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Maritime highway officially has new route
The government has decided to revise the routes of President Joko “Jokowi” Widodo’s flagship maritime highway, as it expects to boost the program’s effectiveness and efficiency to reduce wide price disparity in the country
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The government has decided to revise the routes of President Joko “Jokowi” Widodo’s flagship maritime highway, as it expects to boost the program’s effectiveness and efficiency to reduce wide price disparity in the country.
The Transportation Ministry has eliminated the country’s busiest trade port, Tanjung Priok, in Jakarta from the route leading to Makassar, South Sulawesi and Biak, Papua, as well as the route leading to Natuna and Tarempa, both in Riau. As a result, the route leading to Biak will start in Makassar, while the route leading to Natuna and Tarempa will start in Pontianak.
Ministry director general for sea transportation Antonius Tonny Budiono stated that the government expected higher trip frequencies and shorter duration of goods delivery to the country’s most remote places with a shorter route.
“If back then the goods distribution took two weeks, it could be faster now,” he said over the phone on Wednesday.
The ministry also confirmed that the measure was also taken as the routes had also already sailed by commercial shipping companies.
Tonny said the program would be “more efficient and effective” with the change and integration with the private sector existing route.
The change had been signaled by Minister Budi Karya Sumadi, who stated last month that the maritime highway routes should focus on non-commercial routes, while the commercial ones should be given to private operators or state enterprises.
Budi also argued that Jakarta would not be needed for the route to Papua, as Makassar also had large ports and the prices of staple goods such as rice were almost similar to those in Java.
The government has assigned state shipping firm Pelayaran Nasional Indonesia (Pelni) to operate freighters in six routes to carry staple goods, such as rice, sugar, flour, cooking oil, eggs, steel and cement. The delivery of those goods is expected to push down prices that soar in remote areas, especially in the eastern part of the country.
The six routes connect major ports, such as Tanjung Perak in East Java and Tanjung Priok in North Jakarta, with remote areas, such as Tual in Maluku.
The ministry has allocated Rp 257.9 billion (US$19.8 million) in public service obligations (PSO) this year to subsidize trips in the six routes, an increase from Rp 30 billion in 2015, as the program only commenced late last year.
The government previously claimed the program had helped slash prices in remote areas by 20 to 30 percent. The end goal is to also cut overall logistics costs plaguing the business climate.
Logistics costs account for 24.6 percent of the country’s gross domestic product (GDP), among the highest in the Southeast Asian region, according to data from the World Bank.
Pelni public relations manager Achmad Sujadi said ships had not sailed the route, although both had been directed for the new route.
He confirmed the new route could cut the duration in the two routes from 14 days to 7 days and increase frequency. Goods availability was also predicted to be normal.
“But the one heading back from Natuna usually carries seaweed for Jakarta, and there might be problem with that,” he said.
Indonesian National Shipowners Association (INSA) chairwoman Carmelita Hartoto applauded the reroute, stating that efficiency would be boosted.
Center for Reform in Economics (CORE) Indonesia research director Mohammad Faisal warned that the government might not solve the price disparity merely with the maritime highway program.
“If we talk about high prices, they also need to monitor the private traders. The distribution problem in Java has also been marred by speculants. The possibility of such practice will be even riskier for long routes,” he said.
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