Sea toll road project expected to ease price disparity

Sea toll road project expected to ease price disparity

KM Caraka Jaya Niaga III - 32 in South Jamrud Terminal, Port of Tanjung Perak, Surabaya, East Java, in the Marine Highway program on November 4, 2015. (ANTARA/Didik Suhartono)

In the future the number of routes will be increased up to 13."
Jakarta (ANTARA News) - Indonesia has been developing a sea toll road project aimed at improving the countrys economy and connectivity particularly between eastern and western Indonesian regions.

Sea toll roads are crucial for Indonesia, which is one of the worlds largest maritime countries, with some 5.8 million square kilometers of sea territory, while its land territory covers only 1.9 million square kilometers.

Its coastline is some 92 thousand kilometers long, making it the second-longest after Canada. The largest archipelagic nation in the world has some 17,480 islands.

The administration of President Joko Widodo (Jokowi), which has an ambition to develop the country into a global maritime axis, has come up with the sea toll road concept that will improve ports and shipping in order to facilitate the transport of goods across the archipelago.

Several deep sea ports in Indonesia will be improved to support his sea toll road concept. They include Kuala Tanjung in North Sumatra, Tanjung Priok in Jakarta, Tanjung Perak in Surabaya, and East Java, in addition to Makassar in South Sulawesi, and in Papua.

This year, the government plans to develop 24 seaports to support the project, Deputy Minister of National Development Planning Endah Murniningtyas, who is in charge of maritime and natural resources, stated in Wakatobi, Southeast Sulawesi, on January 25.

Most of the seaports will be located in eastern Indonesian regions, including Southeast Sulawesi.

The high price disparity between eastern and western Indonesian regions so far is caused by expensive shipping freight costs as almost every ship returning from remote areas is empty or carrying no freight.

"If ships delivering goods to eastern Indonesian regions could return with commodities for western regions the freight costs could be cut," she said, adding that at the end gradually there would be no price disparity any more.

The full operation of the sea toll roads in March this year are aimed at easing the disparity of the prices of staples between the western and eastern Indonesian regions by up to 30 percent, Transportation Minister Ignasius Jonan said recently.

"The drop must be more than (20 percent) so that prices (in eastern regions) would be more reasonable and prices would not go up and down," he said.

State-owned shipping liner PT Pelni has earlier predicted there would be a potential drop in prices of staples by 20 to 25 percent.

The government plans to operate possibly 13 sea toll road routes, Director General of Sea Transportation of the Transportation Ministry Bobby R. Mamahit said.

"In the future the number of routes will be increased up to 13, according to the minister," he said.

With better connectivity price disparity between the western and eastern regions would be smaller, Mamahit also confirmed.

Until January 2016, six sea toll road routes have become operational, Transportation Director Bambang Prihartono of the National Development Planning Ministry remarked January 22.

The government is currently evaluating the six projects to ascertain their impacts on reducing inter-island freight costs.

The ministry is conducting the evaluation in cooperation with the Asian Development Bank (ADB) to formulate success indicators of the six projects, one of the indicators being a decrease in price disparity, he added.

The results of the evaluation, which is expected to be completed in 2017, will be used to decide future sea toll road projects, Prihartono said.

Sea toll projects are strategic infrastructure for increasing maritime connectivity and need a total investment amounting to Rp699 trillion, he said.

In order to be combined with land transportation development, the government has set a target to reduce the nations logistics costs to 20 percent of the gross domestic product from the current 27 percent.

PT Pelni are currently serving six routine and scheduled routes to ensure reliable logistics supplies in some regions, specifically the remote areas.

In accordance with Presidential Regulation No. 106 of 2015, the government provides subsidies worth Rp257 billion under the Public Service Obligation (PSO) scheme for developing sea toll road projects.

The first sea toll road route runs between Tanjung Perak (East Java) to Tual (Maluku), Fak-Fak (West Papua), Kaimana (Papua), and Timika (Papua). The return route from Timika to Tanjung Perak passes through Kaimana, Fak-Fak, and Tual.

The second route runs between Tanjung Perak, Saumlaki (Maluku), Dobo (Maluku), and Merauke (Papua).

The third route also runs between Tanjung Perak, Reo (East Nusa Tenggara/NTT), Maumere (NTT), Lewoleba (NTT), Rote (NTT), Sabu (NTT), and Waingapu (NTT).

The fourth route runs between Tanjung Priok (Jakarta), Biak (Papua), Serui (Papua), Nabire (Papua), Wasior (West Papua), and Manokwari (West Papua).

The fifth route covers Tanjung Priok, Ternate (North Maluku), Tobelo (North Maluku), and Babang (North Maluku).

The sixth route is between Tanjung Priok, Kijang (Riau Islands), and Natuna (Riau Islands).

The Wakatobi district authorities have lauded the operation of the sea toll ship that makes a stopover twice a month in the district located in Southeast Sulawesi Province.

"The sea toll ship transits in Wakatobi while sailing from Tanjung Perak towards the eastern region of Indonesia and again during its return journey," Tawakal, head of the Wakatobi industry, trade and SME office, stated January 28.

The first stopover was made January 25, 2016, on its way to the eastern region of Indonesia. The ship did not carry any goods to or from Wakatobi as the local traders were not aware of the ships schedule, he added.

During the next trip, the ship is expected to carry goods from Surabaya to Wakatobi to help cut logistics costs significantly.
(T.F001/INE/KR-BSR/A014)

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