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Indonesia’s #1 ferry company

Interview - June 18, 2014
As an archipelago of over 17,000 islands, overwater transport is logistically essential to locals, businesses and tourists in Indonesia. PT ASDP Indonesia Ferry (Persero) is a state-owned transportation services company for passengers, vehicles and goods. President Director of PT ASDP Indonesia Ferry (Persero), Danang S. Baskoro, talks to United World.
DANANG S. BASKORO, PRESIDENT DIRECTOR OF PT ASDP INDONESIA FERRY (PERSERO)
DANANG S. BASKORO | PRESIDENT DIRECTOR OF PT ASDP INDONESIA FERRY (PERSERO)
What were the main challenges that you faced when you became the head of PT ASDP Indonesia Ferry (Persero) (ASDP)?
 
I was appointed President Director of ASDP in 2011. At this time I took control of the operations from Aceh to Papua and I was in charge of more than 4,000 employees and 128 passenger vessels. To start with, I assessed the general managers in each branch of each province and decided to reshuffle the personnel in order to change the company culture. Furthermore, I initiated a new strategic plan to draw all the elements of the company together and stress the importance of unity and teamwork. The desire to be a more unified company led to the creation of our new slogan ‘One Team, One Spirit, One Goal’.
 
Previously ASDP was mainly product-oriented, but now we are primarily a market-oriented company. In order to achieve this goal, I developed a 5-year corporate plan. The first year had the goal of achieving consolidation. The second year we focused on growth. Now, in our third year, we want to expand further our capacity and increase our fleet. Hopefully, this year we will be undergoing a corporate acquisition of the largest private player in the ferry business in Indonesia. That will change everything and dramatically increase our market share. Nationally, we are number one in terms of the number of vessels and the routes that we service. This acquisition will boost our competitiveness and increase our capacity further.
 
In the fourth year of our plan in 2015, Indonesia will become a member of the ASEAN Economic Community (AEC) and ASDP will focus on regional expansion. By the end of my term as President Director, in 2016, I want ASDP to be the largest player in the regional and global ferry business. It is an ambitious plan, but I believe that we can achieve our goals even ahead of schedule.

How would you describe ASDP’s performance during this time and what steps are you taking to improve operations?
 
For the last two years ASDP has been recognized as Indonesia’s best state owned enterprise (SOE). On 5th March 2013, President Susilo Bambang Yudhoyono visited one of our ports. He took a ferry from Sumatra to Java and was very impressed with our operations. His endorsement demonstrates that the progress we have made has been significant.
 
Now that our financial situation is stable, we want to invest in improving our infrastructure and services. In terms of infrastructure, our priority is to improve our ferry ports, as they are the logistic hubs of this industry. Compared to cargo ports where containers are required to be handled, ferry ports are far simpler. The goods are loaded into the truck, the truck goes into the vessel, the vessel transports the truck, which eventually delivers the goods to the customer. All of our vessels can be loaded with trucks. Every year almost 2 million trucks travel on our vessels and this makes ASDP an important player in the national logistics network.
 
Currently we have 130 vessels, but we would like to expand and increase our fleet size to as many as 250 vessels by 2019. It is important to point out that there are many operators in Indonesia at the moment and competition is getting tougher. Therefore, we have started to buy vessels from Britain, Japan and Korea to enhance our capabilities. It has been more than 30 years since ASDP has been purchasing vessels like this and it will significantly boost our capacity and increase our market share domestically.

Eventually, in 2015, ASDP will be prepared to compete in the new era of the AEC.
 
Another priority is to enhance the quality of our services. ASDP transports about 7 million passengers per year, so we want to improve our services on-board as well as in the ports of origin and destination. In addition to this, very high on our priority list is to increase the safety of our passengers on board.
 
What criterion does ASDP use to decide which ports to focus its development efforts on?
 
We operate 34 ports at the moment and we divide them into 3 categories: growth ports, moderate ports, and marginal ports. The growth ports service high-traffic routes in Sumatra, Kalimantan, Java, Bali and Lombok. We have 10 growth ports and they are the backbone of ASDP operations in terms of ensuring the financial stability of the company and generating funds for the development of the moderate and marginal ports. Due to their strategic role in terms of the national development, the growth ports will always be profitable regardless of the overall state of the economy in Indonesia.
 
Moderate ports are located in less populated areas, while the marginal ports service remote areas. Taking a strategic approach, our priority is the development of infrastructure at our 10 growth ports.
 
In terms of competition, what are your strengths and how do you plan to acquire a greater market share?
 
Our strength is in the quality of our services. The name of ASDP is associated with good services, hospitality, safety, clean cabins, and good on-time performance (OTP). We maintain that image through our human resources. 
 
Three times a year I assess the performance of all my general managers. We have defined the key performance indicators (KPIs) together, in a fair manner, and targets are mutually agreed upon. My expectations are clear and if the general managers are not reaching their targets, they face the possibility of being penalized.  KPIs are very useful and they motivate our employees to be more ambitious. I believe that this also helps us to grow faster than the competition. As the old saying goes, “You don’t build a business, you build people and they build the business”.
 
How has your new IT platform improved ASDP’s services and operations?
 
Our operations run across three different time zones, which can be very challenging at times. For example, sometimes I need information, but my staff in a different office have already gone home for the day. Our new IT platform is an expensive system, but it allows us to keep track of all our operations from the central office. Our revenue has doubled since its implementation. I can keep track of everything that is going on in our growth ports from my office here in Jakarta. We installed this system last year, in 2013.

The technology has been very helpful in managing operations across all the time zones and will hopefully help us to achieve the ambitious goals of our 5-year corporate plan.
 
Can you talk about the process for licensing ferries and ports?
 
It can be challenging for us sometimes. There are many players in this industry and the government regulators act as a jury when distributing licenses. Licenses are often given to companies or ships that do not necessary meet all the KPIs. 
 
There needs to be an agreement between the industry and the regulators according to which companies must meet minimum requirements in order to hold their licensees. At the moment, there is no such agreement. This makes it difficult for ASDP to compete fairly with companies that are not using best practices or well-maintained vessels. 
 
As a successful SOE, what advice do you have for other SOEs that are looking to improve the efficiency of their operations? 
 
There are many alternate routes to achieving your goals. Today, our annual cash flow is greater than $200 million USD. This is a marked improvement from a figure of less than $60 million USD, when I started in 2011. We achieved this growth in less than 3 years. 
 
SOEs need to be sensible with their leasing and purchasing activities. Having the right equipment is vital to profitable operations and mismatching goals can be very detrimental to the running of a company. SOEs should also take advantage of the financial instruments they have at their disposal in order to turn an operation expenditure into a capital expenditure. This is important to change the paradigm from a product-oriented company into a market-oriented company.
 
You previously managed an aviation company and the Jakarta International Container Terminal (JICT). How did that experience help prepare you for your work with ASDP?
 
I learnt the importance of leading by example. Employees will not respect a leader whose actions and words do not align. My experience helped me convert the unproductive potential of ASDP into the fastest growing SOE in Indonesia. I built the IT systems and developed our human resources. 
 
People are very important to us and last year ASDP spent $50 million USD on training and development for our employees. I am very proud of that and it has had a huge impact on the way we run our business and the services we provide to our customers. We are reducing the bureaucracy and costs that our customers used to face. Out of the 140 SOEs in Indonesia, we have become the most successful. Better yet, we are aiming to reduce the cost and improve the efficiency of Indonesia’s national logistics system overall.
 
What advice would you give to the next president of Indonesia?
 
Some SOEs are lagging behind because of the lack of political will to change things. Our next president should closely examine the management of SOEs and make room for potential reforms. He should consider reforming the transportation system in Indonesia and find a way to decrease the pressure on roads and move trucks onto the sea. Roads are expensive to maintain and they get congested quickly. Ship transportation is more reliable, safer and cheaper. We are fortunate that we do not have to maintain the ocean the way we have to maintain our roads. We can simply launch a vessel into the sea and begin operating. 
 
Considering the unique geographic condition of our country as the largest archipelago in the world with over 17,000 islands, I believe that the future of Indonesia’s transportation lies in the sea. Within that framework, ASDP plays a crucial role in improving the interconnection and efficiency of the national logistic system, while reducing the cost of transportation. Furthermore, ASDP has a critical role in the national and regional development by connecting and opening up the remote and isolated areas of our country.

This is important for many sectors, including resources and energy, as these areas are the future for those industries. 

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