Indonesia pushes to slash port dwelling time and cost

Indonesia's president Jokowi Widodo has requested for the "dwelling time" to be slashed again from three days to two days.

Manila port
Picture for representation Reuters

Acknowledging the need to slash costs at Indonesian ports, coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan said despite efforts taken to successfully cut loading and unloading time of goods at ports (dwelling time), its logistical costs was still steep. He said the ministry acknowledged that the costs were still a problem, that needs to be overcome.

He was quoted by Indonesia's Antara News on Thursday at the National Coordination Meeting in Sasana Kriya TMII in East Jakarta, saying that he hoped that at some point this year, the cost at the ports would be reduced.

At the same event, Indonesia's president Jokowi Widodo has requested for the "dwelling time" to be slashed again from three days to two days.

"It (dwelling time) has been three days and now, I ask for two days. We will not change unless we are forced to; while we can change if we really want to because this is a matter of intention whether we desire to change or not," Jokowi said.

Meanwhile, Luhut said PT Freeport Indonesia must abide by regulations if it still wanted to extend its contract, which ended together with the freeport contract. He said regulations such as the 51% divestment and smelter development must be fulfilled while saying: "I met the US secretary of trade and explained the current issue was Freeports expiration of the contract."

"We still wish to give the contract extension to Freeport, provided if it meets our conditions," Luhut said.

The government, through their Government Regulation Number 1, 2017 - in line with the fourth amendment to their Government Regulation Number 23, 2010 on the implementation of coal and minerals mining business has put in place a number of conditions for the extension of contracts.

The regulations include that work contract holders must change their companies into mining business permit companies and special mining business permit companies while declaring their willingness to build smelters within a five-year period.

Freeport needs to wait

Jakarta Globe reported that the government will take a sabbatical and wait till 2019 to consider granting Freeport Indonesia, a local arm of the US mining company Freeport-McMoRan Copper & Gold which is seeking an extension to its contract, which is expected to expire in 2021, after whcih the company seeks a 20-year-extension.

On Friday, Coal and Mining Resources director general R. Sukhyar said according to regulations, the request for a contract extension can only be executed two years prior to its termination date.

He said he hoped Freeport Indonesia would come to terms with the 2009 Mining Law which has turned the tables on foreign interest. If the company renews its contract, it must be satisfied through holding a Special Mining Business permit (IUPK) as opposed to the current Contract of Works held by Freeport.

Sukhyar said the new contractual scheme related to the obligatory 10% share of the company's profit where he said leaves room for further discussions. He acknowledged the company's contract extension was vital to its long-term investment plan to develop its Grasberg site which is located in Papua aimed to extract higher-grade ores.

Freeport has previously said that it planned to invest a total of US$17 billion in developing the Papua mine until 2041.