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 MindaNews 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.