Maritime Highway’s Ineffectiveness Affects Interconnectivity

KOMPAS/LASTI KURNIA

Inter-island ships arrive and dock on Sunday (8/3/2020) at the Tanjung Priok container terminal in Jakarta.

JAKARTA, KOMPAS – The government’s commitment to reducing interregional price disparities for staple needs is reflected in its program to ensure interconnectivity of sea, air and land transportation modes. However, achieving these goals will be difficult if the maritime highway initiative, the backbone of this interconnectivity, is not effective.

Institute for Development of Economics and Finance (Indef) researcher in industrial, trade and investment affairs, Ahmad Heri Firdaus, said in Jakarta on Monday that the maritime highway initiative lacked efficiency. Among the indicators is that regions with ports that are passed by the maritime highway have higher inflation rates than the national average.

Also read : Public Hopes for Improvements to Maritime Highway Program

Papua and East Kalimantan, for instance, had inflation rates of 0.59 percent and 0.4 percent, respectively, in February. The national average inflation rate in the period was 0.28 percent. “The inflation showed that the prices of staple needs in regions passed by the maritime highway remained high,” Heri said.

According to him, the maritime highway concept has always prioritized a transportation paradigm, leading to it lacking efficiency thus far. What is common is that loads during the outbound and the return journeys are often imbalanced.

The maritime highway should instead prioritize a supply chain paradigm between production, consumption and raw material provider regions. To achieve this, a map of supply and demand in all regions is necessary, supported by the development of resourced-based industries passed by the maritime highway.

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KOMPAS/LASTI KURNIA

A Tol Laut (sea toll) cargo ship on Sunday (8/3/2020) in the waters off Tanjung Priok, Jakarta. At a limited meeting last Thursday (5/3/2020), President Joko Widodo expressed his disappointment over the government’s flagship program, the maritime highway, which had not helped reduce interregional shipping costs.

Reachability

The government launched the maritime highway initiative in 2015. In 2017, the government improved upon the reachability of inner and remote regions unreachable by sea through the air bridge program and the subsidized land transportation program.

The air bridge program comprises pioneer cargo air transportation and subsidized cargo transportation. Launched in November 2017, the program has 13 routes. The number of routes increased to 43 in 2018 but decreased to 39 in 2019 and then to 28 in 2020.

The program’s coverage areas include points of origin and destination points reachable only by air. These areas include Timika, Wamena, Dekai and Tanah Merah in Papua; Masamba in South Sulawesi; and Tarakan in North Kalimantan. After transportation by sea or air, foods and other important goods are then transported by subsidized land transportation.

As long as the supply chain paradigm was not implemented, maritime highway development through the air bridge and subsidized land transportation programs would never be efficient.

Trade Ministry’s Domestic Trade Directorate General distribution and logistics infrastructure director Sihard Hadjopan Pohan said that air bridge routes were added and eliminated based on proposals from local administrations and an annual evaluation. “Goods transported via the air bridge are connected to goods transported through the maritime highway and subsidized land transport,” he said in a press statement.

This year, the government has allocated around Rp 500 billion (US$35.64 million) to subsidize pioneer air passenger, pioneer cargo and cargo transportation.

Heri said that, as long as the supply chain paradigm was not implemented, maritime highway development through the air bridge and subsidized land transportation programs would never be efficient.

KOMPAS/HERU SRI KUMORO

President Joko “Jokowi” Widodo (left) and Vice President Ma\'ruf Amin preside at a limited meeting on Thursday (5/3/2020) on accelerating the government’s sea toll program at the Presidential Office, Jakarta. The President again reminded all parties to work harder to realize the primary goal of the program to reduce interregional price disparities and cut Indonesia’s notoriously high logistics costs.

Meanwhile, regions are proposing various programs to improve the maritime highway’s efficiency. East Flores deputy regent Agustinus Payong Boli, for instance, has pushed for the issuance of a presidential regulation on maritime highway goods control and supervision, spanning from production centers in Java to marketing in eastern Indonesia. “Goods transported on the maritime highway are given certain labels to make them easily recognizable,” he said.

Kendari Muhammadiyah University Islamic business and economy school dean Syamsul Anam said the government should improve regional institutions and provide detailed regulations. Institutions with fixed duties and functions would help make goods control and supervision more effective.

“This must be resolved first and regulations must be detailed and clear. If the current condition persists, it will seem as if local administrations are doing nothing while the central government thinks that this is the duty of local administrations,” he explained.

On the other hand, the government is also making efforts to resolve monopolies by traders using the maritime highway. Transportation Ministry sea transportation director Wisnu handoko said that the Rumah Kita (Our House) program launched by state-owned ship operator PT Pelayaran Nasional Indonesia (Pelni) and the Trade Ministry’s maritime office aimed to counter such monopolies.

(HEN/JAL/FRN/FLO/OKA)