NEW SHIPPING ROUTE. Seen to increase trade between Indonesia and the Philippines, the Davao-General Santos-Tahuna-Bitung sea route which will open next month will formalize shipping services between Mindanao and North Sulawesi, two key island-provinces in the Brunei Darussalam Indonesia Malaysia the Philippines East ASEAN Growth Are (BIMP-EAGA). The opening of the shipping route is also seen to boost trade growth within the economic sub-region and encourage entrepreneurs to engage into international trade business.

 

Trade and economic ties between Mindanao and Indonesia expect to get further boost with the opening of the Davao-General Santos-Tahuna-Bitung sea route this month that will operationalize shipping services between Mindanao and North Sulawesi.

An agreement to operationalize the shipping service was sealed in Jakarta on April 11 by the representatives of the 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.

The sea route has expanded to include Tahuna, a fishing and trading center in Sangir Talaud group of islands in the province of North Sulawesi, situated in between Bitung and General Santos City.

In the agreement, PT Kanaka will provide shipping services to the route with its conventional cargo-type vessel with a 120 TEU capacity. ARREE Freight Express on the other hand will handle the cargo consolidation requirements for the shipping 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 Dr. Malou Monteverde, former president of Davao City Chamber of Commerce and Industry and one of the primary proponents of the sea route.

The shipping service is also seen to significantly increase trade and economic relations not just between the two countries, but in the entire Brunei Darussalam Indonesia Malaysia the Philippines East ASEAN Growth Area (BIMP-EAGA).

Monteverde added that the vessel is initially expected to ply the route twice a month.

Among the products 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 that connect Mindanao to Indonesia have to pass through Manila and Jakarta before reaching the provinces of North Sulawesi.

Monteverde said that the new link will allow the direct exchange of goods between Mindanao and Indonesia through a less costly and more proximate route.


Prior to the commencement of this route, consumer items for East Indonesia are usually sourced from Jakarta, almost a thousand nautical miles from North Sulawesi. The direct sea route is estimated to span only 350-nautical miles. Tahuna was added to the route due to the area’s strategic location and its significant contribution to trading activities.

“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) and Philippine signing minister for BIMP-EAGA.

Antonino added that the private sector-led sea route is identified as a priority route under the masterplan on ASEAN connectivity, and is seen to strongly contribute to efforts towards ASEAN integration.

Currently, shipping companies that provide services to areas covered by BIMP-EAGA are given 50 percent discount on port and dockages fees as part of the incentives for serving within the sub-region.

As part of the Philippine initiatives for ASEAN integration, the development of the route is also supported by various national line agencies including the Departments of Agriculture, Trade and Industry, Foreign Affairs, Transportation and Communication, 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 also highlighted that the route can be dedicated to a freight service once shipping service requirements are in place.

Another study made by the Research Education and Institutional Development (REID) Foundation in 2010 cited that the North Sulawesi-Mindanao sea link offers strong potentials for international trade and commerce between Indonesia and the Philippines since 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,” said Eko Hartono, Indonesian Consul General to Davao.

North Sulawesi is among the 10 provinces in 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 is seen as an impetus for the reopening of the Davao-Manado air links that revive the trade and tourism links between the two key cities in the sub-region.

The BIMP-EAGA is primarily intended to spur development in the lagging sub-economies of the member countries by boosting intra-EAGA trade, tourism, and investments.

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