Press Release

Collusion and High Cost Undermining Competitiveness in Lini 2 Port of Tanjung Priok

Jakarta | Thursday, December 04, 2008

High costs and cartel-like practices that undermine competitiveness in the Lini 2 Port of Tanjung Priok were the focus of a stakeholder roundtable held at Hotel Santika Jakarta today by the Indonesian Importer and Exporter Association (IEI) in collaboration with SENADA. The discussion, attended by various port users and port service suppliers as well as representatives of government, was prompted by a newly released report that outlines problems with imported goods at Lini 2, especially for those with Less than Container Load (LCL) status. 

“This is just one of many problems at the Port of Tanjung Priok, but it needs to be solved immediately, along with the other problems that occur there,” said Bobby Mamahit, head of Tanjung Priok’s Port Administrator office.

Research by SENADA indicates there are three key problems at Lini 2. The first is failure to comply with a price agreement for LCL import service tariffs at the Port of Tanjung Priok Container Freight Station–Temporary Storage Area. This agreement was signed by various parties, including GAFEKSI (Indonesian Forwarder and Shipping Association) and APBMI (Indonesian Stevedoring Companies Association) in Jakarta on May 28, 2007. SENADA found that users tend to be charged well in excess of the agreed-to tariffs. “If port service providers comply with the Price Agreement, it will help importers reduce material release costs,” notes Mamahit.

The second problem, as characterized by head of IEI Amalia Achyar, is that “Many port service providers are separately charging for the same component of CFS [Container Freight Station] operations, leading to unnecessary overlapping costs.” The report finds that the cause of this problem is the ambiguous nature of the regulations governing CFS operations, particularly with respect to terms used to describe activity components that are charged to service users at Lini 2.

The third problem relates to the lack of transparency surrounding the LCL goods release process. At the core of the problem is the fact that users cannot choose their warehouse service providers and this leads to high costs. Notes Achyar, “warehouses have been nominated by the forwarder, users have no say.”

Important conclusions drawn from the report, and today’s roundtable discussion, center on the need to review and if necessary amend existing regulations and agreements governing LCL tariffs, as well action to address possible cartel-like practices

SENADA is a four-year project financed by the United States Agency for International Development (USAID). Started in September 2005, the objective of SENADA is to generate growth, jobs, and income by increasing the competitiveness of Indonesia’s major labor intensive light manufacturing industries through the strengthening of industry value chains. SENADA focuses on six industries: footwear, furniture, auto parts, garments, home accessories, and information and communications technology.