SPECIAL REPORT: INDONESIA
PUSHING PORT DEVELOPMENT IN INDONESIA A World Bank project in Indonesia is seeking to reduce costs and improve supply-chain reliability – but are ports the chokepoint in the system, asks Gordon Feller
8 World Bank wants to reduce costs and improve supply-chain reliability in Indonesia
A largescale World Bank project in Indonesia wants to reduce the costs and improve reliability of the country’s logistics chain. Underlying the project is one key assumption - enhancing the movement of goods within and across this large country’s borders is the key to furthering the mediumterm economic development and poverty reduction goals. SO, WILL IT WORK? This new US$400 million project is the first in a planned series of two such projects, both of which are designed to support critical reforms that address bottlenecks at various points in the supply chain. SPENDING THE MONEY The World Bank and Indonesia’s national government is using the funds to focus on strengthening port governance and operations, enabling a competitive business environment for logistics service providers and trade processing being more efficient and transparent. This ambitious project is structured around three sets of objectives, each one being aimed at a specific area of reform: 1) Enhancing port performance: Strengthening port governance and operations by better clarifying the role of Port authorities vis-à-vis port operators. It means that the emphasis is on facilitating the entry of port services operators and enhancing the coordination of documentary and container examination in ports. These
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actions are expected to increase in the share of Pelindos’ ports with internationally certified management systems, raise the number of applications for the Build-Operate-Transfer scheme for port development and reduce the average turnaround time in Tanjung Priok and Makassar ports. 2) Dramatically improving logistics services: Enable a competitive business environment for logistics service providers by increasing competition in freight forwarding services, storage and distribution services. Also, increase competition in auxiliary shipping services and reduce inventory costs of imported materials for producers. This project is expected to help increase the number of new foreign licenses for freight forwarders, warehousing and cold storage services, support new shipping agents’ (SUKK) and foreign maritime cargo handling licenses and raise the amount of logistics bonded centres. 3) Strengthening trade processing: To make the processing of trade flows more efficient requires many chang¬es, including a greater degree of transparency that comes from reducing licensing requirements for imports. The main aims are to reduce licensing requirements for imports, facilitate traders’ compliance with trade regulatory requirements, expedite the submission of trade documentation and improving risk management by border agencies. These actions are expected to help reduce preclearance time in Tanjung Priok port, increase in the share of
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