Revamp Infrastructure and Maritime Connectivity

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Port Tanjung Priok in Jakarta (Photo by Pelindo)

Global Maritime Fulcrum is initiated by Presiden Joko Widodo to develop Indonesia as a maritime country. To achieve that goal, the President is fully aware that Indonesia should revamp infrastructure and maritime connectivity, fisheries, maritime diplomacy and maritime defense power. The upgrading of Indonesia’s maritime infrastructure is a priority of President Joko Widodo. At the same time, a program the president termed as “sea highways” aims to improve capacity port in a bid to meet growing demand for passenger and freight transportation.

 

Ports play important role to establish connectivity between islands. Good maritime connectivity is an important key to Indonesia’s further economic development. According to survey by World Bank, high logistics costs in Indonesia, impede stronger Indonesian economic growth. President has vowed to simplify permit procedures and expedite cargo inspections to support shipping and reduce dwelling times. It is hoped that the regional price disparity can be reduced in the near future.

Based on Information Centre for Strategic Food Price, data as of 14 September 2016, onions in Jakarta sold for roughly Rp. 41,250 per kg but in West Papua they cost Rp. 60,000 per kg. Similarly, chicken in Jakarta was about Rp. 20,400 per kg but in West Papua it sold for Rp. 30,050 per kg.

As an archipelago with thousands of ports, port infrastructure in Indonesia has lagged far behind other countries in ASEAN. Based on the 2013/2014 Global Competitiveness Report published by the World Economic Forum (WEF), Indonesia’s infrastructure and connectivity ranking was at the 61st position out of 148 countries. Meanwhile, Singapore being ranked the 2nd in the world, Malaysia the 29th, Thailand the 47th, Brunei Darussalam the 58th, and Indonesia in the 61st position. One year later, WEF’s 2014/2015 data show that Indonesia’s ranking in terms of its infrastructure and connectivity has increased from the 61st position to the 56th of the world.

According to the report, the availability of port infrastructure in Indonesia is still considered insufficient. This has become one of the causes of the high cost of national logistics when compared with other countries. The flow of export and import goods, as well as inter-island trade, has become obstructed and logistics costs have become more bloated.

Private investors welcome

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New Priok Port Project

Indonesia requires significantly more investment in maritime infrastructure to restore lacks sufficient transport and logistics infrastructure to move goods and people effectively and efficiently around its some 17,000 islands. In order to strengthen the country’s maritime industry, priority areas identified include the construction of ports, railways, highways and toll roads. President has pursued foreign investment for major infrastructure projects, seeking cooperation with both governments and the private sector in Japan and China. China’s 21st Century Maritime Silk Road initiative, aimed at linking East Asia to the Middle East, provides further momentum for Indonesia to attract cooperation with China on maritime infrastructure.

 

For China, its contribution to the construction of maritime infrastructure in Indonesia will help boost production capacity in its iron, steel, aluminum and cement industries for export purposes. Infrastructure is a significant opportunity for Chinese companies. At the CEO Summit of the Asia-Pacific Economic Cooperation forum in Beijing on Nov. 10, 2014, President Joko Widodo invited Chinese companies and others to help build 24 seaports and deep seaports and also a maritime highway from the west to the east of Indonesia to ease price disparity of commodities.

Chinese Foreign Minister Wang Yi in the same week added that Chinese enterprises can certainly help facilitate Indonesia’s maritime initiative as they have an “advantage in technology, funds to develop ports, bridges, toll roads, power generators and other infrastructure projects that Indonesia needs”.

Projections

For China, investing in foreign infrastructure projects is an economic necessity. But it doesn’t mean that China’s economic assistance is entirely apolitical in nature. Wilmar Salim and Siwage Negara from the Institute of Southeast Asian Studies in Singapore views that China’s investment in Indonesian infrastructure can be seen as an economic “litmus test”.

Although China reassures Indonesia that its intention to take part in maritime infrastructure projects in Indonesia essentially serves peaceful intentions, there is no absolute guarantee. It needs time to see whether China’s lofty plans will go beyond maritime connectivity and infrastructure building. The recent case in the Natuna Island and increase the risk of hostile maritime encounters with Chinese fishermen, if not their coastguard escorts may not be overlooked.

Government should develop all of Indonesia’s frontier areas, including prioritize the infrastructure development in the Natuna Islands, Entikong and Atambua and outlined plans to fund a massive maritime infrastructure program to accelerate growth in Southeast Asia’s biggest economy.

Indonesia, through Ministry of Foreign Affairs, may remind China that it is important for both countries to develop a healthy economic partnership continues as an anchor for the mutual benefit relationship between Indonesia and China.

oOo

#sesparlu

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