Port Development in DKI Jakarta: Benefit or Diseconomies?

By August 2016, The New Priok Port Project or North Kalibaru Terminal began its first phase operation. This project will make DKI Jakarta have an adequate port in Indonesia by 2030 (the time of the New Priok Project is expected to finish). On the other hand, this project also aligns with the vision of the current President of Indonesia, Mr. Joko Widodo, to make Indonesia the world maritime axis. As a response to this port development and its emerging role for the country, the central government issued regulation number 3 of 2016 on accelerating national strategic projects. North Kalibaru Terminal is included in the national strategic project in this regulation. This port development project also responds that there has been no new terminal development in Jakarta in more than 20 years which hopefully. Also, with this terminal, hopefully, the current domestic terminal in Tanjung Priok Port can return to its primary function as it was used for international cargo.

Nowadays, Tanjung Priok Port handles more than 50% of the international cargo of Indonesia trade, which brings Tanjung Priok Port as the main port of this country. However, despite the critical role of this port, Tanjung Priok Port has suffered some problems regarding the lack of capacity and some political issues related to the Jakarta International Container Terminal acquisition back in 2008.

On the other hand, DKI Jakarta is highly suffering from its traffic jam. TomTom Traffic Index released the ranking list of the most traffic city globally and placed DKI Jakarta in third place. For sure, the logistic cost would be affected by this condition as the cargo most likely pass through the DKI Jakarta road facility also. The additional fact also says that the current national logistic cost reached 24,6% of GDP. Another critical aspect of regional trading activity is the absence of an Export Processing Zone. Export Processing Zone (EPZ) in DKI Jakarta is handled under PT Kawasan Berikat Nusantara. While the emergence of Tanjung Priok increased due to the rapid growth of export and import goods, the interest in EPZ in DKI Jakarta doesn’t seem to show similar trends. This situation also compounds the problem faced in DKI Jakarta.

An Undergraduate Student from UI – Industrial Engineering Department, Anggit Prakoso, spent six months working on research in this field. He developed a system dynamic model & simulation to understand interaction in this problem and analyzed the result.

The problem is considered a complex system due to the significant trade-off by port investment, making it suitable to use a system dynamic approach. This model is also relevant with some theories such as Porter’s industrial cluster theory, Port Regionalization by Rodrigue, etc. The bottom line of port development is that the port will generate employment and a good economic impact for the region. But remembering the problem faced in DKI Jakarta, this positive impact might not yield its maximum outcome.

A model can be a suitable tool for understanding the situation and making decisions with the built “mimic system.” With the model, the decision-maker can better understand what’s coming right through them, the significant thing to consider, and what is not. Also, as mentioned before, the model can lower the risk of making decisions in the natural system before the “mimic system.”

This model considers five important things in its development: Export Processing Zone, Logistic Infrastructure, Logistics Cost, Port Operation & Investment, and Economic Growth. In addition, the current policies: progressive tax and access road development also involved in the model as the intervention variables.

The result shows that the GDRP of DKI Jakarta will increase over the year. The contribution to GDRP value from port development and EPZ is expressed in how much they will generate employment and having household consumption. Port development in DKI Jakarta will enable the economic growth in DKI Jakarta from jobs and household spending. The more investment in the port, the more they need a human resource to manage it. Road density in DKI Jakarta will naturally increase over the years. Jakarta-Cikampek Toll Road, passed through by more than 70% of cargo handled in Tanjung Priok Port, showed a declining road density when the government completed the road improvement project. But, this situation will not last long as the growth of vehicles on the road increase over the years. The impact to the logistic cost shown by the cargo from EPZ is assumed not having any road development plan in its access road. When road density became 100%, the logistic cost yielded a sudden increase, and this situation made EPZ production slower in some simulation periods. Progressive tax policy also affects the cargo calling time and pricing scheme of cargo. With this policy, the pricing scheme will be much more costly for shippers than before, but it will make the cargo calling time by shippers became shorter than before.

DKI Jakarta will have an adequate port in Indonesia. With the spirit of developing a national maritime performance that kept over the years, it is possible to make Indonesia a world maritime axis. But we also find alignment between port development and regional development. We can’t leave the opportunity lost by neglecting one and another aspect in both of them. Both port and region should grow in integrity.