Leipzig, Germany. Indonesia can reap the benefits from the shifting of the trade patterns in the maritime transport following Asia’s emerging economies as long as the government is focus on its ambitious maritime plan especially building capable infrastructures, experts said on Wednesday.
Ronald Widdows, chairman of the World Shipping Council, the international liner shipping industry organization, said Indonesia, just like India had enormous potential and ambitions, but still lacked the key element of reliable infrastructure.
He said Indonesia relied heavily and historically on Singapore, as “what goes in and out of Indonesia goes through Singapore.”
“If you build capability within Indonesia that has more direct services which have impact on cost, it won’t need to [rely on Singapore] as much at the point that you build more significant capability,” he told GlobeAsia after a panel discussion on “New Trade Patterns: Implications of Maritime Transport" at the International Transport Forum 2015 Summit in Leipzig, Germany.
The ITF said in a statement that the main maritime trade routes now all originated from Asia and intra-Asia trade with the booming of the economy in the region. It was reported that Asian ports currently manage more than 50 percent of the world’s port activity.
“Expansion in Asia continues to determine global trade patterns, with intra-Asia containerized cargo flows now being more substantial than Asia-Europe and Asia-US flows together,” the statement said.
President Joko Widodo has announced his administration’s ambitious plans to build 24 new seaports until 2019 with total investment of Rp 60 trillion. He aimed for the world’s largest archipelago to be back to its roots and become a global maritime fulcrum. The plan also included sea toll which serves within Indonesia’s waters to help lower the logistic costs in the country’s sprawling islands.
Widdows lauded the initiative, saying that Indonesia would have huge capability once the infrastructure was developed to improve access to the market. He acknowledged that currently Jakarta's Tanjung Priok Port served as Indonesia’s main port with large facilities, but that the situation in other parts of the country was different.
He added that if Indonesia built modern ports that could handle larger vessels, not only would it affect the networks of the carriers that came to Indonesia but also the service that existed within Indonesian waters.
“It will take some time and big investments, but with the focus of the government and doing it in a professional way, it will draw investments from private sectors internationally. I think it’s a very positive development,” Widdows said.
He added that container shipping moved roughly $4.5 trillion dollar worth of goods every year, or 60 percent of the world’s GDP, and any shift would have a significant impact on the global economy.
The shift started in China, he said, as 30 years ago there were not many terminals there. Today, the country has the largest terminal network in the world. China has also become the largest trading partner for countries in Asia which for years relied on the United States as their biggest trade partners.
“Those changes have caused changes in the individual lanes, it caused changes in ship sizes and port developments. There are still many countries in Asia that are still capped and restricted in terms of their ability to play in the game because they don’t have infrastructure,” Widdows said.
Edward Tan, chief executive of the Maritime and Port Authority of Singapore, applauded Indonesia’s plan to become a major maritime player. He said that as a close neighbor, Singapore had worked closely with Indonesia in port operations and management and was willing to share its expertise.
“It’s positive for Indonesia putting investment building its ports; it can facilitate the goods and people. If Indonesia grows, the rest of the region also grows because Singapore will also benefit from Indonesia’s growth,” Tan told GlobeAsia.
He added that regional connectivity in terms of infrastructure and investment would also bolster the full implementation of the upcoming Asean Economic Community by the end of this year.
“The key thing is for the region to be stable which is important for countries to continue to work with one another and build our relationship that’s based on trust and mutual benefit,” he said.
The writer was invited to Leipzig by the International Transport Forum.