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The government is considering buying back shares in port
operators PT Jakarta International Container Terminal (JICT) and PT
Terminal Petikemas Surabaya (TPS) from the current foreign investors as
they have failed to expand the ports as promised.
After managing the ports for some time, the government has seen no
progress or evidence of a serious intention on the part of the foreign
investors to turn the ports into an international hub, Transportation
Minister Hatta Radjasa said.
"The buyback plan is not a nationalism gimmick. It is a fact that the
foreign investors in the two ports are only making Indonesia a feeding
market for their operations in Singapore," said Hatta recently at the
Presidential Palace.
As a feeding market, exporters from Indonesia cannot directly ship
their goods to international destinations unless they are shipped first
to Singapore or Malaysia, making transportation costs higher and
requiring a longer shipment time.
The condition has also derailed the expansion of the country's shipping
industry, with exports and imports largely dependent on foreign
shipliners.
Hatta said the ministry had proposed the buyback plan to the Office of
the State Minister of State Enterprises, with the later currently in
the process of seeking the best financing to repurchase the shares.
The government sold 51 percent of its shares in state port operator PT
Pelindo II in JICT, the country's largest container terminal operating
in Tanjung Priok Port, in Jakarta, to the Hong kong-based Hutchison
Port Holdings Group in 1998.
After the divestment the government owned a 48.9 percent share in the
company via Pelindo II, with the remaining 0.1 percent being held by
the company's workers.
In 1999, the government also sold a 49 percent share in PT Pelindo III
in TPS, the nation's second largest container terminal operating in
Tanjung Perak Port in East Java's Surabaya, to British company P&O
Ports.
"When these investors came in, they promised to invest more and expand
the ports to an international hub. But it has been more than five years
now and we don't see any seriousness from Hutchison in JICT nor P&O
in TPS to realize those plans," Hatta said.
He said a consortium of state companies could repurchase the shares and
sell them later to investors who made a strong commitment to developing
the ports.
It is estimated that the government will need some US$300 million to
repurchase the shares.
The government is currently looking for new foreign investors to
develop an international hub in Batam, Bojonegoro and Tanjung Priok in
order to encourage Hutchison and P&O to expand their businesses
here.
However, Indonesia looks set to remain dependent on port facilities in
neighboring countries for the foreseeable future due to the lack of
certainty in the legal and planning spheres, which resulted in the
halting of the port development projects.
The Transportation Ministry has estimated that 80 percent of the
country's exports and imports go via Singapore or Malaysia, causing
potential losses of more than US$2 billion per annum to local businesses.
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