Large logistics companies have been exploiting the government's sea toll program at the expense of small businesses, which have to pay logistical costs considerable higher than what the program intended, a study by Maritime Research Institute Nusantara (MRIN) showed. (Antara Photo/Kornelis Kaha)

Jokowi's Sea Toll Road Program Marred by Rent Seekers: Study

BY : AMAL GANESHA

FEBRUARY 21, 2018

Jakarta. Large logistics companies have been exploiting the government's sea toll program at the expense of small businesses, which have to pay logistical costs considerable higher than what the program intended, a study by Maritime Research Institute Nusantara showed.

The Jakarta-based think-thank said President Joko "Jokowi" Widodo's sea toll road was intended to lower logistical costs on shipping routes between Java Island – Indonesia's most developed region – and underdeveloped eastern regions, such as Papua and East Nusa Tenggara.

Under the program, the government subsidized 13 cargo ships to transport basic goods and commodities between the two regions. These ships are available to all business that are registered with state-owned shipping firm Pelayaran Indonesia and the Ministry of Trade.

The program was supposed to cut logistical costs by 30 percent, but research conducted by the MRIN last year found that this was still far from becoming a reality.

According to MRIN director Muhammad Makbul Rahmadhani, larger logistics companies have been able to "game the system" to obtain slots in subsidized cargoes, which they then sell to others at a hefty margin.

"These big players monopolizing the system have usually have gone through a legitimate process [to obtain the slots], but what they are doing is unethical," Rahmadhani said.

"For example, they order 17 [subsidized] containers, but in fact, they leave 10 of those containers empty and then sell the empty space to small business at a profit," he said.

The subsidized price for one 15-ton container is Rp 6 million ($420), but this is then sold for up to Rp 11 million, the study shows. The market price for a similar container is Rp 13 million.

The MRIN calculates that the country has lost an estimated Rp 500 million per month since the inception of the program in 2015.

"The program is actually only effective in lowering price disparities between Java and the eastern regions by 15 percent, as we did not find the figure of 30 percent the government often claims," Rahmadhani said.

He said the Jokowi administration has stated on many occasions that commodity prices in Papua have been lowered by 30 percent due to the program.

He added that the MRIN also found other ways in which the program has been abused.

"We found that, even though in small numbers, the subsidized ships carried cargoes that included non-basic commodities, such as electronic goods, which are not actually allowed on board," Rahmadhani said.

"We suggest that related government stakeholders, in this case the Ministry of Transportation and Ministry of Trade, look into this case seriously," he said.

SHARE