Brief Perspective on National and International Shipping Network in Indonesia

Connectivity Working Group SecretariatNational Development Planning Agency (BAPPENAS)

23-25 July 2013

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Based on the report of the World Economic Forum (WEF) of the latest Global Competitiveness Report (2012-2013), Indonesian port service quality is ranked 104. Still lags behind Singapore, Malaysia, China and India.

Country Overall 

Infrastructure Roads  Railroad  Port  Air Transport 

Singapore 2 2 5 2 1 

Malaysia  25  27  17  21  24 

China 29 39 65 56 33 

Thailand 38 54 22 59 70 

Indonesia 78 90 51 104 89 

India 59 86 27 80 68 

Philippines  65  87  94  120  112 

Vietnam 75 120 68 113 94 

Bangladesh 118 113 73 121 120 

Indonesia Competitiveness

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Domestic good movement still dominated by road modes

International good movement highly dependent in sea modes

Highly concentrated goods movements in Java and Sumatera

Goods Transportation

Most sea movements are long and medium distance except between North Sulawesi and Maluku.

Maluku is now the busiest sea movement in Indonesia.

Passenger Movement

DISTRIBUTION OF INDONESIA

POPULATIONTotal Population Indonesia 2010:

237.641.326

Origin – Destination for Freight Transport

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Origin – Destination for Freight Transport

OD for Freight Transport > 50.000 ton/ day OD for Freight Transport (20.000- 50.000) ton/ day

OD for Freight Transport

Characteristics of transport demand in Indonesia

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Indonesian Main Ports by Economic Corridor

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Indonesian Port Traffic by Trade Flow and Cargo Type2009 (000’s ton)

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Indonesian Port Traffic by Trade Flow and Cargo Type and Principal Commodity,2009 (000’s tons)

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Number of Ships Passenger at Commercial and Non Commercial Sea Port, Indonesia 1995 - 2011 (Millions) in Indonesia

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Composition of Indonesian Flagged Cargo Vessels by Age

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Growth of National Fleet Cargo Share After Cabotage Principle

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Government Support

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Indonesian Cabotage Principle

LAW 17/2008; PP 22/2011; PM 48/2011Large Number

of Islands

Foreign Vessel Dependancy on

domestic shipping and sea

transportation

Policy reforms

Presidential Instruction No. 5/2005

National Shipping Industry Empowerment

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Indonesian Cabotage Principle

Growth of National Fleet After Cabotage PrincipleImplementation

Growth Of National Cargo Share (Dec 2007 – Feb 2013)

Large Number of Islands

Foreign Vessel Dependancy on

domestic shipping and sea

transportation

Policy reforms

Presidential Instruction No. 5/2005

National Shipping Industry Empowerment

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MP3EI

Strengthening national connectivity that considers regional and global geostrategic position will be one of the main fokus of Master Plan for the Acceleration and Expansion of Indonesia's Economic Development (MP3EI) implementation

MP3EI

Pusat Distribusi Provinsi

Pusat Distribusi Nasional

Legend:By sea / by rail By land / by rail / by seaBy sea / by rail / by land

Konektivitas:

Short Sea Shipping

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Inter-island connectivity: needs to be regionally differentiated

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Dumai – Malacca Route

Bitung – General Santos – Davao Route

Belawan – Penang –Phuket Route

MPAC Implementation

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Opportunities

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Port Traffic Forecast by Economic Development Corridor, 2030 (000 tons)

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Indonesian Ports – Container Traffic Forecast

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Final Notes

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Final NotesIndonesia has a very strategic position in global and regional shipping network. It has a direct access to the world’s largest market since it is passed by one of the most SLOC, i.e. The Malaccan Strait and 3 SLOCs in Indonesia.

There are two main problems in port development in Indonesia. First, Indonesia’s main ports are facing overcapacity which causes inefficiencies. Second, Indonesia also does not have trans-shipment port capable of accomodating large trans-oceanic vessels. Huge investment is therefore needed, as well as to strengthen the existing 32 strategic ports which are in poor condition at the moment.

Indonesia still needs to strengthen its shipping because Indonesian-flagged vessels are typically older that vessels operated by foreign shipping companies..

Government of Indonesia is currently implementing Master Plan for the Acceleration and Expansion of Indonesia's Economic Development (MP3EI) to strengthen national connectivity that considers regional and global geostrategic position.

In addition to strengthening national connectivity through MP3EI, Government of Indonesia is in the process of developing ASEAN RO-RO Shipping network in coordination with Malaysia and Phillipines to strengthen inter-island connectivity in ASEAN.

Indonesia can benefit from its strategic cooperation with Australia, as well as New Zealand, and other Southwest Pacific islands states.

Government of Indonesia is committed to maintain the momentum of investment friendly environment and is exploring all options in encouraging investment in infrastructure, especially port development as backbone of national economic development corridor