Trade and economic ties between the Philippines and Indonesia are expected to increase with the formal opening of the Davao-General Santos-Tahuna-Bitung sea route this May.
The new sea route is an offshoot of a recent agreement to operationalize shipping services between Mindanao and North Sulawesi, two key island-provinces in the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA).
The accord was sealed in Jakarta on April 11 by representatives of Indonesian shipping line PT Kanaka, the North Minahasa Chamber of Commerce of Indonesia, Philippine-based cargo company ARREE Freight Express and the Davao City Chamber of Commerce and Industry.
The sea route has expanded to include Tahuna, a fishing and trading center in the Sangir Talaud group of islands in Indonesia’s North Sulawesi province. Situated between Bitung and General Santos City, Tahuna was added to the route due to the area’s strategic location and its significant contribution to trading activities.
Under the agreement, PT Kanaka will provide shipping services to the route with its conventional cargo-type vessel with a 120 twenty-foot equivalent unit (TEU) capacity.
ARREE Freight Express, on the other hand, will handle cargo consolidation requirements for the route.
“We have always looked into this route as one of the cheapest and fastest ways to transport goods from Mindanao to Indonesia and vice versa,” said Malou Monteverde, a former president of the Davao City Chamber.
The twice-a-month service is also seen to significantly increase trade and economic relations not just between the two countries, but in the entire BIMP-EAGA.
Among products being eyed by Mindanao traders to export to Indonesia through the new shipping service are canned beverage, fresh and dried tropical fruits, processed coconut, corn feeds, construction supplies, meat, poultry and fish products.
Currently, sea links between Mindanao and Indonesia have to pass through Manila and Jakarta before reaching North Sulawesi.
Consumer items for East Indonesia are usually sourced from Jakarta, almost a thousand nautical miles (1,852 kilometers) from North Sulawesi. The direct sea route is estimated to span only 350 nautical miles.
“We commend the continuous efforts of the private sector in making this route possible, which will significantly cut shipping costs and thereby allow our small and medium entrepreneurs to engage in international trading between these two points in the BIMP-EAGA,” said Luwalhati Antonino, chair of the Mindanao Development Authority (MinDA).
Antonino added that the sea route is a priority route under the master plan on ASEAN connectivity, and is seen to strongly contribute to efforts towards ASEAN integration.
Currently, shipping companies that provide services to areas in the BIMP-EAGA enjoy a 50% discount on port and dockage fees.
As part of Philippine initiatives for ASEAN integration, the development of the route is supported by various national line agencies including the Departments of Agriculture, Trade and Industry, Foreign Affairs, Transportation and Communications, the Philippine Ports Authority, Maritime Industry Authority, Bureau of Customs, including transport security offices.
In a feasibility study conducted by the Japan International Cooperation Agency (JICA) in 2012, the Gensan-Bitung route was selected as one of the pilot areas for a roll-on/roll-off operation within BIMP-EAGA. The study proposed that the route be dedicated to freight once shipping service requirements are in place.
Another study made by the Research Education and Institutional Development Foundation in 2010 said the North Sulawesi-Mindanao sea link has strong potentials for international trade and commerce between Indonesia and the Philippines as it offers a proximate channel for the shipment of goods.
“The opening of this sea route concretizes our long-running efforts to establish a shipping link between Mindanao and North Sulawesi,” Eko Hartono, Indonesian consul general to Davao, said.
North Sulawesi is among 10 provinces on the Indonesian islands of Kalimantan, Sulawesi, Maluku and Irian Jaya that are part of the BIMP-EAGA.
Hartono added that once fully utilized, the sea route could be an impetus for reopening the Davao-Manado air links that would revive the trade and tourism links between the two key cities in the sub-region. –– Roumina M. Pablo
