The Indonesian government has earmarked US$292.5 million to build freight and passenger ships to serve new routes aimed at facilitating the movement of goods and people outside Java and to spur growth in the country’s east.
The investment, which has been allocated in the revised 2015 State Budget, will go on 15 freight ships and 10 passenger ships, the Transportation Ministry’s sea transportation director general, Bobby Mamahit, said.
The new ships are expected to help stabilize commodity prices outside Java, especially in the east of the country, where prices can be inflated by high logistics and distribution costs.
This initiative is part of President Joko “Jokowi” Widodo’s maritime highway initiative, which will see new routes connecting the country’s east and west, with scheduled maritime traffic charging a fixed rate. Currently, shipments are clouded by uncertainties surrounding the shipping schedule, contributing to higher prices.
Bobby said that the ships would be ready for operation in two years and that the ministry would open a tender for private freightliners to operate them.
The additional ships are expected to reduce the voyage time to remote areas by a third, from 21 days currently to 14 days, and increase the number of new routes from the current 86 to 97 by the end of the year.
“As for the 10 passenger ships, we‘re building them to replace the existing ships that serve areas with high waves such as East Nusa Tenggara and Maluku. We will operate bigger ships with a capacity of 2,000 GT [gross tonnage] replacing the previous ships, which only have around 750 GT in capacity,” Bobby said.
Indonesian Logistics and Forwarders Association (ALFI) chairman Yukki Nugrahawan Hanafi lauded the ministry’s plan to procure freight ships to help stabilize the prices of primary commodities in the eastern part of the country.
“The government, however, has to be fair when choosing the firms to operate the ships and allow any private company to compete for the tender,” Yukki said. “But, overall, we are optimistic that this could help spur growth in the country’s east,” he continued.
Article reprinted from The Jakarta Post