Network of port-cities to boost ASEAN economy

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.