Indonesia is further upgrading Batam port with a 1.2 trillion rupiah (S$115 million) injection from state port operator Pelindo I.
The investment, announced by Pelindo I president director Bambang Eka Cahyana on Tuesday (April 2), follows a visit by Vice President Jusuf Kalla to Batam earlier in the day.
News of the Pelindo I investment follows hot on the heels of Malaysia's plan to develop a multi-million-dollar project off Johor's Port of Tanjung Pelepas to enable ships to transfer their cargo to other vessels without having to dock at the berths, in a bid to enhance shipping flexibility and cut costs for shippers.
The Batam investment plan aims to enhance cargo handling at the port of Batu Ampar, in order to raise its competitiveness.
The port, located on the northern tip of Batam, and facing the Singapore Strait, will soon take delivery of three new mobile harbour cranes and 12 terminal tractors, paid for by part of the investment from Pelindo I, Mr Bambang told reporters.
Over the medium-term, Pelindo I will procure container cranes capable of loading and unloading goods for larger ships and he is optimistic that the additional equipment will increase productivity at the port as well as reduce operating costs.
"We are following shipping standards that demand efficiency at Batu Ampar port. This begins this April," he added.
The move by Pelindo I comes hot on the heels of Malaysia's plan to develop a multimillion-dollar project at Johor's Tanjung Pelepas port to enable ships to transfer their cargo to other vessels without having to dock at the berths.
The new collaboration between Malaysia's maritime services company KA Petra and Hong Kong-based port operator Hutchison Ports Holdings is aimed at enhancing shipping flexibility and cutting costs for shippers.
The project, which could cost up to US$180 million (S$244 million), will cover an area of 1,200ha, and will be built in the Strait of Johor near Tuas.
It is also poised to be the world's biggest ship-to-ship transfer hub, able to accommodate up to 30 vessels at one time, as well as store 9 million tonnes of petroleum products, when completed in two years.
The Pelindo I announcement followed a meeting called by Vice-President Jusuf Kalla with Mr Bambang, Economic Affairs Coordinating Minister Darmin Nasution, Riau Islands governor Nurdin Basirun, free trade zone agency BP Batam chief Edy Putra Irawady and Batam mayor Muhammad Rudi on Tuesday.
The Vice-President was visiting Batam earlier in the day for an event organised by the Association of Indonesian Entrepreneurs.
Mr Kalla, speaking to reporters that the meeting, which lasted more than an hour at BP Batam's headquarters, was called to discuss how Batu Ampar port can improve its efficiency and that its operational costs are not higher than those at other ports in the region.
He added that the port currently incurs many unnecessary costs, including having to pay for container inspection fees carried out in Singapore, which adds to the high logistics costs in Batu Ampar.
Indonesia wants Batam as an alternative shipping and manufacturing hub to Singapore with a potential to draw US$60 billion in new investment, reported Bloomberg news in February this year.
Located less than 30km south of Singapore, Batam has attracted about US$20 billion of investment since Jakarta began promoting it as an industrial zone in the 1970s.
The Joko Widodo administration has plans to expand benefits to businesses by reclaiming about 8,000ha of idle or confiscated land to offer to exporters or producers of import substitutes.
Mr Joko, who is running for re-election without Mr Kalla on April 17, caused a stir last December when he ordered BP Batam to be placed under the control of the Batam city administration to fix its problem of "leadership dualism".
Since then, BP Batam, the state agency overseeing free trade on the island, has proposed developing two special economic zones, offering bigger tax breaks for businesses including those from Singapore and income tax relief for workers.
Mr Edy told The Straits Times in an interview in February that the plans will be approved by Mr Joko as early as June, if the President wins a second term.