Shipping reforms sought

Shipping reforms sought

JAKARTA (JP): A University of Indonesia economist says the nation must reform its shipping industry and improve its transportation infrastructure in order to maintain economic growth and effectively face international trade liberalization.

"Not only must Indonesia liberalize its shipping industry, the country must also revamp its ports and land transportation infrastructure," Dorodjatun Kuntjara-jakti told a seminar on sea transportation and trade liberalization here yesterday.

Dorodjatun warned that efficient transportation is required to maintain the export progress and growth in foreign investments needed to balance out Indonesia's debt burden and current account payments, as well as to help control inflation.

Government figures show that the country's debt service ratio in the last fiscal year (1994-1995) was estimated at around 32 percent.

The government has said that it wants to reduce the debt service ratio to 20.6 percent by 1998-1999.

"By 1998, some of our foreign debts (a total of US$87.6 billion) will reach maturity. We must increase our foreign exchange earnings to keep the debt service ratio in check," Dorodjatun told the seminar, which was sponsored by Bisnis Indonesia daily.

"This can be done by having an efficient transportation system, which is needed to support our non-oil exports," he said.

Containers

Dorodjatun also said yesterday that Indonesia must anticipate the dominant trend in the international shipping industry towards the use of increasingly larger and more powerful container ships.

"Quite soon, in the near future, those who cannot deliver their goods and services with the least defects and in the fastest and cheapest ways will be left out of international trade," he said.

"Consequently, we have to revamp our shipping sector, our ports, our trucking regulations and even our railway networks," he said.

Many analysts and businessmen have noted that Indonesia's container terminals and trucking regulations are inefficient because of complicated regulations, as well as poor infrastructure.

Congestion was reported at Jakarta's Tanjung Priok and Surabaya's Tanjung Perak ports.

Minister of Transportation Haryanto Dhanutirto said recently that the government will institute a three-month trial period for the improvement of management systems and hardware facilities at Tanjung Priok seaport.

Government figures indicate that since the authorities introduced the 1988 deregulation of the shipping sector, which allows greater freedom of entry into different types of shipping services by foreign chartered vessels of various types, domestic shipping firms have carried an average of only around three percent of Indonesia's exports and imports.

Shipping tycoon Soedarpo Sastrosatomo made a similar point yesterday by saying that "most Indonesian shipping companies have become mere shipping agents for foreign liners."

Soedarpo said that the situation could be remedied if the government warranted protection for domestic shippers.

"If the government protects the cement and paper industries, why don't they protect the shipping sector as well?" he said, while presenting his paper.

Responding to the businessman's plea, Dorodjatun said that under increasing trade liberalization, protection of industries would no longer be relevant.

"The most relevant factor will be improvement of efficiency. This is why domestic shippers must adopt mergers or strategic realignment to increase their efficiency rather than seeking protection," he said. (hdj)