[041115.EN.SEA] Maersk To Improve Grow Cargo Flows In Indonesia's Remote East

DENMARK's shipping giant Maersk Group has inked a letter of intent with the Indonesian government to improve the flow of cargo through the eastern port of Bitung and speed up maritime and economic development of the under-served region, according to IHS Media.

The agreement was signed between Indonesia's ministries of maritime and economic affairs and Maersk Line representatives in the capital, Jakarta, during a state visit of Henrik, His Royal Highness the Prince Consort of Denmark.

President director of Maersk Line in Indonesia, Jakob Friis Sorensen, said: "We want to support the development of Eastern Indonesia by understanding the challenges and opportunities for the supply chains of key commodities such as tuna, coconut and their downstream products, as well as the potential of aquaculture development and the need to improve vocational skills in this area.

"We see the added value this will bring and expect this will enhance the economic activity and trade of the country."

In a statement, the shipping line said the collaboration between the carrier and the government ministries would help enhance inter-island connectivity and was in line with the Indonesia New Maritime Strategy. With trade more developed in the western part of the giant Indonesian archipelago, the aim of the letter of intent was to accelerate trade and economic development in the east.

As part of the National Ports Masterplan, the state-owned Indonesia Ports Corporation wants to build 35 ports across the country in the next five years in a bold bid to bring down high logistics costs and stimulate economic growth in the Southeast Asian giant.

Almost 80 per cent of the country's containerised trade is handled in the terminals at Jakarta and Surabaya with virtually no international volumes making direct calls at ports in the east of the country.

Maersk was the first shipping line to offer a direct service linking Bitung to the transshipment hub Port of Tanjung Pelepas in Malaysia in April last year. Indonesia has identified the eastern port as a special economic development zone and a strategic national transportation hub.

Focus will be placed on driving increased connections for eastern Indonesia to more developed parts of Indonesia, such as the main island of Java, to the region (ASEAN) and global export markets, such as Europe and the US.

"We have been operating in Indonesia for more than 50 years and we see the potential for increased exports out of the eastern Indonesia," Mr Sorensen said.

Logistics costs in Indonesia are currently 23.5 per cent of the gross domestic product and the infrastructure development will reduce this to 19.2 per cent by 2019. While an improvement, this is well above the 8 per cent of GDP typical for developed nations.

Source : HKSG.