Erick Thohir: Belawan Port in Sumatra Must be Made Able to Serve Direct Calls to Reduce Losses

JAKARTADAILY.ID – Indonesian Minister of State-Owned Enterprises (SOEs) Erick Thohir revealed that currently 95 percent of cargo from Belawan port, Medan, North Sumatra, are not going directly to their destination country,  but must go through the ports of Singapore and Malaysia.

Not only the Belawan port, but most ports in Sumatra are also only feeders. This results in significant economic losses for Indonesia.

The domination of Malaysia and Singapore continues, to this day, from January - May 2022, around 51 percent of containers unloaded/unloaded in Belawan headed to/originated from Malaysia. The rest, 44 percent to Singapore and Thailand (5 percent).

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"We at the Ministry of SOEs are trying to make Belawan an export port that serves direct calls," said Erick Thohir, in Jakarta, Friday, July 8, 2022.

As an illustration, a direct call for container ships from Indonesia to Los Angeles, for example, only takes 23 days. In contrast, with transshipment, the same route takes 31 days, plus an additional 20 – 30 percent more expensive fare.

According to Minister Erick, the development of Belawan can be started by bringing large container ships to Belawan. This can be done by increasing the loading and unloading capacity and equipment at the Belawan Port so that it is adequate for direct call transportation (direct shipping to the destination country).

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In addition, the volume of container cargo must also be grown. The trick is to make Belawan a gateway for small ports around it. Cargo loads that are scattered in small ports in Sumatra, can be brought to Belawan and then jointly transported to the destination country.

PT Pelindo noted that of the 550,871 TEUs of containers loading and unloading in Belawan in 2021, 59 percent came from/to ports in Malaysia. The remaining 25 percent went to Singapore, and another 16 percent went to Thailand, Taiwan, and several other countries.

Data from the Central Statistics Agency (BPS) noted that exports from North Sumatra have so far spread to more than 30 countries. Based on tonnage, in 2021, most exports from this area will be directed to China (16 percent India (6.7 percent ), Japan (6.2 percent ), and the United States (4 percent ). exports from North Sumatra are very small (less than 2 percent).

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Exports of goods in transit to other countries are very detrimental to the economy. This practice makes Indonesian exports less competitive because they have to bear expensive and time-consuming logistics costs. In addition, Indonesia also had to lose a lot of foreign exchange.

In addition to harming exporters, this transshipment makes Indonesia lose more foreign exchange. Container ship services have so far been paid for in foreign currency (US dollars).