Pelindo to Pump Additional $77m Into Tanjung Priok as Upgrade Steams Ahead

Jakarta Globe, Faisal Maliki Baskoro, July 29, 2010

 PT Pelabuhan Indonesia II plans to invest Rp 700 billion ($77.7 million) more in the next 12 months to revamp Tanjung Priok in North Jakarta. (Antara Photo/Fanny Octavianus)
 

State-owned port operator PT Pelabuhan Indonesia II plans to invest Rp 700 billion ($77.7 million) more in the next 12 months to revamp Tanjung Priok in North Jakarta as part of an ongoing upgrade program.

President director Richard J Lino said the company, known as Pelindo II, would use internal funds. It has already allocated Rp 2.7 trillion this year to buy equipment and pay for the initial phase of reclaiming 246 hectares over the next eight years.

“Our customers are global customers and we need to match that by transforming the port into a world-class facility by increasing productivity through expanding capacity, investing in new equipment and giving 24-hour service in all of our ports,” Richard said.

Pelindo II is undertaking a massive program of capital expenditure to upgrade and expand its 12 ports nationwide, including Tanjung Priok, which it hopes to turn into a port capable of being a regional shipping hub.

Richard estimates that the total program will cost Rp 12 trillion for all ports over the next three years, with the total bill for Tanjung Priok’s upgrade coming to $1.6 billion over eight years.

Pelindo II is considering an initial public offering, as well as issuing bonds and seeking bank loans, to finance the projects.

“If we can increase productivity and reduce loading time it would reduce logistics costs,” Richard said. “Logistics costs in Indonesia are among the highest in the world, ranking around 70th. We want to give our customers nearly zero waiting time.”

The World Bank’s Logistic Performance Index ranks Indonesia 75th among 155 economies.

The government has been pushing its seaports and airports this year to prepare for an expected increase in the flow of goods resulting from free-trade deals with China and India.

It said in February that it would spend Rp 10.3 trillion to upgrade 66 seaports and 25 airports this year, compared with Rp 3.27 billion last year.

Pelindo plans to double its productivity within the next eight years, starting with a 90-hectare beach reclamation at Tanjung Priok and buying new cranes. Tanjung Priok and three other national ports began operating 24 hours a day in November.