previously it needed 5 to 6 days.

“This means that the shipping line will have more sailing time. Similar to buses, they will only receive money if they travel, they will not make money if they stay at the terminal. More or less, it is like that. Regarding logistics ports, ships use networks and not just a single port, so it is impossible to be perfect in one port but to perform poorly in its pairing port. So, that means that the network is not optimised. Roughly, that is the consideration for Pelindo’s integration,” he revealed.

Arif is also optimistic about Pelindo’s plan that has been arranged since the last 10 years running smoothly. For the integration process, Pelindo I-IV have been walking in the same direction, so it will be easier to implement the government program. Moreover, before the merger, Pelindo I-IV have discussed to improve services at their main ports. Similar to the collaboration between Pelindo IV and Pelindo II to improve services at one of the ports in Ambon. Ships that usually need three days to load and unload only need one day after the transformation.

This is on progress and will also be implemented at other ports. It is currently being implemented in Medan as the purpose is to improve services. Moreover, the quick quit pre-merger program is currently on progress,” he said.

Besides that, in the merger process, the important factor is coordination with the Transportation Ministry. Until now, the Transportation Ministry is officially supporting the program.

Arif added that, to handle logistics issues in Indonesia, even if all Pelindos merge, they would not be strong enough to solve the problem, so collaboration with the Transportation Ministery was required.

“We have also said to the Transportation Minister that an excellent integration is not only among Pelindos, but also with the Transportation Ministry,” he said.

Regarding when Pelindo I-IV will be integrated, Arif said that it was up to the ministry to decide.

“We only received a mandate from the SOE Ministry,” Arif said.

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