Known as “Zamrud Kathulistiwa” or “Emerald of the Equator”, Indonesia is the world’s largest archipelago, with over 17,000 islands within the country’s territory. Such feature has been blessing the country with rich sea resources, but also put on a burden in efforts to make its development to be inclusive to all islands. Western part of Indonesia has been part of a busy and famous trade routes through the Malacca Strait since the days of kingdoms and empires in the past, making it more populated and developed. Eastern part of the country on the other hand, directly neighbors with the vast Pacific Ocean, making it less travelled and developed. Such condition continues up to this day, where population, infrastructure development, and economic activities are heavily centered in Sumatra and Java.
Lack of infrastructure has been taking the blame for the low level of development in Eastern Indonesia, mostly in transportation. Transportation infrastructures are like blood veins of an economy. It enables resources to be spread out to parts of the country and enables development in which they are connecting to. We can confirm that current government in Indonesia also agrees to such concept and thus infrastructure development has been the main policies in the last decade. Latest data from BPS and Ministry of Transportations shown that road transportation infrastructure has mainly developed in the western part of Indonesia, especially Sumatra, further boosted by government program of Trans-Sumatra highway which also drives development in supporting roads. But in Sea and Air ports, Eastern Indonesia actually leading in numbers.
Exhibit 1: Provincial Road as of 2021 (Km)
Source: BPS
Table 1: Data Jalan Tol
Exhibit 2: Jumlah Bandara dan Jumlah Pelabuhan di Indonesia (as of June 2022)
But leading in numbers doesn’t always refer to more traffic or quality. Airports in eastern Indonesia are mostly classified as Class III and Satker which means they are small airport or not for commercial operations. Same for seaports, large commercial port operations in Indonesia are handled by Pelindo company group, a state-owned enterprise, which then divided into regions. Pelindo 1, 2 and 3 handled Sumatra, Java, Lesser Sunda Islands and parts of Borneo, while Pelindo 4 handled large area of Eastern Indonesia, which covers eastern part of Borneo, Sulawesi, Maluku, and Papua. Though the combined number of ports managed of Pelindo 1 and 2, which managed ports in Sumatra and western part of Java are close to the number managed by Pelindo 4, the cargo traffic is close to double of the ones managed in Pelindo 4. The difference is more evident in containers traffic. Though Pelindo 4 managed a significant number of passenger traffic, goods and container traffic are more prominent in signaling development in the destination area.
Table 2: Airport Classification in Indonesia
Table 3: Traffics Seaports by Region
Nevertheless, government has been taking steps to address the imbalance. One of the goals for the current Indonesian Government is to reach the same level of price for vital resources all across Indonesia, such as gasoline. Key initiative to achieve it is the “Sea Toll Road”, which aims to connect Indonesian islands through network of ports and ferries. Other than driving mobility, and hasten the process, the program enabled lower logistic costs and in turn ensure same price level across the country can be achieved. The program was launched in 2014, and results are started to showed in 2016, prices of goods in Eastern Indonesia have decreased. Steel prices fell 6 percent, soybeans 14 percent, cooking oil 21 percent, and chicken meat prices fell to 35 percent. This showed that building sea transportation might be the key to develop Eastern Indonesia.
In addition to the Sea Toll Road, the government is also investing in the development of new ports in the eastern regions of the country, such as the construction of a new port in Wakatobi, Southeast Sulawesi. This is aimed at improving the connectivity of these regions and facilitating the movement of goods and people.
Despite the effort and investment for the sea transport infrastructure and shipping routes, development of the Eastern Indonesia could not be sustained if there are no economic destination in the region. Large nickel deposit discovered in Sulawesi could be a great starting point. Indonesia who ambitioned to be the Southeast Asia Electric Vehicle Hub will need to further develop industrial capacity in the region in effort to improve the down streaming process of the nickel industry. With the development of the new industrial estate in North Konawe, Southeast Sulawesi, traffic of nickel related goods will be mostly done by Sea, as it is more economical to carry large amount of goods. This is where sea transportation players and regulators must take attention and initiatives to capture the opportunities. Tourism could also be a good traffic and development driver. Eastern Indonesia has nature tourist attraction such as Raja Ampat, which are bogged down due to the living cost in the area is considered high compared to other destinations in other regions of Indonesia. Sea transport could be the key to attract more tourist and drive down the prices.
Supporting resources and infrastructure also needed to ensure the quality of the sea transportation of Indonesia. Digitalization has enabled Indonesia to achieve 9th rank of the countries with the best ports services in 2022. The port performance is based on data from the United Nations Conference on Trade and Development (UNCTAD) on the average movement of container ships from 1,000 GT and above in the first semester of 2022. Ranked under Canada, Australia, Russia, the United States, Germany, Greece, France and Italy, the average arrival of container ships based on data from UNCTAD, Indonesia is above the average port in the world. Digitalization has enabled Indonesia to address its loading and unloading time or commonly known dwelling time problem. In 2016, dwelling time in Indonesia averaged in one week, while in 2022, it was shorted to 2 to 2.5 days.
In short, the development of sea transportation in Indonesia is crucial for the country's inclusive growth and development. The government's initiatives to enhance sea transportation are a step in the right direction, but ensuring the quality of the sea transportation provided is a must in order to address the imbalance in development between the western and eastern regions of the country. The government, private sector, and the public must work together to ensure that sea transportation continues to play a vital role in connecting the archipelago and driving progress and growth in all parts of Indonesia.
