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INDONESIA
has made remarkable progress in setting
the framework for further development of
its ports after the promulgation of the
2008 Shipping Law.
As
the world's largest archipelago, Indonesia's
economic prospects appear to be brightening
in 2015.
Since
taking office in October, the government
led President Joko Widodo (known as Jokowi),
has taken advantage of falling global oil
prices to carry out a radical overhaul of
Indonesia's costly fuel-subsidy regime.
This
will free up public funds for much-needed
spending on infrastructure and welfare services.
After bottoming out at five per cent in
2014, economic growth will accelerate to
an average of 6.1 per cent a year in 2015-19,
supported by more pragmatic policymaking
and stronger export growth.
Exports
increased 1.24 per cent in the first quarter
compared to the same period last year, which
were bolstered by stronger palm oil shipments
and demand from China and Japan. Yet imports
fell 2.34 per cent year on year in first
three months of the year.
Takehiko
Nakao, president of the Asian Development
Bank (ADB), estimates that the Indonesian
economy will grow 5.6 per cent year-on-year
in 2015, lower than the target that has
been set by the State Budget of 5.8 per
cent. Mr Nakao is slightly less optimistic
as he expects a slowdown in government spending
this year. On a positive note, his forecast
implies a sharp improvement in Indonesia's
economic growth in 2015 from an estimated
5.1 percentage point year on year GDP growth
in 2014.
Last
year, Indonesia's economic growth moderated
amid the global economic slowdown and subsequent
falling commodity prices. Low commodity
prices (such as coal, crude palm oil, and
rubber) impact heavily on the export performance
of Southeast Asia's largest economy. Moreover,
due to internal rebalancing of the economy
the central bank introduced a higher interest
rate environment (to combat high inflation
and curb the wide current account deficit)
thereby curtailing economic growth.
Mr
Nakao emphasised that Indonesia's economic
performance in 2015 may surpass his forecast
provided that the government continues to
implement structural reforms (such as the
recently revised fuel subsidy policy), improves
tax collection, accelerates infrastructure
development and improves the investment
climate. These efforts will boost market
confidence in the government's economic
programme and the country's economic fundamentals.
This
ASEAN member country is projected to double
its GDP by 2020, increasing from US$900
billion in 2012 to $1.9 trillion by 2020,
according to a Port Strategy report.
With
the country slated to be the sixth biggest
economy in the world by 2030, this is indeed
the time to iron out the sometimes discernibly
chaotic trade facilitation arrangements
that Indonesia has typically been associated
with.
So
far, Indonesia's five key ports Tanjung
Priok (Jakarta), Tanjung Perak (Surabaya),
Belawan, Tanjung Emas and Panjung - account
for more than 90 per cent of the country's
container trade. Therefore, the construction
of new container port terminals is vital
for Indonesia to handle further freight
increase in near future.
Rajiv
Biswas, Asia-Pacific chief economist for
IHS Global Insight, was cited by Port Strategy
as saying: " [The current] congestion
reflects a number of factors, including
demand drivers, notably Indonesia's sustained
rapid growth in GDP and trade flows since
2004."
He
urged the Indonesian to pay much attention
in port planning and operations. He said
although the abovementioned five ports "are
a key strategic priority for government
initiatives for port development, the Indonesian
government will also have a much larger
task of upgrading its wide network of other
ports, which are crucial for intra-island
trade."
Besides,
he suggested that the Indonesian government
should encourage more private investment.
"Although
the Indonesian government has already been
involving international shipping lines and
global port operators in some of its largest
ports, considerable further private sector
participation will accelerate the development
of Indonesian ports. Such reforms will help
to encourage greater efficiency and improved
port management, as well as greater private
financing for port infrastructure development.
An estimated $20 billion needs to be spent
on Indonesian port infrastructure by 2020,"
said Mr Biswas.
Indeed,
a timetable has been set for the implementation
of a single port authority. But as is in
the glacial nature in Indonesia whenever
rules are mooted and plans suggested there
is always a big "if" as to how
these plans pan out.
If
and when that eventuality does happen the
move will almost surely be welcomed with
undisguised relief. As after all, competing
and sometimes annoyingly overlapping directives
have hardly done Jakarta any favours.
There
is no disputing, whatsoever, the determination
with which Jakarta wants to make a break
with the "past" when port authorities
in the country typified by Pelindo I to
IV were but disparate entities, fragmented
loosely and which had all the appearance
of a lack of an authoritative coordinating
voice to govern port activities and port
development.
A
typical case in point is the ceaseless congestion
and recurring bottle necks in Tanjung Priok.
For
years shippers have complained of the lack
of draft, berthing, storage and space, whenever
vessels call.
Sources
say ships take up to six days to get into
ports and spend an equal time unloading
cargo. Trucks can be held up for hours on
end sometimes resulting in frustrated shippers
eventually taking their cargo to Singapore
or Malaysia.
Port
inefficiencies, bottle necks, congestion
and other "kinks" in Indonesia's
supply chain are the bane driving unusually
high inflation rates in the country.
The
heart of the matter, as has been openly
acknowledged, is how Indonesian ports can
be made leaner, responsive to vessel calls
and yet be able to affect quick turnarounds.
The
nation itself recorded an enviable growth
rate of some 6.5 per cent in 2011 and has
set a target of 8.3 per cent for 2013. Coming
as that goal does against the backdrop of
anaemic growth in the US and in Europe,
it indeed becomes time to sit up and take
notice of what is stirring there.
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