Indonesia is seeking US$7 billion in foreign investment to upgrade its ports as part of a five-year plan to improve its ports network, Finance Asia said.
The plan involves modernizing existing ports and building new ones in the country, which is Southeast Asia’s largest economy and the largest archipelago in the world.
Indonesia’s ports are in need of upgrade, the report said; Indonesia ranks only 53rd on the World Bank logistics
performance index, below Thailand and Vietnam.
The expansion of Indonesia's ports is extremely important, not just for the connectivity of Indonesia's islands but also to bring down logistical costs and raise competitiveness, says Sarvesh Suri, Indonesia country head for International Finance Corp, the private equity arm of the World Bank.
Port infrastructure needs to be upgraded progressively across the board in order to support the shipping network, Jason Chiang, director at Drewy Maritime Research quoted as saying. This will allow the shipping lines to upsize their vessels in order to realize economies of scale, he added.
The plan, called the “Sea Toll Road” or “Ocean Highway” by new Indonesian president Joko Widodo, aims to create a coordinated network of ports to improve how international traffic is handled and to streamline local trade.
Increased shipping is increasing already-poor “dwell times” – an industry term for the time between a container being unloaded and it leaving the port. Dwell times at Jakarta’s Tanjung Priok port increased from 4.8 days in 2010 to 6.4 days in 2013, the report said, citing the World Bank.
Meanwhile, Indonesia is planning reforms in the pre-customs clearance process at major seaports as part of President Joko Widodo efforts to reduce its high logistics costs and improve efficiency at the ports.
Transportation Minister Ignasius Jonan was quoted as saying that he would undertake efforts to improve efficiency at Indonesian seaports
, so that the government would meet the new dwelling-time target set by the President.