Batam: Singapore’s shipping rival less than 30km away

[Indos]

JAKARTA — Indonesia wants to re-position its Batam island as an alternative shipping and manufacturing hub to Singapore with a potential to draw US$60 billion (S$81 billion) in new investment.

Batam and nearby islands – located at less than 30km south of Singapore – have attracted about US$20 billion of investment since the government began promoting them as industrial area in the 1970s. The region, declared a free-trade zone in 2007, is home to thousands of local and foreign firms producing goods from computers to oil rigs.

Now authorities want to expand benefits to businesses by reclaiming about 8,000 hectares of idle or confiscated land to offer to exporters or producers of import substitutes.

“We aim to develop enclaves of special economic zones in Batam” with dedicated clusters for tourism and logistics among others, Mr Edy Putra Irawady, the acting head of Batam Indonesia Free Trade Zone Authority, said in an interview. “Based on a rough calculation, the potential investments including those in the pipeline are worth around US$60 billion.”

The Batam free-trade zone consists of eight islands measuring 71,500 hectares. It’s grown in importance as an investment destination for foreign companies, especially Singaporean firms, given its location in one of the busiest shipping channels, cheap labor and tax breaks. Companies operating in the free-trade area are exempt from value-added and luxury taxes, as well as import duties.

President Joko Widodo’s administration is seeking to boost exports to help curb a widening current-account deficit, a key risk for the economy and one of the reasons why investors sold off the currency amid an emerging-market sell-off last year.

The islands suit companies looking to relocate their factories as the U.S.-China trade war disrupts global supply chains, according to Indonesia’s Industry Minister Airlangga Hartarto. Taiwan’s Pegatron Corp has already announced an investment partnership with local electronics manufacturer PT Sat Nusapersada, while Apple plans to open a new developer academy in Batam, according to the ministry.

ASEAN DEAL

Companies are also keen to invest in tourism, electronic goods and shipyard industries, Mr Irawady said. Under the special economic clusters, companies will enjoy tax incentives and benefits stipulated under free-trade agreements of the Association of Southeast Asian Nations, or Asean, he said.

The extension of the Asean free trade benefits may spur companies in Batam to directly supply goods to other regions in Indonesia rather than routing it through Singapore, Mr Irawady said.

The authority is also expanding the capacity of Batam international airport, which along with the popular tourist destination of Nongsa will be turned into the first special economic zone in the island dedicated for tourism in the next two years, Mr Irawady said.

Batam’s strategic location – along the Malacca Strait connecting the international shipping routes between the Indian and Pacific Oceans – is a key advantage the authority wants to promote further, Mr Irawady said.

“Singapore has already been too crowded. Talking about crude trans-shipment service, for instance, some vessels have moved out from Singapore to Batam,” he said. “Shippers from regions such as Jakarta and Semarang also rely on direct call services in Singapore to deliver their goods overseas. We want to shift them all to Batam later.” BLOOMBERG

https://www.todayonline.com/world/batam-singapores-shipping-rival-less-30km-away

 

[Indos]

The plan to build bridge between Batam island and Bintan island is also projected to boost both Industry and Tourism into Bintan island who is bigger than Singapore and has its own fresh water supply with much low population (200.000 people).

Batam Island

Bintan Island

Bintan Island (low density population)

 

[Rusty]

smart idea.
But we have to remember that Singapore is what it is because of the culture of no corruption.

If Indonesia can set up a free and fair city, it will attract a lot of people can be very successful.

 

[Indos]

Batam Free Trade Zone promotional video

 

[vi-va]

Batam Free Trade Zone promotional video

Feel sorry for Singapore. There will be win-win in some cases, but regarding to entrepot trade, it's all about competition.

Business is business. The thing Singapore can do is industry structure upgrade, very challenging.

 

[Indos]

Feel sorry for Singapore. There will be win-win in some cases, but regarding to entrepot trade, it's all about competition.

Business is business. The thing Singapore can do is industry structure upgrade, very challenging.

Yup, Indonesia have another Singapore, not only one but several islands, and not like Singapore who have already been overpopulated, there are still enough lands for industries and tourism in both Batam and Bintan island and several islands in Riau islands province. Bintan island also has its own fresh water supply, unlike Singapore who need to get water supply from Malaysia. Thats why it is crazy to think Indonesia will invade Singapore some day as we also have islands located in this strategic location.

Singapore IMO can still retain its port industry and its financial services but in term of industries I think it is difficult to be developed further as Singapore doesnt have empty land anymore. The last time I check Malaysia as the biggest sand supplier for Singapore reclamation project has already stopped their sand export to Singapore. Indonesia also has stopped its sand export to Singapore since 2000's.

Batam has prepared to build biggest container port in Indonesia and has prepared some land for that but it is still waiting for investor. Indonesia state owned port companies so far havent yet started to do the project and still focus on expanding Tanjung Priok port in Jakarta and build a new port in West Java and Papua.

This is Batam city mayor who talk about it last year but the language on the video is in Indonesian.

 

[Nike]

i dont think this will be enough to challenge Singkie domminance at shipping and ports industry but to complement what they had is enough

 

[Indos]

i dont think this will be enough to challenge Singkie domminance at shipping and ports industry but to complement what they had is enough

Indonesian government until Today is still thinking that way, our container port in Batu Ampar, Batam city is still small and only mean to get spill over from Singapore port and not to compete it.

The story will be different if we start to develop port in Tanjung Sauh who is deep enough to be a transhipment port. According to recent plan, its capacity will be 20 times of current port in Batu Ampar. Until so far there is MOU between Indonesian state owned port company 1 (Pelindo 1) with Korean but development hasnt yet been started.

Sungjee Construction Signs MOU with Indonesia on Tanjung Sauh Container Port Development

22/03/2019

Sungjee Construction Co. announced on March 15 that it has signed a memorandum of understanding (MOU) with Indonesian state-owned port company PT. Pelabuhan Indonesia 1 (Persero) for joint development of Tanjung Sauh Container Port.

The project calls for building a container port on Batam Island in the southeastern part of Indonesia. The port is scheduled to start commercial operation in 2022. The total project cost is estimated at about US$2 billion.

Indonesia plans to develop Tanjung Sauh Container Port as the biggest logistics hub in Southeast Asia. It will make a massive investment to improve the port’s infrastructure and grow it into an industrial center.

The port’s business prospect is bright as it has a competitive edge compared with the Singapore port, which is only 40 km north of Batam Island.

“We are hoping that the largest port development project in Indonesia will help us secure a high growth and profit base,” an official of Sungjee Construction said. “We will make more efforts to win overseas construction contracts based on this project.”
Source: Business Korea

https://www.hellenicshippingnews.co...a-on-tanjung-sauh-container-port-development/

http://www.businesskorea.co.kr/news/articleView.html?idxno=30156

smart idea.
But we have to remember that Singapore is what it is because of the culture of no corruption.

If Indonesia can set up a free and fair city, it will attract a lot of people can be very successful.

Yup, you are right, Indonesia has another island like Singapore who sits in very strategic location, even bigger and more beautiful but to be like Singapore it needs efficient and professional human power and clean bureaucrats.

I hope Batam and Bintan islands at least can be 1/3 Singapore and has 100 billion USD GDP in near future.

 

[Mista]

Feel sorry for Singapore. There will be win-win in some cases, but regarding to entrepot trade, it's all about competition.

What's there to feel sorry? It's business, and our neighbors have been eyeing the shipping pie ever since our independence.

It's not new. You aren't from the region so you might not be familiar, but every few years or so you will read reports of enthusiastic officials talking about building a new hub or port to replace Singapore because they share the same strategic location, land and labor is cheaper and plentiful etc.

This is especially true for our dear neighbor from the North, which already have multiple transshipment ports along the Malacca straits, including one just straight across Singapore.

Yet their combined cargo handled in still lesser than Singapore, and Singapore remains as the busiest transshipment port in the world. Last year I heard they are planning again to build another port in Malacca to 'replace' Singapore. Existing ports aren't enough to 'replace' Singapore I guess.

SINGAPORE port operator PSA has entered into an agreement with Japan's largest shipping line after forming a joint venture with Ocean Network Express to operate four mega container berths from the first half of 2020, turning the Lion City into a major port of call for ONE's services.

The deal was the final piece of the puzzle in drawing all of the world's three major shipping alliances - which account for three-quarters of the world's container shipping trade - to the island state, SCMP reported, given that ONE belongs to THE Alliance. The other two leading box shipping alliances worldwide are Maersk Line and MSC's 2M Alliance, and Ocean Alliance.

The deal puts the port of Singapore ahead of its nearest competitors in Asia. For Malaysia's port Klang, in particular, the partnership between PSA and ONE comes 'as a blow', said shipping consultancy Alphaliner's chief analyst Tan Hua Joo, who is based in Singapore.

'Port Klang is the main loser as the move limits their ability to draw away Singapore's customers, now that all three of the global shipping alliances are tied to PSA through various joint-venture arrangements,' Mr Tan was quoted as saying.

https://www.seanews.com.tr/singapore-remains-worlds-top-transshipment-port/181356/

You know there are cargoes from India coming to Singapore before heading to the Middle East, despite geographically making no sense?
Location is important but it's not everything. Other important factors include economies of scale, efficiency, maritime law, arbitrage, transparency and lack of corruption. You don't want your containers to suddenly go 'missing' or unaccounted for.

PETALING JAYA: The Malaysian Anti-Corruption Commission (MACC) has taken the statements of six individuals to help investigations into the case of a “missing” container believed to be carrying high-tech military radar equipment at the Port of Tanjung Pelepas (PTP) in Johor.

https://www.thestar.com.my/news/nat...s-give-statements-in-rada#cQ3tWIHmwSsBOSdB.99

 

[Indos]

Indonesia plans to build 7 km sea bridge linking Batam and Bintan

Thu, Jul 11, 2019 - 2:45 PM

[JAKARTA] Indonesia plans to start building its longest sea bridge next year to connect two islands near Singapore and boost growth and trade with the neighbouring hub.

The seven-kilometre bridge connecting Batam and Bintan will cost as much as four trillion rupiah (S$385.5 million) and construction is set to take three to four years, the country's cabinet secretariat said in a statement on Thursday.

President Joko Widodo, who has secured his second term in office, is embarking on a more than US$400 billion infrastructure push. The government wants to re-position Batam as an alternative shipping and manufacturing hub to Singapore with a potential to draw US$60 billion in new investment.

The ministry in charge of public works is preparing a feasibility study and analysing engineering designs, and is aiming complete these by year-end, according to the statement.

Indonesia is developing the Batam area to attract opportunities potentially arising from trade tensions between the US and China, according to Edy Putra Irawady, head of Batam Development Body. The bridge would also complement Singapore's effort to boost air-passenger traffic by building a fifth terminal for its Changi Airport.

SEE ALSO: Where are the opportunities for fintechs in Indonesia?

Indonesia wants the bridge to reduce logistics costs, improve connectivity and boost tourism in the area. Mr Joko's administration is also reviewing the possibility to connect Peninsular Malaysia with the Indonesian island of Sumatra, head of the country's toll-road regulator, Danang Parikesit, said in an interview last month.

BLOOMBERG

https://www.businesstimes.com.sg/go...uild-7-km-sea-bridge-linking-batam-and-bintan

 

[AndrewJin]

No many how many ports a country can build, the high-IQ culture cannot be copied.

 

[8888888888888]

Singapore also has automated cranes.

 

[redgriffin]

Been to all 3 countries (Singapore, Malaysia & Indonesia) on personal and work visits. From an outsider's pov, Singapore has an advantage in human capital, regulatory environment, lack of corruption, an assimilated culture, and sense of nationhood over Malaysia and markedly so over Indonesia.
The business & work environment is really good, better than the Mideast and right up there with North America and Western Europe. It attracts high quality expatriate human capital in droves and offers a better more secure environment and infrastructure than its neighbors for both people and businesses. The work life there is hard and keeping in view how competitive it is that is a given.
Personally had it not been for Singapore's constitution disallowing dual citizenship, I would have accepted any one of the few job offers I got there.

 

[Menthol]

I never been to Batam and don't know much about it.

But if Batam want to successful, it must have a good bureaucracy and easing+simplify the administration. Have a clear and bold development plan.

Make it easy down to the level that Singaporean feels Batam is just another part of Singapore, like they are living in the same city. Crossing to Batam feels like the same as people from home went to orchard road.

And the Batam port, it's better to be outsourced to professional operator, just like Shenzhen port handled by Singapore port operator.

We are still the owner of Batam, but Batam feels as free as Dubai, HK and Singapore. Able to rival them.

 

[8888888888888]

The only threat Singapore could get is the Thai Canal being contracted by a Chinese company. A lot of ships will welcome the shortcut.