JAKARTA (TheInsiderStories) – Four state-owned port operators, PT Pelabuhan Indonesia I (Pelindo I), Pelindo II, Pelindo III and Pelindo IV preparede capital expenditure Rp34.5 trillion (US$2.59 billion) this year, surged four times from Rp8.81 trillion in 2017. The spending will be used to expand the ports capacity as well as developing new projects.
Of the four port operators, Pelindo II and Pelindo III have set capital expenditure of Rp11.6 trillion and Rp13 trillion respectively. Pelindo II President Director Elvyn G. Masassya said the need for capital expenditure this year will be met by internal cash flow as well as bond issuances from previous years.
While, Pelindo III will issue global bonds worth US$1 billion to fund several development projects, including the construction of the overpass to the Teluk Lamong terminal in Surabaya, the deepening of Benoa port in Denpasar, Bali, and the construction of the Gili Mas quay at Lembar port in Lombok, West Nusa Tenggara.
Under President Joko Widodo’s administration, the development of maritime connectivity has become a main element of the national long-term development plan. He once said Indonesia has to seriously start exploiting maritime resources, which he believes are the future of the country’s economy.
Four state-owned port operators are tasked with much of this work and have begun courting foreign investors and the capital markets for funding. Major capacity expansion for the most strategic ports is likely to be financed either through special-purpose vehicles or on the balance sheets of the respective state-owned port company.
Opportunities for foreign companies and investors will be widespread, and investment banks are expecting a ramp-up in project finance deals as a result.
The Ministry of State-Owned Enterprises (SOEs) has put in motion a plan to establish a parent company or holding body in 2018, for ports, ships and industrial estates. The establishment of a maritime holding organ for SOEs is considered necessary to cut the cost of logistics in Indonesia while imposing closer regulations on inter-port, shipping and industrial areas.
In preparation, on March 10, 2017, the Ministry issued decree number 48/MBU/03/2017 on the establishment of a Project Management Office (PMO) Maritime Sector Holding. This Holding will involve four state-owned Indonesian port operators, PT Pelayaran Nasional Indonesia, PT Bahtera Adhiguna, PT Djakarta Lloyd, PT ASDP Ferry Indonesia, PT Varuna Tirta Prakasya, PT Bhanda Ghara Reksa, PT PAL, PT Industri Kapal Indonesia, PT Dok Perkapalan Surabaya, and PT Dok Kodja Bahari.
The formation of a holding structure is useful for the synergy in developing strategic and investment plans, asset utilization, service and operations, capacity building and efficiency, since it benefits from economies of scale and competitiveness.
Masassya mentioned that there are at least four stages to achieve a final deal on the establishment of a holding company. For the first stage, SOEs will verify that their business sector can integrate activities among companies and evaluate the amount of investment.
For the second phase, the companies will conclude an agreement related to the process of standardization of operations, systems and business processes. This stage, said Masassya, is expected to be done in 2018.
Later, the third and the final stage will cover the legal aspects and establishment of subsidiaries.
Currently, the four state-owned seaports operate in accordance with the division of work area. Pelindo I operates in western Indonesia, Pelindo II or IPC operates in parts of Sumatra, West Kalimantan, Banten, Jakarta, and West Java.
Further, Pelindo III operates from Central Java, Central Kalimantan, South Kalimantan, East Java, Bali and Nusa Tenggara. Meanwhile, Pelindo IV has the largest working area, covering Kalimantan and all provinces in Sulawesi, Maluku and Papua.
Interestingly, Pelindo I and Pelindo II have set a plan in motion to establish a joint venture company to develop and manage ports in Indonesia. The cooperation has been concluded through their subsidiaries, PT Prima Indonesia Logistik, a subsidiary of Pelindo I and PT IPC Terminal Petikemas, a subsidiary of Pelindo II.
IPC TPK, a subsidiary of Pelindo II, also known as Indonesia Port Corporation, engages in the management of terminals, facilities, and other port services in supporting the implementation of loading and unloading of goods and containers. Meanwhile, PT Prima Indonesia Logistik manages a container and logistics depot.
The new venture is aimed at expediting the development, management and operation of container terminals in Batu Ampar, Batam.
PII is projected to form assets of Rp11.7 trillion by 2021, with Return on Equity (ROE) of 16 per cent. Meanwhile, Pelindo III will issue global bonds worth US$1 billion to fund several development projects, including the construction of the overpass to the Teluk Lamong terminal in Surabaya, the deepening of Benoa port in Denpasar, Bali, and the construction of the Gili Mas quay at Lembar port in Lombok, West Nusa Tenggara.
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