Source: Investor Daily

Date: 30 June 2021

The integration of PT Pelabuhan Indonesia/Pelindo I, II, III, and IV (Persero) is set to be realised in the third quarter of 2021. Later, there will be four subholdings under Pelindo that are integrated to focus on handling different sectors, namely containers, non-containers, logistics and hinterlands, as well as marine and equipment.

Deputy Minister of State-owned Enterprise (SOE) II, Kartika Wirjoatmodjo, explained that, in Indonesia, logistics costs were expensive as it was an archipelago. One of the efforts implemented to lower logistics costs is port integration.

"We see that port integration is a must. This is caused by several factors. Firstly, Indonesia is a large archipelago that requires shipping and cargo [transportation] planning that are more integrated with a target to become efficient," the Deputy Minister, familiarly known as Tiko, said during a hearing meeting with House of Representatives (DPR) Commission VI on Wednesday (30/6).

He added that, in the last few years, Pelindo owned four companies that managed several different regions. This makes it difficult for the government to plan lanes and investments that can efficiently lower the national logistics costs.

Then, Tiko explained that Pelindo's services needed to be integrated as services of each Pelindo had yet to meet the same standard. This is caused by newly developed ports or ports in regions that are not as developed as Jakarta.

"Services must be improved to provide the best service and lower costs," Tiko stated.

Next, he continued that, regarding global competitiveness, if they were not integrated, port SOEs would struggle to compete with their current scale as they were divided into four companies.

"We do not have strong bargaining power on the global shipping line. With this integration, we expect to be the top ten global players in the container port [sector] so that we can negotiate to attract international traffic with a stronger global shipping partner," Tiko said.

He said that this integration would be implemented systematically and corporately to provide positive impacts, such as greater service capacity and efficient cost reduction in various functional areas of the company.

Furthermore, Tiko stated that, with the integration, there would be four subholdings that would focus on each of their function.

"The integration will provide different focuses to the functions of the current Pelindo. If the merger is implemented, we will establish four corporations with different functions, which are the container company, the non-container company, the logistics company, and the marine services company," he revealed.

During the occasion, PT Pelindo II (Persero) President Director as well as Pelindo Integration Organising Committee Chairperson, Arif Suhartono, revealed that the SOE Ministry had instructed his agency to integrate Pelindo by the third quarter of 2021.

"From the instruction given by the SOE Ministry, the integration is expected to be realised in the third quarter. So, at the end of September 2021 or early October 2021. On that day, we expect a legal merger among Pelindo I, II, III, and IV," Arif said.

Then, he continued that share transfers would be conducted in stages for the four subholdings established from the Pelindo integration.

"Share transfers will be conducted in stages for the subholdings, and we expect to finish in the second quarter [of 2022]. However, we hope to finish more quickly. We will be thankful if all of it can be finished by early 2022," Arif revealed.

Subholdings

He said that, after the integration, there would only be one Pelindo. However, there will still be branches. Then, the businesses will be carried out by subholdings.

"The subholdings will act as business owners. There is a subholding especially for container terminals, which will handle containers from start to finish," Arif explained.

According to him, 70% to 80% of the current customers of Pelindo I-IV are the same shipping companies. Same customers mean that they have the same operation pattern. However, customers are having difficulties as there are four Pelindo that offer different service standards.

"We hope that, after the integration, services from start to finish will be provided by a single entity, which will make it easier for shipping players," Arif mentioned.