Port gridlock in Indonesia a bad omen

The line of trucks waiting to cross from Indonesia’s main island of Java to westernmost Sumatra today stretches 10km out of Merak port. Some drivers have waited several days, forced to sell off perishable cargo to buy food.

It’s a worrying sign of what may lay ahead in southeast-Asia’s fastest growing economy as increasing demands are made on the inadequate infrastructure.

“We have a lack of capacity, but at the same time the volume of shipments is increasing. It increased 7 per cent in February”,  Wiratno, director of PT Transportation River Lake Crossing (ASDP), the port operator, told beyondbrics. He said:

After facing a vessel shortage, now we are facing bad weather. This makes the crossing time and loading and unloading take longer than usual.

Merak is one of the country’s busiest crossings, with 24 aging ships usually transporting 2,400 trucks and several thousand cars a day across the Sunda Strait.  Since last week, nearly half the fleet has been out of commission due to routine maintenance and breakdowns. Local media reports said drivers were being fed by concerned residents.

Indonesia’s economy has been among the best performing in Asia, with GDP picking up speed to 6.9 per cent in the last quarter of 2010. It is widely expected to be the best performing economy in south-east Asia this year, growing at more than 6 per cent. That could easily accelerate to 7 per cent or higher in years ahead if the investment climate is favorable.

Now, comes the “but” part. Indonesia’s government is unable to spend enough to keep up with growth, so will be relying heavily on private money and foreign direct investment to build roads, power plants, bridges and ports. An estimated $150bn is needed during the current government term through 2014.

Several major projects worth tens of billions of dollars will be up for grabs at an international infrastructure conference in April, but past efforts to bring capital to these long-term, corruption-fraught deals has proven tough.

If Indonesia is serious about lifting its economic growth to the next level and deepening development, it must take urgent action to address situations like Merak port.

Related reading:
Oil spike: curse & boon for Indonesia, beyondbrics
Indonesia lifts interest rates, beyondbrics
Food drives Indonesian inflation again, beyondbrics
China’s monster traffic jam: a sign of things to come, beyondbrics