The arc of Indian Ocean rim that runs from India to Indonesia has been dominated by Singapore for quite some time, but there could be some surprises waiting down the line.<\/p>\n
It was only a short while ago that it seemed that hub to hub transfers were the coming thing, but it hasn\u2019t panned out that way, and there\u2019s now a lot more debate about whether the large hub routes or the smaller ports will gain most from the growing Indian Ocean box trades.<\/p>\n
Suren Vakil of BMT India explains. Firstly, exports from China have reached a plateau \u2013 partly because the drive from the west has faltered. \u201cThere\u2019s various reasons, one is the downturn, another is simply that just about everything that could be outsourced, has already been outsourced,\u201d although he adds, \u201cChina is still China and so much investment has been put in place, its difficult to pull it away.\u201d But these main East-West hub routes are now being challenged by intra-Asia trades, if not in terms of volume at present, at least in terms of growth.<\/p>\n
However, import-export facilities in the area have their issues. Mark Yong of BMT Asia explains: \u201cIf you look at the South East Asia-Indian Ocean region, you can see there are quite a few port clusters, but despite their density many of them are lagging far behind the global standard when it comes to creating the infrastructure links that ties them into their hinterland.”<\/p>\n
Vietnam is one example. The Cai Mep development, although working on the marine side, still lacks a complete hand of hinterland links: \u201cMost of the cargo is still being barged down the river… obviously this not so good for a container port,\u201d says Dr Yong. However, he says although its slow, it will change as Vietnam is welcoming a slow migration of textiles and lower-end industries from China, which is helping pick up the local economy and with it, the ports.<\/p>\n
On the other hand, Indonesia\u2019s Tanjung Priok port is an exception to the rule as they are developing the corresponding links in tandem with the port, although even here the infrastructure is expected to still lag behind.<\/p>\n
The biggest problem is \u2013 well, democracy. Right across the board in places on the rim of the Indian Ocean, governments, some relatively new to the idea of elections, have had to wield their might to co-ordinate the hinterland links, and creating the interface frankly makes the actual building of a port look easy. \u201cMuch of it comes down to land right issues; there are often piecemeal tracts of land owned by a lot of different people, who then, quite rightly, are entitled to fight for their rights,\u201d explains Dr Yong. Mr Vakil points out, even if you are a large Indian conglomerate, it still takes a lot to pressurise the government into giving you the wherewithal to create those hinterland links \u2013 despite the fact that companies like Adani have managed it.<\/p>\n
However, regardless of this, Dr Yong explains that Indonesia is itself a fast-growing market with a large population \u2013 and opportunities are there to be carved out for operators with vision and the ability to wait for returns as it only handles a fraction of its own cargo at present.<\/p>\n
It would be an understatement to say that Indonesia is at present underutilising its ports sector. Firstly, inter-island transportation is slow. Secondly, carrying goods within Indonesia is more expensive than the cost of importing them from China \u2013 which, as Dr Yong says, leaves \u201copportunities\u201d for those willing to engage with improving it.<\/p>\n
And it seems that the government, despite recent political changes, is still open to meshing government entities with private operators. \u201cThe Indonesian government is taking a step back into simple regulation in order to open up the marketplace. In fact, the country is shaping up to be a good business model.\u201d<\/p>\n
Dr Yong says he thinks Indonesia could \u201cjump ahead\u201d, not just in volume, but in terms of green ports and green shipping \u2013 and good legislation could create the framework. \u201cThey have an opportunity to revamp their creaking infrastructure, so it is a chance to leap frog: it is easier to build new than to rebuild the old,\u201d he explains. Certainly at present \u201cthey are playing catch-up\u201d with the scale of the ships, says Dr Yong. Bigger ports with a deep draft, would certainly help Indonesia to capture some of its own cargo.<\/p>\n
However, he adds that the culture will inevitable play its part. \u201cI think foreign investors will have to be a little patient to get the returns, because you are looking at a different mindset.\u201d However, he points out that a lot of things are changing, including the division between regulator and operator \u2013 which leaves the previously state run operations having to compete in the market place.<\/p>\n
He also thinks that if the islands improved their connectivity \u2013 a major challenge but an interesting one \u2013 then the larger ports might also be able to steal their cargo back from places like Singapore, where most of the internationally inbound and outbound goods are transhipped. \u201cIf the cost of inter-island transportation is reduced, it would drive up domestic commerce,\u201d says Dr Yong, lowering costs overall.<\/p>\n
The most interesting possibility so far is the Banten port area, located along the Sunda Strait between Sumatra and Java off the Island of Singapore. It has often been put in the frame as a possible option for the much needed deep water facility, with the hope it will mirror the success of Tanjung Pelepas.<\/p>\n
However, he warns, \u201cthere might be a rush for many private port operations\u201d, adding that there are a number of bodies ready to push in. \u201cShort to medium term capacity might lead to some bloodshed, but in long term, it benefits the country,\u201d he says.<\/p>\n","protected":false},"excerpt":{"rendered":"
There are Indonesian rewards to be reaped by patient investors, as Stevie Knight explains<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[69],"tags":[],"sponsor":[],"class_list":["post-8418","post","type-post","status-publish","format-standard","hentry","category-asia"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/8418","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/comments?post=8418"}],"version-history":[{"count":0,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/8418\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/media?parent=8418"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/categories?post=8418"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/tags?post=8418"},{"taxonomy":"sponsor","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/sponsor?post=8418"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}