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Jakarta shipping faces challenge to become 'global maritime axis'
WITH its new cranes and wharves that can handle some of the world's biggest ships, Indonesia's main international port - Tanjung Priok in Jakarta - has been shaking off its reputation for inefficiency and congestion with a US$2.5 billion (SGD3.5 billion) upgrade.
But the revamp is just the first step in an ambitious drive to overhaul shipping in the country, with experts warning that a scheme to dot the sprawling archipelago with a string of new harbours over the next few years could be heading for choppy waters as it still needs billions of dollars in financing, according to The Straits Times of Singapore, which cited a Reuters report.
President Joko Widodo wants Indonesia to become a "global maritime axis", looking to slash logistics costs as the nation competes with neighbours Vietnam and Thailand to be a major regional manufacturing base for automotive and electronics companies including Toyota Motors and Samsung Electronics.
"In terms of challenges, locating adequate funding is one of the biggest," said IHS Markit's editor for global ports Turloch Mooney.
Indonesia is ranked 63rd out of 160 countries last year on the World Bank's Logistics Performance Index, which measures the ease of trade including the timeliness of shipments, customs performance and infrastructure quality.
The costs of moving goods across one of the world's most populous countries stood at 27 per cent of gross domestic product, according to a 2013 study co-written by the World Bank. That compared with 13 per cent in Malaysia and 8 per cent in Singapore.
Indonesia has an ambitious plan to build or expand a total of 24 ports, though it is unclear what the overall cost would be, with the work largely shared between four state-controlled port operators that have their own fund-raising plans.
Manufacturers have long criticised Indonesia's shipping system, saying it slows the import of raw materials and the export of finished products.
While the dwell time has dropped to around three days at Jakarta's port over the last few years, experts estimate that it still takes eight days or more at Indonesia's secondary ports.
In comparison, the average dwell time at established maritime hub Singapore is only around a day.
But the revamp is just the first step in an ambitious drive to overhaul shipping in the country, with experts warning that a scheme to dot the sprawling archipelago with a string of new harbours over the next few years could be heading for choppy waters as it still needs billions of dollars in financing, according to The Straits Times of Singapore, which cited a Reuters report.
President Joko Widodo wants Indonesia to become a "global maritime axis", looking to slash logistics costs as the nation competes with neighbours Vietnam and Thailand to be a major regional manufacturing base for automotive and electronics companies including Toyota Motors and Samsung Electronics.
"In terms of challenges, locating adequate funding is one of the biggest," said IHS Markit's editor for global ports Turloch Mooney.
Indonesia is ranked 63rd out of 160 countries last year on the World Bank's Logistics Performance Index, which measures the ease of trade including the timeliness of shipments, customs performance and infrastructure quality.
The costs of moving goods across one of the world's most populous countries stood at 27 per cent of gross domestic product, according to a 2013 study co-written by the World Bank. That compared with 13 per cent in Malaysia and 8 per cent in Singapore.
Indonesia has an ambitious plan to build or expand a total of 24 ports, though it is unclear what the overall cost would be, with the work largely shared between four state-controlled port operators that have their own fund-raising plans.
Manufacturers have long criticised Indonesia's shipping system, saying it slows the import of raw materials and the export of finished products.
While the dwell time has dropped to around three days at Jakarta's port over the last few years, experts estimate that it still takes eight days or more at Indonesia's secondary ports.
In comparison, the average dwell time at established maritime hub Singapore is only around a day.
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