Transportation Ministry pursues port concession cooperation
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 - Kemenhub kejar kerja sama konsesi pelabuhan
15 October 2024
By Ichsan Amin
Jakarta, ID – The Transportation Ministry is continuously pursuing concession agreements with port business entities in Indonesia to increase non-tax state revenue (PNBP).
Transportation Minister Budi Karya Sumadi stated that his agency would continue to evaluate concessions in the maritime and port sectors. He believes that continuous evaluations are expected to accelerate concession agreements in the sector.
“We will continue to pursue this to increase PNBP and revenue in the maritime sector. This can surpass the target by 100%,” he revealed at the Expose on State Revenue Optimisation Results through Port Business Entity Governance event in Jakarta on Monday (14/10/2024).
The Sea Transportation Directorate General of the Transportation Ministry stated that investment in the port sector is spread across various provinces in Indonesia. Sea
Transportation Director General Capt. Antoni Arif Priadi said that the port sector collaborates with business entities to provide port services. This involves technical implementation units at the Sea Transportation Directorate General working together with port business entities.
“PNBP from concessions throughout 2022-2024 has involved nine ports or terminals and two other water management bodies functioning as ports,” he stated.
Port or terminal management is implemented in Balikpapan, Samarinda, Kendari, Satui, Banten, Rangga Ilung, Gresik, Balikpapan, and Dumai. Meanwhile, water management is implemented in Kotabaru-Batulicin and Tanjung Redep.
Director General Antoni said that, in the second half of this year, his agency would discuss the concession agreement drafts, which will be followed by concession signings with six port business entities.
These port business entities are PT Rigaya Nusantara Jaya, located in the work area of the Tana Paser Port Operator Unit (UPP) Office; PT Pelabuhan Buana Reja, in the work area of the Satui Harbourmaster and Port Authority Office (KSOP); PT Samas Port, in the work area of the Teluk Palu KSOP; PT Satya Amerta Havenport, in the work area of the Kolonedale UPP Office; PT Pelabuhan Samudera Nusantara, in the work area of the Weda KSOP; and PT Sinar Centra Cipta, in the work area of the Tanjung Emas KSOP.
“These port business entities will process the agreement drafts. The investment value of the six port business entities ranges from approximately Rp28 billion to Rp4.8 trillion, with a concession period of around 28 to 35 years and a concession fee of 5%,” he stated.
Director General Antoni added that PNBP from the concession fee that will be received by the government will range from approximately Rp2 billion to Rp60 billion annually.
“This is higher than the previous contribution of concessions to the state's revenue, which only reached around Rp4.8 billion, as only the minimum tariff was implemented. I reiterate that not only has revenue increased, but services are also being provided more professionally by prioritising the effectiveness and efficiency of port performance,” he stated.
He added that, besides implementing concessions, his agency is also utilising the public-private partnership (PPP) mechanism in port management. Ports that implement this mechanism include Patimban Port and Anggrek Port. Utilisation cooperation is also implemented at several locations, such as Garongkong Port, Labuan Bajo Port, Waingapu Port, Badas Port, and Bima Port.
“There are currently three utilisation cooperation agreements being processed for implementation at three locations, namely Tanjung Wangi Port, Belang-belang Port, and Nabire Port,” he added.
Increase PNBP
The Sea Transportation Directorate General has achieved more than 90% of its PNBP target. Currently, sea transportation services are the largest contributor to the Transportation Ministry's revenue, making up about 50% of the total income.
Director General Antoni revealed that, as of September 2024, revenue realisation has surpassed Rp4 trillion, which is around 90% of the set target of Rp4.8 trillion.
“We forecast the realisation by the end of the year to reach Rp5.5 trillion, or 115% of the set target,” he revealed.
Behind the increase, Capt. Antoni stated that there would be greater challenges, especially regarding regulation and policy changes. These include the handover of local and regional feeder ports to regional governments, the management of ferry ports, the utilisation of state assets, and concessions at ports.
“Therefore, we must adjust the allocation target for technology application. Meanwhile, regarding the PNBP target for the fiscal year 2025, technical implementation units are expected to make smart and thorough calculations,” Director General Antoni added.
Creating a climate for the port industry
Meanwhile, a maritime expert from Institut Teknologi Sepuluh Nopember in Surabaya, Raja Oloan Saut Gurning, stated that the involvement of the private sector must be maximised to create healthy industrial competition in the shipping sector.
According to him, the government, especially the regulator in the shipping sector, should not focus on port facilities, such as ships. Instead, the government must drive a more expansive shipping sector through port business entities.
“Port business entities have the potential to be developed outside the existing state-owned enterprises (SOEs). However, the challenge lies in the significant capital required to operate a private port business entity,” he told Investor Daily.
What the shipping regulator has been doing, in this case the Sea Transportation Directorate General, by maximising other private port business entities through concessions, must be supported. He said that, as an archipelago and a maritime nation, Indonesia requires many large ports.
“However, the establishment of these ports must be supported by cargo traffic and the industries they serve. This means that ports should reflect the economic potential of a region and optimise its growth,” he added.
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