Thu, 18 Sep 2003

Network of port-cities to boost ASEAN economy

Siswo Pramono, Deputy Director for Global Organization, Ministry of Foreign Affairs, Jakarta

Waterways in Southeast Asia, particularly the straits of Malacca, Lombok, Ombay and Wetar, are among the most strategic and busiest in the world. With globalization, the development of port-cities along the waterways can become the driving force of economic growth in the region. The Association of Southeast Asian Nations should consider the feasibility of developing a regional network of port-cities.

A network of port-cities would integrate waterways, coastal cities and their adjacent ports as a unity of economic development and growth. A successful network of port-cities would enhance regional investment, trade, and employment.

Such a network would be in Indonesia's best interests. The archipelago would serve as the backbone of this network.

While Jakarta's Tanjung Priok already serves interregional traffic, other port-cites such as Belawan in North Sumatra, Semarang in Central Java and Ujung Pandang in South Sulawesi can serve the intra-ASEAN traffic.

Given the Law No. 22/ 1999 on regional autonomy, the governments of coastal provinces and coastal cities can respectively extend their jurisdictions over the 12-mile and 4- mile maritime belts adjacent to their shores.

Regional jurisdiction, according to the Law, includes the exploration, exploitation, and conservation of resources in the designated regional maritime belts. Regional governments are also authorized to impose in their respective maritime areas administrative regulations and security measures.

This means, the provincial and city governments, under the coordination and guidance of the Foreign Ministry -- as requested by Law No. 37/1999 on foreign relations -- would play an important role in the administration of the "ASEAN network" of port-cities.

The network would comprise of 2.5 percent of the surface of the world's sea, stretching from Kyaukphyu, Myanmar in the east to Bitung, Indonesia in the west; from Cailan, Vietnam in the north, to Surabaya, Indonesia in the south. All together, the network would involve more than 30 ports in Southeast Asia.

Cooperation is thus the keyword for the comprehensive administration of such a network. Following the Asian economic meltdown, an ASEAN workshop revealed that, while shipping container growth in the region is expected to slow down by 4 percent to 7 percent between 1997 and 2004, the total container traffic of ASEAN (excluding Lao) is expected to increase from 23.3 million twenty-foot equivalent units (TEU) in 1997 to 40.3 million TEU in 2004.

Among benefits to the local economy, Aceh and North Sumatra would benefit if such a network helped to improve the performance of the Indonesia-Malaysia-Thailand Growth Triangle. The success of the Brunei East ASEAN Growth Area would enhance the economic development of various provinces in Kalimantan and Sulawesi.

There are, however, risk factors to be considered. Ports that are efficient and cheap will attract foreign vessels.

As the ultimate outcome of the ASEAN network of port-cities is the creation of a competitive policy environment for the maritime industry in Southeast Asia, Indonesia must be ready for tough competition with foreign port-cities such as Singapore, Port Klang (Malaysia), and Manila/Batangas (The Philippines).

Another risk factor is that Indonesia has a large domestic fleet but a limited international shipping fleet. Thus, unless Indonesia is able to improve the capacity of its international fleet, it will hardly benefit from, for instance, various incentives offered by foreign ports.

Worse, the domestic shipping industry might be threatened by competition from the well-developed Malaysian and Singaporean shipping companies.

Risk factors aside, and considering the irreversible pace of globalization, it is time for ASEAN to promote a network of port- cities as a way to enhance regional growth. And Indonesia, as the world's largest archipelago, should take leadership in this endeavor.

For Indonesia, domestic coordination is the first step to take. The central government should consult its regional authorities -- including port authorities -- about the problems that they might face with the development of such a network.

As such, the regional governments should address, among others, the following concerns:

o Promotion of container services in the provinces or port- cities where infrastructure is underdeveloped;

o Gradual liberalization of maritime services;

o High-speed services;

o Standardization of port security and improvement of online cargo data between port-cities;

o Protection of marine environments;

o Employment benefits to the local people.

At the ASEAN level, Indonesia should promote a forum to facilitate the exchange of ideas and experiences among the authorities of port-cities in Southeast Asia. The dialog should be geared toward cooperation in the realization of the proposed network.

Indonesia should also help ASEAN develop maritime cooperation with China, Japan, and the Republic of Korea; these are among the main users of the waterways in Southeast Asia. They are prospective partners in developing an ASEAN network of port- cities.

The opinions stated above are solely those of the author.