The Philippine and Indonesian governments will launch next month a roll-on, roll-off shipping service that will link Davao and General Santos cities to Bitung City in Indonesia, an official of the Mindanao Development Authority (MinDA) said.
Presidents Rodrigo Duterte of the Philippines and Joko Widodo of Indonesia have been invited to grace the launch in Davao City after the 30th ASEAN Summit in Manila, MinDA Assistant Secretary Romeo Montenegro said.
He said the DGB shipping will fill a gap in transport connectivity, at least between the Philippines and the rest of the Brunei-Indonesia-Malaysia-Philippines-East Asean Growth Areas and ASEAN itself.
If pursued, the shipping service will be the first of its kind in the 50-year old ASEAN grouping and will help boost efforts for economic integration.
RoRo carries rolling cargoes and do not require cranes for loading or off-loading as they simply roll on and off the vessel, hence the name. The mode is economical, according to the Asian Development Bank, because it has removed cargo handling costs for labor and equipment, as well as cut the transport time.
In 2012, the Japan International Cooperation Agency recommended in a study to set up a sea link dedicated to freight services between General Santos City in Mindanao and the Indonesian port of Bitung as the much needed maritime connectivity aimed to revive and strengthen trade between Indonesia and the Philippines.
The Master Plan of ASEAN Connectivity 2025 cited the need for physical, institutional and people-to-people linkages to help achieve economic, political-security and sociocultural pillars of integration under the ASEAN Economic Community.
Since its launching in 1994, BIMP EAGA cited improvements made in physical connectivity through improved roads and ports. The BIMP-EAGA Vision 2025 document, however, noted that most of the projects became “stand alone projects” showing benefits at the national level that “fail to clearly demonstrate sub-regional impacts.”
“Only a few projects have accounted for the need to link the two priority economic corridors of BIMP-EAGA, namely the Western Borneo Economic Corridor (WBEC) and the Greater Sulu and Sulawesi Corridor (GSSC),” the document said.
For the transport sector strategy of BIMP-EAGA, the goal based on BIMP EAGA Vision 2025 is “interconnected, seamless and safe multi-modal transport.”
According to the BEV 2025 project list for 2017 to 2025, aside from the DGB route, other sea linkages were also eyed in BIMP-EAGA, such as Bitung-Tahuna-Gensan, Brooke’s Point-Sandakan-Kota Kinabalo, Brooke’s Point-Bataraza-Kudat and Brooke’s Point-Brunei.
For air linkages, there will be flights for the following routes: Puerto Princesa-Kota Kinabalo, Mulu-Bandar Seri Begawan, Davao-Manado, Pontianak-Bandar Seri Begawan and Balikpapan-Bandar Seri Begawan.
Poor transport connectivity
Poor sub-regional transport connectivity, as identified in the BIMP-EAGA Vision 2025 document, is one of its major challenges.
It added that uneven economic development has led to different priorities, policies and regulations related to the transport sector.
Montenegro said there is greater chance to address connectivity from 2017 to 2025 because a total of $23 billion, compared to only $1 billion in the previous decade, has been earmarked for priority infrastructure projects in the area.
Over half of the amount goes to projects identified in Mindanao because the island needs more infrastructures. Also, a big ticket project, the Mindanao Railway System is in the pipeline.
The Duterte administration is giving special focus on infrastructure.
The DGB, Montenegro added, is strategic for the Philippines, not just for Mindanao because it provides a faster and cheaper access for domestic products to be moved in ASEAN and other parts of the world. Notably, Mindanao is physically separated from the other BIMP members.
Regular flights needed
Vicente Lao, chairperson of the Mindanao Business Council Philippine representative to the BIMP-EAGA Business Council private sector forum, said the opening of the route will be good for Mindanao and trading with the Indonesian areas in the ASEAN sub-region.
“The governments should act together to make it happen. The private sector should come in to take advantage,” he told this week.
Since regular flights between Davao City and Manado in Indonesia have been suspended since 2008, travelers between the two areas have relied only on chartered flights, he added.
Lao said the service should be made regular to stop the dependency on chartered flights.
“It is not dependable. It has to be regular trips to make sure it addresses the needs of the businessmen,” he said via telephone.
He said this means a big cut in transport cost, too. MinDA said it takes three to five weeks to move products from Davao City to Manado.
With the DGB RoRo route, the travel time will be cut to three days. PortCalls Asia estimated the savings to be around P75,000 (PUS$1,500) per 20-foot equivalent unit.
Apart from intra-regional trade, the route can also serve as a cheaper alternative for transshipment of goods in Asia, Montenegro said.
Davao City will use the privately-owned Kudos Port. In General Santos City, the Makar Wharf will be used and in Sulawesi, the Bitung Port, which was recently identified as an international port of entry to Indonesia.
Trade and Industry Assistant Secretary Arturo Boncato Jr. said the revival of regular Davao-Manado flights should follow the opening of the shipping service.
He said the new shipping link will be crucial in increasing trading in the BIMP EAGA, which is now considered as a building block of ASEAN.
“Connectivity plays a critical role in trading and the goal of the ASEAN Economic Community,” he added.
But Boncato, who is the Philippine senior official to the BIMP-EAGA, said while the easier direction is for the route to be used in the transshipment business in Asia, it should really facilitate and improve intra-regional trading in BIMP-EAGA.
For his part, Bronx Hebrona, who chairs the Committee on ASEAN and BIMP-EAGA of the Regional Development Council in Region 12, asked: “But now when a ship is available, are there enough goods to be transported?”
He said there is greater push for BIMP EAGA with President Duterte, who he said was instrumental in expediting the preparations for the DGB route opening.
“It’s possible. But it’s a wait and see situation. We are waiting for concrete terms,” he added.
Boncato said loading the vessel is already the easier part. The challenge is how to sustain the shipping service.
Montenegro said a joint meeting is scheduled next week for the Philippine and Indonesian task forces created to prepare for the opening of the route.
During the Davao General Santos Bitung Business Forum last month, Philippine Transport Undersecretary Fernando Juan Perez described the route as a “gold mine” saying it opens up a lot of opportunities for exporters from both countries.
Rosan P. Roeslani, chair of the Indonesian Chamber of Commerce and Industry welcomed the proposed opening of the route, as quoted by Jakarta Post on March 15.
“It is going to be easier to access the Philippine market through the Bitung Port [in North Sulawesi], especially for products and commodities from Indonesia’s eastern regions,” the source added.
Institutional, governance problems
According to the MinDA website, the DGB, as one of three pilot areas for the ASEAN RORO Network Initiative, was initially pushed in 2012 by the private sectors in the three cities.
Policy restrictions in Indonesia like Bitung Port’s status, however, hampered the launch. In 2014, the Indonesian Ministry of Trade officially identified Bitung Port as an international port, allowing entry of food and beverages, electronics and garments.
Montenegro told the problem has been addressed by greater private and public sector coordination.
Under the ASEAN Single Aviation Market, BIMP-EAGA is pushing for the revival of air connectivity within its focus areas to increase not only tourism arrivals but also trade activity within and beyond the sub-region.
Various airlines have previously serviced the route such as Bouraq Airlines (2002), Merpati Nusantara (2005) and Sriwijaya airlines (2006), which have ceased operations due in part to the companies’ financial and operational losses, according to the MinDA website.
There were on and off availability of chartered flights after the suspension of regular flights.
Two of the players included Mid Sea Express, an Indonesian air carrier and Wings Air, a subsidiary of the Indonesian carrier’s Lion Air.
In his April 2016 dissertation titled “Trade Governance Model in the BIMP EAGA,” Soehardi, an Indonesian doctorate student at the University of Southeastern Philippines in Davao City, found that connectivity management in transport infrastructure is an important consideration among traders.
“The current condition of BIMP EAGA trade governance is marred with institutional and governance problems,” he wrote in his conclusion.
He added that it created difficulties and cumbersome engagements with small and medium traders in BIMP-EAGA corridors.
He identified six attributes with “availability of ships/planes as the major indicator.” The others include sufficient cargo ships and airplanes to ferry goods from one country to another and that a sufficiently equipped port of entry as a good indicator of trade governance.
No connectivity, no tourists
Retired government employee Virna Gomez of Davao City said that as a traveler she looks for destinations that do not only have commercial appeal.
“There are also those who look for historical and cultural purposes. This is the kind that we can see in Indonesia, for example,” she said.
For her, the idea of connecting Davao and General Santos to Bitung is welcome news, especially for cargo shipping. She said it would open up opportunities for local people to trade in the sub-region. She would also be interested to explore the tourist attractions there. She, however, hoped that a comfortable passenger shipping service should be offered side by side with the cargo ships.
“It would be an entirely different set of expectations from passengers,” she added.
But she said the prospects of local tourists like her to go to Indonesia will not depend only on the availability of flights or shipping services.
“We will be encouraged to travel if there are budget fares available such as the promotional peso-fare package (offered by a Philippine airline), she said.
She said that for tourists it all redounds to affordability of travel cost and availability of hotels that cater to backpackers.
“We must also have more of those hotels so that we also draw tourists from Indonesia to our shores,” she added.
Unlike archipelagic Indonesia, she said, Malaysia seems to be a more attractive destination because you can take a bus or a train in going from one destination to another.
“But I like to go to Bali and Yogyakarta, given the chance,” she said.
Gomez, who in 2010 set up a small travel agency to keep herself busy, said she rarely get bookings for travel to Indonesia or Malaysia.
’Get acts together’
Businesswoman Mary Ann Montemayor said this should not be a cause for discouragement.
She said the nature of BIMP EAGA is really “going slow” and small, not grand, so hard work is needed to push ahead.
But Montemayor, who sat at the BIMP EAGA Tourism Council from 1998 to 2008, said private and public sectors should get their acts together.
“By all means, the impasse should be broken. It’s impossible to do trading without connectivity,” she added.
Any aggressive marketing, she said, could help tourism and trade but it should be backed by physical connectivity.
Assistance has been extended to micro, small and medium enterprises to help them compete in the ASEAN market. But Montemayor said connectivity will their chances.
She said the ease of travel due to the Davao-Manado flights enabled business to pick up, although not as fast as expected.
“When it happened, the flights were already suspended,” she said.
She argued that it’s not entirely for the lack of attractions but that other destinations just had the edge in the competition.
“The challenge is how to build up the market and prove to the airlines that it’s worth the risk,” she said in the sidelines of an ASEAN meeting in Davao last month.
Joanna Ruth Paloma, an English teacher at Bukidnon State University, recalled fond memories of her visit Manado in June 2012. She was then a member of a 40-person delegation of the university chorale who performed there for the Philippine Independence Day celebration organized by the Philippine Consulate.
The group flew with Wings Air, an Indonesian airline serving the route with a 70-seater aircraft.
Joanna said they traveled to another city and country but felt like she was home. “I felt like we were closely related in culture and language (separated only by the seas).”
Indonesian food, she added, is familiar although a lot spicier. The style of the houses and buildings was also similar. In 2012, she compared Manado to Cagayan de Oro City. She said Manado folks were hospitable and were fond of Philippine tourists.
She was saddened that there are no more regular flights serving the route.
“I hope it will be revived. It’s good to connect with our neighbors. There were differences but there must be more similarities. It’s worth exploring,” she added.