Regional focus: Malaysia & Indonesia port projects

Batu Ampar port. Credit: Batu Ampar port

Indonesia and Malaysia are launching port projects to rival Singapore’s status as a transhipment and oil trading hub. First, Indonesian state-owned port operator Pelindo I will spend IDR1.2 trillion (USD85 million) to upgrade Batu Ampar port on Batam Island. Batu Ampar is on the northern tip of the island, facing the Singapore Strait.

The Batam investment plan aims to enhance cargo handling at the port of Batu Ampar to raise its competitiveness. Indonesia wants Batam as an alternative shipping and manufacturing hub to Singapore, which it claims could attract USD60 billion in new investments. Accordingly, the funds will be used to buy three mobile harbour and 12 container cranes, terminal tractors, which together remove the need to tranship in Singapore, which incurs extra logistics costs.

This is because Indonesia’s cluster of islands has resulted in notoriously high logistics costs for inter-island shipping in the past. Owing to this, President Joko Widodo made port development one of his key policies when he was elected in 2014. The country’s Port Development Master Plan is centred around the country’s six main ports: Belawan, Batam, Makassar, Sorong, Tanjung Perak, and Tanjung Priok but the plan calls for development of a total of 24 ports within five years with multibillion-dollar funding.

Pelindo I president-director Bambang Eka Cahyana said, “We are following shipping standards that demand efficiency at Batu Ampar port.” Over the medium term, Bambang said that Pelindo I will purchase container cranes that can load and unload goods for larger ships, believing that the additional equipment will make Batu Ampar more productive while lowering operating costs.

This is an excerpt of the DPC August edition. To have access to the full article, and more DPC articles, please subscribe here.