Debunking India-Indonesia Maritime Connectivity
Indonesia’s sovereign wealth fund, the "Indonesia Investment
Authority" or INA, a new body set up by the Government of Indonesia to manage
Dubai’s investment asset, will accordingly establish a joint company, perhaps in the form
of a capital venture, with the international port operator responsible for handling the new
connection. This new firm will also invest in the development of the existing
container terminal, currently controlled by PT Prima Terminal Petikemas (locally
dubbed Prima Petikemas), a subsidiary of PT Pelindo Petikemas, an affiliate of
Pelindo.
What is being planned indicates that India and Indonesia
maritime connectivity is flourishing or set to be. Is that so? Such a concern ensues
because basically, at least in terms of media coverage, there are already exists shipping
connectivity bridging the countries, specifically from the western part of
the archipelago. We do not however know its progress to date, until the above-mentioned plan manifests. Of course, this development will not
downgrade existing trade between India and Indonesia, accounting billions of dollars.
The Ministry-led program, in other words, contains loopholes that
may doom it to a similar fate. And, the plan indeed has a couple of question
marks; this article tries to expostulate on them. First, the Belawan-Cochin connection (DP World has quite a sizable operation here) has unfortunately not involved single
shipping company - merely port operators. In many parts of the world, such a network is customarily arranged by a container liner, while the actual port operator only acts as a supporting element.
The issue could be feasibly settled by DP World, as a
worldclass port operator, since it has an intensive shipping partners network. Still, as of this writing, there is no indication the company has been invited to join in the planned India-Indonesia maritime
connectivity effort. It is even hard to see any notices about it in news report.
The Indian embassy in Jakarta and DP World management have been contacted, in
order to get their confirmation; until now, no connection can be
established. It seems that the Ministry’s plan has come out of the blue.
Second, export-oriented container throughput at Prima
Petikemas terminal, according to available data, records around 200,000 TEU per year, mostly destined for African countries. There is no information
about shipment to Indian ports. If the new connection does succeed in actually starting up, it will be a Herculean task to generate cargo for ships serving
the leg. The hinterland of the terminal, Medan city and its adjacent regions,
are the home for massive numbers of rubber and oil palm plantations, mostly exported in raw form. Thus, the most suitable transportation mode to ship them out is bulker or general
cargo vessel, not a boxship.
Significant cargo volume is the critical problem faced not
only by the terminal operator but also by other players across the nation, with the exception of Java. Here they enjoy a lucrative throughput, thanks to high traffic of
manufactured goods in import and export containers. Consequently, terminals in Jakarta
port of Tanjung Priok and Tanjung Perak, Surabaya, East Java, for instance, book
aggregately millions of TEU annually. In fact, DP World was a partner of PT
Terminal Petikemas Surabaya (TPS) in Tanjung Perak port for several years, before terminating cooperation in 2019, after its proposal to continue the partnership was rejected
by then Indonesia Port Corp or Pelindo III.
The island still showcases more container terminals are to be constructed, of which Patimban container terminal will commence operations in
the very near future. Except for upcoming additional capacity, Java still be hosting several on the list, such as Gresik container terminal in East Java province, owned by Indonesian conglomerate Maspion Group, and Kendal in
Central Java (this one to be funded by Singaporean investment). Oversupply
and overcapacity is undoubtedly unavoidable but the Government is turning a blind
eye to the situation and keeps issuing new terminal/port permits, especially to private entities.
Third, India-Indonesia maritime connectivity is currently stuck in a “do not talk each other” situation. The two countries’ export and import shipments are handled by the shipping lines, none of which are national flag carriers of
the states in question. Even after seventy years of close cooperation, there is no "port sister agreement" signed by municipalities that happened
to be the home of major ports in the countries. All maritime connectivity is conducted by a third party, via Singapore or Hong Kong among others. India and Indonesia just
simply lack direct maritime connectivity, amid abundant volume of cargo.
Within the context, what is prepared by the Ministry of SOE
should be lauded. Nevertheless, they need to look at the other aspects, rather
than solely focusing on the new connectivity. There are several practical
measures (geo-economy) to start with. For example, the two states should set up
a shipping chamber to promote shipping cooperation as a part of an initiative
to establish connectivity in the Indian Ocean. As a business-to-business
entity, the chamber could either be a sub-unit of the existing trade and industry
chamber of the two countries or a separate one. A couple of conferences as a
prelude is worth convening for its establishment. The conferences are expected
to come up with the scope of shipping cooperation between India and Indonesia.
Additionally, the two countries can order all coal and CPO exports to be transported by Indonesia-flagged vessels by 2020, and packaged to be fit in container. For liquid cargo transportation, India and Indonesia can cooperate to procure bigger bulker to ply the trade. This business model is completely legal under the United Nations Conventions of Code of Conduct for the liner conference 1975. The other practical measure is that embassies of the two countries could set up a transportation attaché office as a startup to the shipping chamber, to facilitate whatever the shipping players from India and Indonesia may initiate. To expedite its maritime quest, Indonesia may appoint a special envoy or ambassador at large, who would spearhead negotiations with the Indian counterpart. This person should be a well-known figure in the domestic and international maritime circle.
Dimuat dalam Independent Observer, Edisi Jumat, 24 Februari 2023
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