Not all plain sailing for Jakarta shipping

Tanjung Priok port in Jakarta, Indonesia. Manufacturers have long criticised Indonesia's shipping system, saying it slows the import of raw materials and the export of finished products.
Tanjung Priok port in Jakarta, Indonesia. Manufacturers have long criticised Indonesia's shipping system, saying it slows the import of raw materials and the export of finished products.PHOTO: AGENCE FRANCE-PRESSE

Indonesia's plan to become 'global maritime axis' faces challenge of adequate funding

JAKARTA • With its towering new cranes and wharves that can handle some of the world's biggest ships, Indonesia's main international port has been shaking off its reputation for inefficiency and congestion with a US$2.5 billion (S$3.5 billion) upgrade.

But the revamp is just the first step in an ambitious drive to overhaul shipping in the country, with experts warning that a scheme to dot the sprawling archipelago with a string of new harbours over the next few years could be heading for choppy waters as it still needs billions of dollars in financing.

President Joko Widodo wants Indonesia to become a "global maritime axis", looking to slash logistics costs as the nation competes with neighbours Vietnam and Thailand to be a major regional manufacturing base for automotive and electronics companies including Toyota Motors and Samsung Electronics.

"In terms of challenges, locating adequate funding is one of the biggest," said IHS Markit's editor for global ports Turloch Mooney.

Indonesia ranked 63rd out of 160 countries last year on the World Bank's Logistics Performance Index, which measures the ease of trade including the timeliness of shipments, Customs performance and infrastructure quality.

The costs of moving goods across one of the world's most populous countries stood at 27 per cent of gross domestic product, according to a 2013 study co-written by the World Bank. That compared with 13 per cent in Malaysia and 8 per cent in Singapore.

Indonesia has an ambitious plan to build or expand a total of 24 ports, though it is unclear what the overall cost would be, with the work largely divvied up between four state-controlled port operators that have their own fund-raising plans.

Manufacturers have long criticised Indonesia's shipping system, saying it slows the import of raw materials and the export of finished products.

While the dwell time - how long it takes cargo to move through a port - has dropped to around three days at Jakarta's port over the last few years, experts estimate that it still takes eight days or more at Indonesia's secondary ports.

In comparison, the average dwell time at established maritime hub Singapore is only around a day.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 24, 2017, with the headline 'Not all plain sailing for Jakarta shipping'. Print Edition | Subscribe