Indonesian Legal Review: Seaports

The Government of Indonesia (the GOI) has over the past year issued several regulations of note on seaports.

Ministry of Transportation Regulation No. PM 15 of 2015 regarding Concessions and Other Forms of Cooperation Between the Government and Seaport Business Entities in the Field of Seaports (MOT Reg. 15/2015)

Government Regulation No. 61 of 2009 regarding Seaports provides that seaport business activities and services can only be conducted by a Seaport Business Entity (BUP) through cooperation with the GOI in the form of a concession and/or another form of cooperation, and must be documented by an agreement.

MOT Reg. 15/2015 regulates the procedure for such cooperation between a BUP and the GOI in the form of a concession and other forms of cooperation, and provides that they can be conducted through a tender or direct appointment, depending on the type of cooperation that has been entered into between the BUP and the GOI.

The types of cooperation are as follows:

a. Cooperation in the Form of a Concession: (i) Concession to Develop and/or Operate a Port: The cooperation can be conducted through a direct appointment mechanism; (ii) Concession for a New Port: The cooperation can be conducted through a tender or direct appointment mechanism. If through a direct appointment mechanism (i) the land area of the seaport must be owned by the BUP, and (ii) the BUP must make the entire investment in the project without using state or regional funds; (iii) Concession at a Port to Develop a New Terminal: If the concession is at a port that is developing a new terminal that is part of a facility that already exists, then it can be conducted through a direct appointment mechanism; if the concession is at a port that is developing a new terminal that is not part of an existing facility, then it can be conducted through a tender or a direct appointment mechanism. If the concession is done by direct appointment, then the land area of the seaport must be owned by the BUP and the BUP must make the entire investment in the project without using state or regional funds; and (iv) Concession at a Shipping Channel and Port Basin: The concession can be conducted through a tender or direct appointment. If through a direct appointment mechanism, the BUP must make the entire investment in the project without using state or regional funds.

b. Other Forms of Cooperation: (ii) Port Management Facility to Be Developed by State, Regional and BUP funds: In this case, the cooperation can be conducted through a direct appointment mechanism.

Ministry of Transportation Regulation No. PM 51 of 2015 regarding the Implementation of Seaports (MOT Reg. 51/2015)

MOT Reg. 51/2015 revokes Ministry of Transportation Decision No. KM 54 of 2002 regarding the Implementation of Seaports (MOT Dec. 54/2002) and sets out the procedures and requirements related to the implementation of seaport business activities. MOT Reg. 51/2015 provides that a BUP may conduct seaport business activities and services, in the form of services for vessels, passengers and goods.

Services for vessels, passengers and goods consist of the following:

• services to docks;
• refueling services and provisioning of clean water;
• passenger drop-off and pick-up service;
• dock loading and unloading services and container activities;
• warehouse and stockpiling services, dock-side loading and unloading of equipment;
• container, water and dry bulk terminal services;
• loading and unloading goods;
• distribution center and consolidation of goods services; and
• services for delayed vessels.

To conduct the above business activities, a BUP must obtain a BUP license from the Ministry of Transportation. A BUP license is valid for five years. The requirements to obtain a BUP license are as follows: (i) administrative requirements: The applicant must be in the form of a state-owned company, a regional-owned company or a company engaged in the field of seaports, and submit the following:

• a taxpayer registration number (NPWP);
• a deed of establishment along with all amendments;
• a Ministry of Law and Human Rights approval;
• a certificate of domicile;
• an audited financial report by an external auditor for the last year; and
• a proposal for a seaport activity plan.

(ii) technical requirements: The applicant must:

• own and/or operate land and seaport equipment;
• have at least two permanent employees holding seaport certificates issued by the Directorate General of Transportation; and
• have experience in providing seaport services.

A BUP must also conduct cooperation with the GOI in the form of a concession and/or another form of cooperation, which must be documented by an agreement. MOT Reg. 51/2015 also provides that a seaport can only be built by the GOI. However, a BUP may build a seaport if there is a concession and/or another form of cooperation with the GOI to do so.

Government Regulation No. 64 of 2015 regarding the Amendment to Government Regulation No. 61 of 2009 regarding Seaports (GR 64/2015) 

GR 64/2015 sets out the terms under which the GOI can make a direct appointment concession to a BUP. Article 74 of GR 64/2015 provides that:

• the land area of the seaport must be owned by the BUP; and
• the BUP must make the entire investment in the project without using state or regional funds.

Article 75 of GR 64/2015 provides that after the concession agreement between the BUP and GOI expires, the land area must be transferred or given to the relevant seaport organizer (a government institution in the port area which consists of the port authority, seaport organizer units and the harbormaster).

This article was adapted from SSEK's Indonesian Legal Review, which looks at recent legal and regulatory developments in almost 50 sectors, from Airports to Tourism. This publication is intended for informational purposes only and does not constitute legal advice. Any reliance on the material contained herein is at the user's own risk. You should contact a lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and may not be reproduced without the express written consent of SSEK.