POLICY BRIEF

Economy-wide Impact of a More Efficient Tanjung Priok Port

Photo:  Lester Ledesma.
Photo: Lester Ledesma.

A study shows reducing clearance times at Indonesia's Tanjung Priok port in addition to expanding the port will contribute about 1.1% to GDP.

Introduction

Indonesia's growth has long been constrained by sluggish infrastructure development. An often-cited example of this is Tanjung Priok port, which serves more than two-thirds of the country's international trade.

The port was developed over 100 years ago and has since undergone only a few minor extensions. It is now struggling to deal with rising container traffic, while container dwell time has increased consistently since 2010, reaching 8 days in 2014, which is triple the dwell time of the most efficient port in Southeast Asia. This situation has added significant costs and delays to both importers and exporters. Contrary to popular perception, the hard infrastructure of Tanjung Priok is not the largest contributor to increased dwell time. The main cause of the increased dwell time is the port's soft infrastructure.

This paper has two objectives: first, to examine the causes of the increased dwell time and identify solutions, and second, to analyze economy-wide benefits of improved efficiency in Tanjung Priok using IndoTERM, a bottom-up and dynamic computable general equilibrium model for the Indonesian economy.

The findings of the analysis suggest that a 50% improvement in Tanjung Priok's efficiency over the next 5 years will generate additional national growth of about 1.1%. Jakarta and its surroundings will benefit the most from this improvement, while other regions trading with Jakarta will also benefit.


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Meet the experts

  • Edimon Ginting    
    Director, Asian Development Bank

    Edimon Ginting served as deputy country director for Indonesia before being appointed as director of the economic analysis and operational support division of the Economic Research and Regional Cooperation Department in 2016. He holds a doctoral degree in Economics from Monash University, Australia; a master's degree in Economics from Thammasat University, Thailand; and a bachelor's degree in Economics and Development Studies from Gadjahmada University, Indonesia. He has over 17 years of experience in macroeconomics, finance sector, and international trade.

  • Arief Anshory Yusuf    
    Senior Lecturer and Researcher, Department of Economics, Padjadjaran University, Indonesia

  • Priasto Aji    
    Senior Economics Officer, Indonesia Resident Mission, Asian Development Bank

  • Mark Horridge    
    Research Professor, Victoria University's Centre of Policy Studies (CoPS)

   Indonesia, Industry and trade, Transport
   Last updated: October 2015

 




Disclaimer

The views expressed in these articles are those of the authors and do not necessarily reflect the views of the Asian Development Bank, its management, its Board of Directors, or its members.




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