IPC outlines changes to business strategy

Aerial view of Tanjung Priok port in Jakarta. Credit: Hullie/Wikipedia

State-owned port operators Indonesia Port Corporation (IPC) has outlined ambitious expansion plans in which it is keen for foreigners to invest in as it moves from being a port operator to a trade facilitator, IPC president Elvyn G. Masassya told the Association of South East Asian Nations (ASEAN) Ports and Shipping Conference in Jakarta, in late February.

“The business has changed. The new vision of IPC is to be a world-class trade facilitator,” Masassya said before outlining a vision of integrated ports linked by an ecosystem comprising the land and different sides of its business.

IPC plans that seven facilities will become key parts of an archipelago-wide hub-and-spoke system, he said. The seven facilities include Belawan/Kuala Tanjung, Tanjung Priok, Tanjung Pura, Surabaya, Makassar, Bitung, and Sorong/Seget. “Not all ports will become a hub,” Masassya added.

Out of the seven, Tanjung Priok and Surabaya are based on Java, the centre of Indonesia’s 17,508 islands. The remaining five are located on the country’s major islands: Belawan/Kuala Tanjung in Sumatra; Tanjung Pura in Kalimantan; Makassar and Bitung in Sulawesi; and Sorong/Seget situated in West Papua.

Each facility will have a different focus, but all will be fully digital. “No more will we rely on conventional systems, everything should be digitalised,” Masassya told the conference members.

Work is expected to start at the Sorong facility in 2021 and will have an estimated total capacity of 2.95 million teu at the end of its third phase. It will be able to take ships of up to 5,000 teu and have a 50-hectare (500,000 m²) container yard fronted by a 1,440 m berth.

The hope is that Sorong will become a catalyst for broader economic development in West Papua, which the IPC president has described as “very challenging”.

By contrast, Tanjung Pura, a terminal at the Port of Kijing in West Kalimantan, will be a bulk mover capable of handling 15 million tons of dry bulk, and just over 12 million tons of liquid bulk, as well as just under 2 million teu.

IPC’s enthusiasm to work with foreign partners to build these facilities is eye-catching, as is its flexibility about what form these joint ventures should take.

“This is the most important thing. We are open to collaborate with everybody,” he said.

Green-field sites, as underdeveloped land in rural or city areas are known as, offer partnership opportunities – Masassya listed no less than five categories. These include strategic partnerships, bond issuance, commercial loans and the overlapping private-public partnerships, and build-operate-transfer options. The same devices can be used in brown-field sites, disused or derelict land, where the emphasis is on suprastructure and terminal expansion.

Masassya also endorsed a more co-operative approach across the port industry.

“We have to stop the fighting; we must change our view and transform our mindset so that we turn competition into collaboration. That is the solution if you want to increase container trade among ASEAN countries,” he told the ASEAN conference.