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New green terminal for Indonesian ports

Interview - May 14, 2014
The Indonesia Port Corporations are state corporations responsible for the governance, regulation, maintenance and operation of ports and harbors in Indonesia. Indonesia Port Corporation 3 (IPC3) is one of the four bodies in total, covering the regions of Central Java, East Java, Bali, South Kalimantan, Central Kalimantan, West Nusa Tenggara and East Nusa Tenggara. Talking to United World, Managing Director of IPC3 Mr. Djarwo Surjanto talks about how they are working to improve port connectivity and plans for new green terminals.
MR. DJARWO SURJANTO, MANAGING DIRECTOR OF IPC3
MR. DJARWO SURJANTO | MANAGING DIRECTOR OF IPC3
How would you describe the strategic direction Indonesia Port Corporation III (IPC3) taken during your stewardship as Managing Director?
 
To begin with it is important to consider our geographical mandate, which is quite vast. IPC3’s commercial ports stretch across Central and East Java, Bali, West and East Nusa Tenggara and South and Central Kalimantan, which means we oversee operations in 42 locations in total. We also have ten subsidiary companies in operation and at least one other being prepared to enter into operations.
 
I was appointed as Managing Director almost 5 years ago in May 2009. From my point of view the greatest challenge posed to our port corporations at that time, and now, is the poor logistic performance of Indonesia. Our intention is to enhance the Logistics Performance Index (LPI) of Indonesia by improving service levels in the port industry. That has been our target for the last 5 years. Let’s look at Surabaya as an example. In terms of scale and business, Surabaya is the 2nd largest port in Indonesia, just behind Tanjung Priok. Even so, in terms of connectivity and the number of routes, Surabaya surpasses Tanjung Priok. There are at least 30 domestic container routes out of Surabaya, and less than 20 out of Tanjung Priok. Surabaya is the gate to and from Eastern Indonesia and this is where IPC3 is focusing most of its development efforts. 
 
Our efforts over the last 5 years have been to improve both accessibility and connectivity at Surabaya. Currently, the average waiting time for a domestic ship in Surabaya is one and a half days. This is a poor performance and is partly due to the fact that we have terminals that process all incoming vessels, regardless of type. Now we are planning to reduce waiting times by dedicating terminals to particular cargo and particular types of vessel. Across all our ports we’re planning to assign exclusive passenger, dry bulk cargo, domestic and international operations to specific terminals. This includes the development of an aerobridge serviced passenger terminal in Belawan, which will be most advanced terminal of its kind in Indonesia. Likewise in the Telok Lamong area we have built a new terminal dedicated to international cargo container ships because we are preparing for growth. Service of international cargo is generally adequate in all our ports, but we’re anticipating large growth. We are providing dry bulk facilities in our newer international port terminals because, according to our assessments, dry bulk cargo will be a significant part of this growth. Indonesia’s imported soybeans, for example, require dry bulk terminal service. 
 
Right from the beginning, IPC3 has planned for all our new terminals to be green terminals. We’re avoiding diesel generators and fossil fuel power in general and moving towards electricity. If we do have to use a diesel engine we choose the most environmentally sensitive ones. As for land transportation, say from the hinterlands, we’ve made agreements with the trucker associations that trucks servicing our ports will be run on gas. This is the first understanding of its type in Indonesia.
 
This May, we’re planning to have a soft, semi-automatic opening of our newest terminals and in September to have all facilities operating fully. Most operations will be automated in our newer facilities too, that’s what I mean by ‘semi-automatic’. This is allowed by our implementation of remote crane technology from Finland and centralized control technology from Australia. This improves safety and efficiency in the cargo yards, where most accidents tend to happen. 
 
Furthermore with respect to access, at the moment our terminal channels are 9 meters deep but we are dredging our newest ones with a depth of 16 meters, which ultimately depends on both business and safety requirement. Our existing access channels are 9.5 meters deep, so we also have to improve our access channel depth. Last Friday we signed a contract with Dutch company Van Oord Dredging to deepen our access channels to 14 meters deep. We’re also widening our channels from 100 to 150 meters. This triples our freight capacity because bigger vessels mean cheaper freight. Exporting cargo from Surabaya will be very competitively priced. The dredging is expected to be completed by early January 2015. We’re developing a new business plan to work in accordance with our larger channels. 
 
I’ll give you an example of how this benefits industry. Adjoining the Madura Strait there is a company that produces fertilizer. They need phosphates and other raw materials, at least 1 million tons. Currently, they are using 40,000 deadweight tonnage ships to freight their materials, but with the improvements to the Surabaya access channel they can use 80,000 or 100,000 deadweight tonnage ships and reduce their freight costs to 30% of current levels. That’s what we’re doing to improve connectivity. We’re hoping this kind of infrastructure upgrades can support growth in East Java, which remains above the national growth and above 7.8%. 
 
Bali is also very interesting port. We want to make it a special turn-around port for cruise ships. We’d like Bali to be like Singapore, a place where people fly to and board cruise ships. We’re focusing on crew and passenger services at our Bali port as well as accessibility; we’ve created a toll road directly from the airport to the port to facilitate this. 
 
We’re also looking after our other ports. Tanjung Emas port in Semarang was facing problems associated with rising sea levels and we’ve dealt with that particular concern by building border systems within the port. Additionally IPC3 has built additional wharfs and terminal equipment to improve the surface capacity at Tanjung Emas. IPC3 have made similar improvements to our port in South Kalimantan, adding wharfs and providing more cranes. 
 
We are the second largest port company, but try to be the first in everything! Since 1998 we’ve been doing very well in terms of management and effort. We’re working to be first in terms of green terminals and passenger services too. 
 
Can you clarify your structure in terms of subsidiary companies and how that improves the overall efficiency of your organization?
 
Our container terminal was privatized in 1999. We made a tender and selected P&O Dover to be our partner and we both received twenty-year concessions. For this purpose we developed our subsidiary company. 
 
Our second subsidiary is our hospital. It began with a very small unit but now we have established a subsidiary company and it is in good condition now. Our third subsidiary is a company that is taking care of an access channel in South Kalimantan. They have partnerships with the regional government and look after channel maintenance predominantly. Much in the same way a company maintains and services a toll road.
 
Another subsidiary is a company that handles marine services and they take care of docks and maritime services. We also have shares in terminal operations companies. 
 
We are developing an industrial park, which is in itself a subsidiary company. The advantages of establishing an industrial park in East Java are numerous. The region is less crowded than West Java and we have gas here, so we’re assuming that our industrial estate will be quite competitive in conjunction with our port facilities. The industrial estate plan is a large project and IPC3 could not go it alone, so we carefully selected partners including the AKR group.
 
What are the management obstacles to overseeing such a vast and complex operation?
 
I have very dedicated people to oversee the various operations on my behalf. I give them guidance about what information is critical to me and delegate responsibilities. Our human resources are tremendously important in every part of the company and in fact we dedicate a lot of resources to our staff development in general. This year, 10 members of our staff have finished studies in Belgium and 20 are currently studying in Holland, England and Sweden. IPC3 is planning to send further staff overseas for training in development. We are preparing our managers to be critical thinkers so that they can keep IPC3 going from strength to strength. 
 
We also hire a large number of students who have graduated from high school into training programs. We accommodate a large number of graduates in dormitories and teach them the skills needed to work in port management, which is the equivalent of a bachelor degree qualification. This is a new model of development and part of our affirmative action to create employment opportunities for people outside Java. 
 
IPC3 is doing our best to improve accessibility and connectivity throughout Indonesia and the world. To do this will requires a lot of support from inside and outside of the country and this is a lucrative opportunity for international investors. 

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