T

he Transportation Ministry Wednesday launched a program for subsidized cargo shipping services to remote areas as part of government efforts to reduce price disparity in the archipelagic country and support the maritime highway initiative.

For the time being, state-owned shipping firm PT Pelayaran Nasional Indonesia (Pelni) will operate three cargo ships to serve a number of destinations that include Timika and Serui in Papua, Tual in Maluku and Natuna in Riau.

Two ships will sail from Tanjung Priok, Jakarta, while the third will sail from Tanjung Perak, Surabaya.

The government has allocated Rp 27 billion (US$1.98 million) in a subsidy program labeled public service obligation (PSO) for the operation of the three ships until December. The ships will have a capacity of 115 twenty-foot equivalent units (TEUs) each.

'€œThe schedule will be fixed, whether there are goods to be delivered or not. Based on our study, the high prices in the remote areas are usually caused by uncertainty surrounding shipping schedules and sea conditions. The cargo ships can hopefully help to reduce the disparity between the eastern and western part [of the country],'€ Transportation Minister Ignasius Jonan said.

He added the areas served by the subsidized cargo ships was just the first stage of the plan. The government previously said that there would also be routes to Merauke, Papua, Rote, East Nusa Tenggara and Tobelo, North Maluku, among others.

'€œI hope Pelni can have more ships in January or December,'€ he said, adding that the subsidized freight services would be granted only to areas that were not served by private ships.

The cargo ships are slated to carry staple goods such as rice, sugar, flour, cooking oil, eggs, steel
and cement.

The ministry has committed to disbursing Rp 257.9 trillion in PSO spending next year to help PT Pelni operate six routes.

Meanwhile, Trade Minister Thomas Lembong, who was also present in the event, said high logistics costs had contributed to inflation in parts of the country.

'€œBased on our testing for this program, the price [for container shipping in remote areas] will be reduced by 30 percent. This is a significant figure,'€ he said.

Indonesian logistics costs account for 24.6 percent of the country'€™s gross domestic product (GDP) and are among the highest in the ASEAN region, according to data from the World Bank. The high costs stem from a lack of infrastructure in seaports and roads as well as uncertainty in schedules.

Meanwhile, Pelni president director Elfien Goentoro said the company had aimed to add six more vessels, but was unsure that could be realized after legislators rejected the government'€™s plan to provide additional capital for state firms next year. '€œWe may rent some ships before getting the capital injection,'€ he said, adding that the procurement of the six used ships would cost about Rp 500 billion.

He said Pelni would buy ships that were five to 10 years old in order to expedite procurement. According to him, buying a new ship would take time, because the construction of each ship could take two years. (fsu)