Port Sector Policy

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Port Sector Policy of Asian Development
Bank   5 March 2002 Makoto Mizutani Transport
Economist Asian Development Bank
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ADB is preparing Transport Policy including
ports and maritime sector. This presentation is
based on the draft Policy paper and the views of
the presenter, which does not always reflect
views of ADB."
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1. Asian Development Bank

• Multilateral financial institution
• Started operation in 1966
• Aimed at improving the welfare of the people of
  Asia and Pacific
• Owned by 59 member countries (43 Asia and
  Pacific 16 Other Region)
• HQ Manila 15 resident missions 4 other offices
• Staff 2,000 from nearly 50 countries

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2. ADBs Performance in 2001

• Lending totaled 5.3bn for 76 loans in 60
  projects
• Major borrowers India, PRC, Pakistan, and
  Indonesia
• Transport and Communications Sector 27
• Technical Assistance (TA) Grants totaled
  146.4million for 257 projects
• Major recipients of TA grants Indonesia, PRC,
  Viet Nam, India, and Philippines
• Transport and Communications Sector 9

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3. Port Sector Overview in Asia and Pacific Region

• Massive investment for the past 10 years
• Sustained high growth rates in cargo throughput,
  particularly for containerized traffic
• 35m TEU (1990) to 100m TEU (2000)
• Significant increase in ship size, particularly
  in container vessel
• Emergence of global alliances of mega-carriers
  with a consequent increase in the market power

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• Changing technology in terms of the application
  of computerized management and operational system
• Greater involvement of private sector in port
  operation and development, and reduction of
  public sector involvement
• Increased focus on competition, inter-modalism,
  and logistics
• Growing awareness of the need for integrated
  planning and services of port and land transport
• Importance of managing environmental impacts both
  of port operation and port development

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4. ADB Assistance to Port Sector

• 57 loan projects totaled 1.8bn in 20 developing
  member countries since 1969
• Focused on
• (i)   rehabilitation, expanding and improving
• existing port facilities
• (ii)  developing new ports to stimulate regional
• socio-economic development
• (iii) institutional strengthening and
  capacity
• building

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ADBs Lending Operations in the Port and
Maritime Sector __________________________________
________________________________ Country
Loan Nos. Loan million
Approval _____________________________
__________________________________________ Mekong
4 119
Myanmar 1 16 1980 Thailand
2 73 1978, 81 Vietnam 1
30 1995 _____________________________________
________________________________________ South
East Asia 24 620 Indonesia 11 357
1972-97 Malaysia 7 164
1969-84 Philippines 4 83
1971-87 Singapore 2 16 1970, 71
_________________________________________________
______________________ East and Central Asia
7 325 PRC
4 254 1991-97 Korea 2
70 1973, 80 Taipei,China
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1
1969 _____________________________________________
_________________________________ South Asia
12
700 Bangladesh 1 7
1973 India
5 615
1987-97 Maldives
3 16
1981-93 Pakistan 1 49 1976 Sri
Lanka 2 13 1970,01 ____________
__________________________________________________
_________ Pacific 10 75 PNG
3 51 1980-00 Fiji 1
7 1979 Solomon Islds 2 6
1977, 87 Kiribati
2 2 1976, 84 Vanuatu 2
9 1987, 91 ________________________________
_______________________________________ Total
57 1,838
_______________________________________________
________________________
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• 1960s and 1970s rehabilitation and expansion
  of port facilities in the Newly Industrialized
  Countries (Korea, Singapore) and ASEAN countries
  (Indonesia, Malaysia)
• Late 1970s shift to Pacific (Fiji, Solomon) and
  Bengal
• Bay countries (Myanmar, Bangladesh)
• 1980s rehabilitation of smaller ports in island
  countries (Indonesia, PNG, Solomon, Vanuatu)
• Late 1970s to 1980s container terminals
  (Manila, Penang) and specialized bulk cargo
  terminals (Qasim, Bintulu)
• 1990s strong trend to private sector investment
  and decrease of ADBs involvement greater
  emphasis on achieving sector reform, and private
  sector development, and public-private
  partnerships

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5. Policy Issues (i)
Poverty Reduction

• Poverty Reduction Overarching policy goal of
  ADB
• (October 1999)
• Economic growth and poverty
• Growth can reduce poverty by generating
• employment and incomes.
• How ports contribute to poverty reduction
• Facilitate export growth and reduce
  import costs
• -gtIncrease production, revenue, and job
• opportunities
• -gtReduce poverty

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• Alleviate remoteness
• -gtProvide better access to the
  market by
• reducing supply-chain costs
• -gtReduce poverty
• Possible areas of intervention
• Ports that could contribute to
  reduce supply-
• chain costs
• Inland waterways to improve
  accessibility with
• low costs
• Challenges
• Detailed analysis on distribution
  of benefits
• accrued by port development
  operators,
• carriers, shippers, and the people
  themselves

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(ii) Sustainable Economic Growth

• Ports as engine of economic growth
• -gt Gateway for international and domestic
  trade
• -gt Node point in supply chain
• -gt Employment generator
• Conflicts
• Large work force in the port may
  increase
• operational costs
• -gtHamper operational efficiency
• -gtReduce competitiveness
• -gtDecline the port

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• (iii) Private Sector Development
• ADBs private sector development strategy
  (March 2000)
• Experience has shown that when
  properly regulated and
• operating under competitive market
  conditions, the private
• sector can generally use resources
  more efficiently than
• the public sector.
• Private sector development in port sector
• Port business is generally profitable. Private
  sector
• development is justified.
• Role of private sector in port
  operation, port management,
• and port development increased
  dramatically (concession,
• lease, contract out).
• Involvement of private sector
  increased efficiency and
• productivity.

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(iv) Governance

• Change in role of public sector
• Decrease of public sector
  involvement in port operations
• and development (corporatization,
  decentralization)
• Role of public sector
  (regulation, management, operation,
• development) needs to be agreed
  in the Government
• Role of the Government
• Establishing policy and
  regulatory framework, including
• competitive environment and
  pricing structure
• Reserving land for port
  development
• Developing port facilities that
  do not generate profits
• Developing ports with high
  economic benefit and low
• financial returns

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(v) Sub-regional Cooperation

• Ports could play a critical role in sub-regional
  
• cooperation initiatives to facilitate
  trade, particularly
• to and from land-locked countries
• Greater Mekong Subregion (GMS) since 1992
  Port
• of Da Nang to central Thailand through
  East-West
• Corridor
• South Asia Sub-regional Economic Cooperation
• (SASEC) since 2001 Port of Chittagong
  and
• Kolkata to Nepal and Bhutan through India
  and
• Bangladesh

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• (vi) Environmental and Social Impacts
• Major impacts
• Discharge from vessels and oil spillage
• Noise, dust, water pollution caused by port
• operation and generated traffic
• Change in marine ecology due to port
• development, particularly dredging and
  reclamation
• Resettlement caused by port development
• ADB operations
• Require IEE or EIA according to the
  magnitude of
• potential environmental impacts
• Require Resettlement Action Plan

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• (vii) Operational Efficiency
• Operational improvements and new technology
  could
• increase efficiency and productivity
  without need for
• further infrastructure development.
• There are a range of operational and
  technology
• improvements to cargo handling
  operations
• Equipment upgrading
• Operator training
• Terminal layout modifications
• Computer-based terminal operations
• Management measures to improve labor
• productivity

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• 6. Toward Sustainable Maritime
• Transport
• Primary role of ports Trade Facilitation
• Provide efficient, reliable, and
  costless supply-chains
• Approach
• (i)   Establishing transport corridor
• Integrate land transport network
• Remove impediments to trade
  (infrastructure,
• operation, management, regulation)
• Consider under sub-regional
  cooperation
• initiative
• (ii)  Promoting private sector involvement
• Establish private sector
  development policy
• and its implementation program

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• Challenges
• (i) Optimal capacity of infrastructure
  development based
• on a long-term strategy, together
  with staged
• program
• (ii) Regulatory framework to invite private
  sector and to
• ensure competition
• (iii) Sector reform of the Government
• (iv) Regulation for safety control
• (v) Consideration to poor affected people
  due to
• unemployment and resettlement
• (vi) Environmental sustainability

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THANK YOU

• www.adb.org
• mmizutani_at_adb.org