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Friday, 24 July 2015

ITF urges Indonesia to rethink JICT concession

The International Transport Workers’ Federation (ITF) has urged the Indonesia government to rethink the concession for the Jakarta International Container Terminal (JICT), claiming that the process has been rushed through parliament and not open to due transparency.

The government granted investment firm Hutchison Port Holdings the concession to operate Indonesia’s largest container terminal until 2039 and critics claim the extension has violated national law.

“We seek your urgent intervention to cancel the extension in the light of the issues that have been raised by the union,” ITF general secretary, Steve Cotton said in a letter to president Joko Widodo

“For these reasons, the union opposes the extension of the JICT concession to Hutchison Port Holdings.  It, and the ITF, are requesting that you and your government act urgently to cancel the extension of the concession granted by the IPC, and to put in place a transparent process to deal with the matter. 

The current concession is due to expire in 2019  which the ITF claims is sufficient time for a more open tender process that will be more favourable to local opportunities.

“The ITF also strongly supports the JICT Union’s argument that JICT should be owned and managed nationally. The ITF and its affiliates globally will be following this important campaign by the JICT Union with keen interest, and look forward to your positive engagement on this issue,” Cotton added.

The Indonesia government faces a difficult dilemma as despite local opposition it also  desperately needs to raise around $7 billion of foreign investment to upgrade its ports as part of a strategy that aims to tackle the country’s current dire lack of capacity for shipping lines.

The World Bank currently ranks Indonesia just 53rd in its logistics performance index, below nearby Thailand and Vietnam, despite its booming population driving demand for sea trade.

Although Indonesia is South East Asia’s largest economy, ocean carriers currently offer no direct mainline services to either Europe or the United States due to port capacity shortages. Also, Indonesia’s ports still suffer from shallow draughts.

The country’s largest container port, Tanjung Priok, on the northwest coast of Java, has a maximum draught of 11.5m and cannot accommodate vessels longer than 250m.

“Port infrastructure needs to be upgraded progressively across the board in order to support the shipping network,” Jason Chiang, director at Drewy Maritime Research said in comments to news source FinanceAsia. “This will allow the shipping lines to upsize their vessels in order to realise economies of scale.”


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