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Evaluating port reform in Indonesia: A case study of the Ports of Tanjung Priok and Tanjung Emas

Kaur, Jasmine (2018) Evaluating port reform in Indonesia: A case study of the Ports of Tanjung Priok and Tanjung Emas. PhD thesis, Murdoch University.

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Abstract

In 2008, the Indonesian government introduced the ‘2008 Shipping Law’ to develop an efficient, competitive and responsive port system that supported trade and promoted economic growth. This law was designed to remove the legislated monopoly power of the Indonesian Port Corporations (Pelindos) and separate the role of ‘operator’ and ‘regulator’. Private companies were issued with port business licenses to operate and manage ports, leading to a shift in the governance model from the traditional ‘public ownership model’ to the ‘landlord model’. It has been almost a decade since this law was passed in Indonesia. However, there has been very little analysis undertaken to assess if these reforms brought about an improvement in port performance. This research aims to contribute to the literature by providing a comprehensive analysis of the port governance framework in Indonesia and how it has evolved since the ‘2008 Shipping Law’ came into place. The research includes case studies of the Ports of Tanjung Priok in Jakarta and Tanjung Emas in Semarang.

The methodology involved in evaluating port reform is a mixed methods approach (Rao and Woolcock 2003; Rao et al. 2003). This approach provides a broader analysis of the Indonesian port reform while offsetting the weakness inherent in using only one approach. In the case of Indonesia, this methodology was useful especially as data was not readily available at the port level. The quantitative results based on both financial and non-financial indicators, show that port performance at both the Port of Tanjung Priok and Tanjung Emas has improved since 2008. However, it is difficult to argue that the improvement in port performance was only because of the ‘2008 Shipping Law’ and not other factors such as increasing cargo volumes that also affected performance. In order to improve understanding of the determinants of performance, a qualitative analysis is undertaken using the ‘Matching Framework’ (Brooks and Balthazar 2001). This framework provides a qualitative analysis suggesting that the political environment in Indonesia needs to provide more certainty to achieve the outcome of an ‘efficiency oriented configuration’ and to realise the gains from port reform. Also, the separation of the ‘operator’ and ‘regulator’ roles, has not worked well in practice. The results suggest that path dependency and the legacy of colonisation plays a critical role in explaining the trajectory of port reform in Indonesia as legal reform has not always been able to bring about institutional reform. Although the ‘2008 Shipping Law’ was the trigger for the beginning of a reform process, the results suggest that more needs to be done to implement them and realise their full potential. This includes the need for further policy changes to bring about a conducive environment for economic growth and a more flexible approach to private sector and, in particular, foreign investment, in ports.

Item Type: Thesis (PhD)
Murdoch Affiliation: School Of Business and Governance
United Nations SDGs: Goal 9: Industry, Innovation and Infrastructure
Supervisor(s): Tull, Malcolm and Taylor, Ranald
URI: http://researchrepository.murdoch.edu.au/id/eprint/46729
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