Lawsuit to the Transportation Ministry

The Transportation Ministry, through the Marunda Port Authority Office, gave a 70-year concession to KCN in November 2016. KBN saw that the granting of the permit violated the existing law and has the potential to cause losses to the state of up to Rp 56 trillion.

In February 2018, KBN then took this matter to the North Jakarta District Court. During the trial in August last year, the judge decided to nullify KCN’s concession agreement for Marunda port. Following this decision, KCN no longer has the right to manage the Public Terminal at Marunda Port. Chief Judge Andi Cakral Alam ordered KCN to stop the operation and construction as well as the management of the terminal until there is a permanent legal decision.

The handover of the Marunda Port concession to KCN does not exist in the Presidential Decree (Keppres) No. 11/1991 concerning the Appointment and Determination of PT Kawasan Berikat Nusantara’s Business Areas. Therefore, the court judge saw that the Marunda Port was under the control of the Bonded Zone.

KCN did not accept the judge's decision, which they seen unfit with the facts during the trial. Keppres No. 11/1992 does not state that the Marunda KCN Port area is within the KBN area. The regulation only mentions the KBN area as the mainland, while the Marunda Port concession area initially reclaimed waters. KCN also appealed and lost at the Jakarta High Court in early 2019. KCN then made another appeal to the Supreme Court.

Interference in the Marunda Port Case

The government had intervened when the KBN lawsuit in the North Jakarta District Court was running. In May 2018, Law and Human Rights Minister Yasonna Laoly led the Working Group IV for Case Handling and Settlement in a discussion regarding the case. This working group is part of the Task Force for Economic Policy Effectiveness and Acceleration headed by the Coordinating Economic Minister Darmin Nasution.

The meeting was attended by representatives of related state institutions, such as the Investment Coordinating Board (BKPM), National Police, Attorney General's Office, Agrarian and Spatial Planning Ministry, and Transportation Ministry. The KBN’s director and KCN’s president director were also present.

The working group leaders saw the state company lawsuit against the Transportation Ministry should not occur because it means the state sues the state. Moreover, the Coordinating Minister for Political, Legal, and Security Affairs Wiranto had come up with a resolution for this case in 2017. He asked the SOEs Minister and Jakarta Governor, as the shareholders of KBN, to support the continuation of Marunda Pier 2 and Pier 3 construction for the sake of investment certainty.

KCN is now awaiting a decision from the Supreme Court regarding the appeal. Since the emergence of the Marunda port lawsuit, investors involved in port development throughout Indonesia have refused to use the concession scheme for fear of experiencing the same thing. Currently, there are 19 collaborative projects between the government and port business entities (BUP) that use concession schemes.

“Investors' interest to build a port is still high, but some investors are stepping back slowly because there is no legal certainty,” Institute for Development of Economics and Finance (Indef) Executive Director Tauhid Ahmad said. Port investment is long-term in nature, so long-term commitments are also needed to create a conducive climate.

Transportation Minister Budi Karya Sumadi said he would encourage the continuation of the Marunda KCN Port operations. Moreover, the government has designated this port as the National Strategic Project (PSN). He expects the KBN and KCN to resolve their dispute correctly. “I think reconciliation is a good way. Mr. Luhut [Coordinating Maritime Affairs Minister] will probably summon them,” Budi said, last July.

Regarding the continuation of the project, Widodo promised to remain consistent in building the Marunda port. Until now, KCN has completed 70 percent of the Pier 2 construction, spending around Rp 3 trillion without using state funds. “We remain committed to completing the construction of Pier 2 and Pier 3, even though the stevedoring activities at Pier 1 have decreased by 60 percent due to various legal issues that we are currently facing,” he said.

Besides being included in the PSN, whose infrastructure construction is a priority, the Marunda KCN Port is also intended to help the already congested Tanjung Priok Port. The government set this port as a particular terminal for bulk commodities that do not use containers.

Based on the Port Master Plan, Marunda Port is targeted to be fully operational in 2020. However, KCN expects the construction of Pier 2 and Pier 3 to be completed by 2023. According to Widodo, the state will lose potential revenue of around Rp 200 billion per year if the Marunda KCN Port project case is protracted.