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Issue 1 : February 2009 |
Shipping is in crisis, it is already hard to believe that the peak of the new build boom is only a few months behind us. The intention of this newsletter is to provide some information on what is happening in the world of ports and how David Wignall Associates (DWA) is getting involved.
In an attempt to provide positive content for our first newsletter we decided to focus on Indonesia, a country where the ports have been sclerotic for a generation or more. It is also a country where the port investment may be about to boom. The reasons why we think this hopefully comes through from our four main articles: |
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In future issues this year, it is our intention to focus on the cruise industry, market forecasting for ports and how to take advantage of a downturn. The first edition this newsletter has been sent out to all our clients, contacts and friends. If you do not want to receive any more please let us know by emailing Himaya on [email protected]. Any other feedback on the newsletter would be helpful, please contact me on [email protected]
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Indonesian Port Law
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The Republic of Indonesia is an archipelago nation of more than 17,000 islands. It is critically dependent on its ports and shipping infrastructure. They are the arteries and veins of its economy, supporting trade within Indonesia, linking its economy to that of the rest of the world. For many years Indonesia has suffered from the hardening of these arteries, it's ports providing inadequate facilities, poor service and productivity and charging premium rates for doing so. The symptoms of the problem are obvious, for many the causes also are obvious; the State Owned Monopoly tasked with developing and |
operating them. The Government of Indonesia certainly decided that this was the case and through the Shipping & Port Act, No. 17/2008 took the knife to the problem and abolished the monopoly.
In addition to abolishing the state monopoly on port operations, the intent of the new law is to provide a clear regulatory and development structure for the port sector. This suggests a major opportunity for port investors. One major container operator has stated that getting their feet on the ground and building a terminal in Indonesia is one of their strategic goals for 2009/10, even allowing for the performance of the world economy. Tank farm operators, bulk terminal operators and others are also known to be looking for appropriate sites.
| The new law sets up Port Authorities to control the land and water. These authorities are not allowed to provide port services. The law is also explicit in stating that the existing state owned monopoly (Pelindo) has to be treated no better than any other provider of port services. The policy direction of Government on ports is to create a competitive business environment to obtain more effective and efficient port facilities. Through the new law, the Government is trying to ensure equal treatment of all players in the port sector. |
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The details of how the new law will work in reality are still being finalised. Key Implementing Regulations are being drafted to support the law. These should be issued in mid 2009. In the meantime potential port operators are positioning themselves. Background work on the market potential for a range of ports and terminals is ongoing. Whilst competition for potential sites is not yet evident, there is certainly a strong pickup in the number of site identification and prefeasibility studies being undertaken many in very similar locations. Perhaps the Governments surgery is already starting to work and Indonesia's ports are in for a renaissance. It is certainly good to have one country where port development is potential exciting and dynamic in such difficult times.
Study on the Potential Impact of Indonesia's new Port Law on Sulawesi
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The island of Sulawesi is an important case study for port infrastructure in Indonesia. Close to the heart of the archipelago, considered by some as a fulcrum around which the trade between Eastern and Western Indonesia rotates. It is undeniably an island where improving the efficiency of port infrastructure would very directly provide support to the per capita income of the population and the growth of the industries and agriculture that provide this income. The Asia Foundation commissioned DWA to study the potential impact of the new port law on Sulawesi, in mid 2008.
The main purpose of the study was to support the development of |
Small & Medium Sized Enterprises (SMEs) in South Sulawesi. The specific approach to identify how the new law may:
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improve the efficiency and effectiveness of port infrastructure |
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reduce the cost to users of port infrastructure |
For SMEs these improvements reduce the cost of market access and the cost of critical imported inputs. It also improves the reliability of market access reducing their business risk. A key focus was reviewing existing dedicated terminals that could develop to handle third party cargo quickly and effectively.
The Asia Foundation is a non-profit, non-governmental organization, committed to the development of a peaceful, prosperous, just, and open Asia-Pacific region. The funding for the study came from a program managed by The Asia Foundation on behalf of the Canadian Government.
Bali Cruise Terminal
Potential investors are preparing developments at several key locations in Indonesia seeking to take advantage of the opportunities offered by the new port law. Perhaps the first off the mark will be Bali Cruise Terminal. The company is seeking to offer cruise ships a reliable shore partner who offers tailored shore side activities and excursions to enhance the visit of cruise guests as they call on Bali. It believes that the existing facilities located in the industrial area of Bali, unable to accept large cruise ships and constrained by the overcrowded commercial port in which it attempts to offer
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high quality tourism services are simply not good enough for Asia's No.1 tour destination.
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The location of the new Bali Cruise Terminal provides easy access to Bali's major attractions and activities. It offers specially designed shore excursions, which can provide guests the authentic Balinese experience. Sited in a village and with close links to the community, Bali Cruise Terminals offers a unique opportunity to experience Balinese culture within walking distance. The local temple, villagers whose culture seeks to welcome guests into their homes and lives, all emphasize the unique nature of Bali Cruise Terminal as a destination. |
David Wignall Associates was appointed by the Bali Cruise Terminal to set up the operations of the new cruise terminal. This was done after DWA prepared a detailed Business Plan for the terminal. DWA will now facilitate Bali Cruise Terminal to:
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Develop appropriate shore excursions at all locations; |
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Ensure that the terminal facilities and shore support are put in place to provide safe, secure and effective landing places; |
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Grow public private partnerships that bring together local Government and people to benefit from the terminals;
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Support the Indonesian department of Tourism to market the archipelago as a destination for cruise ships.
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More details of Bali Cruise Terminal can be found at http://www.BaliCruiseTerminal.com
News Item - Semarang Prefeasibility Study
David Wignall Associates has recently been appointed to help prepare a commercial prefeasibility study for a Container Terminal in Semarang, Central Java. The study will examine the market potential for containers in the area. It will also study the impact of a new toll road on the structure of the hinterland for the port. It should be completed in April 2009.
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