SPECIAL REPORT: Great expectations await Davao-Gensan-Bitung link: ASEAN’s first” RoRo shipping service

By Walter I. Balane

DAVAO CITY – Taxi driver Rondie Madria, 36, hopes he could bring his passengers to their destination fast and safely every day. He hates days when the traffic is heavy. He does not earn enough.

Unfortunately, Rondie associates “traffic congestion” and “meetings with big people”. to “ASEAN” (Association of South East Asian Nations) and “BIMP- EAGA” (Brunei Darrusalam, Indonesia, Malaysia and Philippines – East ASEAN Growth Area (BIMP-EAGA).

He lamented that ASEAN or BIMP meetings held here choked the traffic. Some roads needed to be closed – so visitors can move fast and safely.

Rondie confessed he is also yet to meet any Indonesian or Malaysian passenger because mostly, he served Caucasians like Americans and Australians.

From a radio program, he heard that the meetings were meant to create more jobs. But he could not understand how.
“I haven’t heard anyone who said they worked for “ASEAN” or “BIMP-EAGA,” he added.

If Indonesia and Malaysia are two of the closest neighbors in terms of distance from Mindanao, he said “why don’t we have many neighbors visiting us?”

As he was about to park the cab, he said he got curious that there is a ship plying Davao to an Indonesian port when there is no Davao-Manila voyage.

“Maybe that’s the time we can see many Indonesian visitors?” he asked.

Rondie was referring to the Davao-General Santos-Bitung (DGB) roll on – roll off (RoRo) shipping service, which the governments of Indonesia and the Philippines are set to launch on April 30 this year.

Presidents Rodrigo Duterte of the Philippines and Joko Widowo of Indonesia have been invited to grace the launch in Davao City after the 30th ASEAN Summit in Manila, Mindanao Development Authority Asst. Sec. Romeo Montenegro said.

RoRo is a mode of shipping designed to carry rolling cargoes that do not require cranes for loading or off-loading. They simply roll on and off the vessel. The mode is economical, according to the Asian Development Bank, because it has removed cargo handling costs for labor and equipment. It will also cut the transport time.

Montenegro said the DGB shipping link not only connects three cities in two countries. It is also eyed as a breakthrough – breaking the impasse of transport connectivity, at least between the Philippines and the rest of BIMP-EAGA and ASEAN, said Montenegro.

If pursued, the shipping service will be the first of its kind in the 50-year old ASEAN grouping eyed to help boost the efforts for economic integration.

In 2012, the Japan International Cooperation Agency (JICA) recommended in its study to set up a sea link dedicated to freight services between General Santos City in Mindanao and the Indonesian port of Bitung as the much needed maritime connectivity aimed to revive and to strengthen trading between Indonesia and the Philippines.

The Master Plan of ASEAN Connectivity 2025 cited the need for connectivity in physical, institutional and people-to-people linkages as support and means to achieve economic, political-security and sociocultural pillars of integration – for the ASEAN Economic Community (AEC).

Since its launching in 1994, BIMP EAGA cited improvements made in transport connectivity in the development and improvement of roads and ports and transport facilitation initiatives. The BIMP-EAGA Vision 2025 document, however, cited that most of the projects became “stand alone projects” showing benefits at the national level that “fail to clearly demonstrate sub-regional impacts.”

“Only a few projects have accounted for the need to link the two priority economic corridors of BIMP-EAGA, namely the Western Borneo Economic Corridor (WBEC) and the Greater Sulu and Sulawesi Corridor (GSSC),” the document cited.

For the transport sector strategy of BIMP-EAGA, the goal based on BIMP EAGA Vision 2025 is “interconnected, seamless and safe multi-modal transport.”

According to the BEV 2025 project list for 2017 to 2025, aside from the DGB route, other sea linkages were also eyed in BIMP-EAGA, such as Bitung-Tahuna-Gensan, Brooke’s Point-Sandakan-Kota Kinabalo, Brooke’s Point-Bataraza-Kudat and Brooke’s Point-Brunei.

For air linkages, Puerto Princesa-Kota KInabalo, Mulu-Bandar Seri Begawan, Davao-Manado, Pontianak-Bandar Seri Begawan and Balikpapan-Bandar Seri Begawan.

A problem over the years 

Poor sub-regional transport connectivity, as identified in the BIMP-EAGA Vision 2025 document, is one of the major challenges the BIMP-EAGA faced.

Within the transport sector, there were also uneven levels of development across the economies. As a result, the document cited that there were differing development priorities and agenda and divergent policies and regulations related to transport and transport facilitation.

Montenegro said there is greater chance to address connectivity from 2017 to 2025 because a total of $23 billion, compared to only $1 billion in the previous decade, have been earmarked for priority infrastructure projects (PIPs) in the area.

More than half of the amount goes to projects identified in Mindanao because of different factors. He said Mindanao has the biggest need in infrastructure development. Also, a big ticket project, the Mindanao Railway System is in the pipeline. There is also a large allocation of the national government, representing strong national focus on public spending in infrastructure. President Duterte’s priority is “build, build, build”.

The DGB, Montenegro added, is strategic for the Philippines, not just for Mindanao because it provides a faster and cheaper access for domestic products to be moved in ASEAN and other parts of the world. Notably, only Mindanao is physically separated in BIMP, with Brunei, Indonesia and Malaysia very near each other.

Should be regular
The private sector shared the idea.

Vicente Lao, chairperson of the Mindanao Business Council, who sits in the BIMP-EAGA Business Council as the representative from the Philippines to the private sector forum, said the opening of the route will be good for Mindanao and trading with the Indonesian areas in the Association of South East Asian Nations (ASEAN) sub-region.

“The governments should act together to make it happen. The private sector should come in to take advantage,” he told MindaNews this week.

Since regular flights were suspended in 2008 between Davao City and Manado in Indonesia, travelers between the two areas relied only on chartered flights, he added.

Mindanao Business Council’s Lao, however, noted that the service should be made regular, to step up from the chartered services that marked transportation in the area after regular services were suspended.

“It is not dependable. It has to be regular trips to make sure it addresses the needs of the businessmen,” he said via telephone.

Lao said this means a big cut in the cost, too. The Mindanao Development Authority cited that at present it takes three to five weeks to move products from Davao City to Manado, Indonesia.

With the DGB RoRo route, the travel time will be cut to three days. PortCalls Asia cited the savings to be around P75,000 (PUS$1,500) per 20-foot equivalent unit (TEU).

Apart from intra-regional trade, the route can also serve as a cheaper alternative route for transshipment of goods in Asia, Montenegro added.

The privately-owned Kudos Port will be used in the route for Davao City. In General Santos City, the Makar Wharf will be used and in Sulawesi, the Bitung Port, which was recently identified as an international port of entry to Indonesia.

Open the gates
Trade and Industry Asst. Sec. Arturo Boncato Jr. said the revival of regular flights to the Davao to Manado route should follow the opening of the shipping service.

He said the new shipping link will be crucial in increasing trading in the BIMP EAGA, which is now considered as a building block of ASEAN.

“Connectivity plays a critical role in trading and the goal of the ASEAN Economic Community,” he added.

But Boncato, who is the Philippine senior official to the BIMP-EAGA, said while the easier direction is for the route to be used in the transshipment business in Asia, it should really facilitate and improve intra-regional trading in BIMP-EAGA.

Bronx Hebrona, who chairs the Committee on ASEAN and BIMP-EAGA of the Regional Development Council in Region 12 or the South Cotabato, Cotabato, Sultan Kudarat, Sarangani and General Santos City (SOCCSKSARGEN) region, said the opening of the shipping service is good.

“But now when a ship is available, are there enough goods to be transported?” he asked.

He said there is greater push for BIMP EAGA with President Duterte, who he said was instrumental in expediting the preparations for the DGB route opening.

“It’s possible. But it’s a wait and see situation. We are waiting for concrete terms,” he added.

Boncato said loading the vessel is already the easier part. The challenge is how to sustain the shipping service.

Montenegro said a joint meeting is scheduled next week for the Philippine and Indonesian task forces created to prepare for the opening of the route.

During the Davao General Santos Bitung Business Forum last month, Philippine Transport undersecretary Fernando Juan Perez described the route as a “gold mine” because it opens up a lot of opportunities for exporters from both countries.
Rosan P. Roeslani, chair of the Indonesian Chamber of Commerce and Industry (Kadin) welcomed the proposed opening of the route, as quoted by Jakarta Post on March 15.

“It is going to be easier to access the Philippine market through the Bitung Port [in North Sulawesi], especially for products and commodities from Indonesia’s eastern regions,” the source added.

What happened before
According to the MinDA website, the DGB, as one of three pilot areas for the ASEAN RORO Network Initiative, was initially pushed in in 2012 by the private sectors in the three cities.

Policy restrictions in Indonesia like Bitung Port’s status as an international port, however, hampered the launch. In 2014, the Indonesian Ministry of Trade officially identified Bitung Port as an international port, allowing entry of food and beverages, electronics and garments.

Montenegro told MindaNews the problem has been addressed by greater private and public sector coordination.

Under the ASEAN Single Aviation Market (ASAM), BIMP-EAGA is pushing for the revival of air connectivity within the EAGA focus areas to increase not only tourism arrivals but also trade activity within and beyond the sub-region.

Various airlines have previously operated in the route such as Bouraq Airlines (2002), Merpati Nusantara (2005) and Sriwijaya airlines (2006), which have ceased operations due in part to the companies’ financial and operational losses, according to the MinDA website.

There were on and off availability of chartered flights after the suspension of regular flights. Two of the players included Mid Sea Express, an Indonesian air carrier and Wings Air, a subsidiary of the Indonesian carrier’s Lion Air.

In his April 2016 dissertation entitled “Trade Governance Model in the BIMP EAGA,” Soehardi, an Indonesian doctorate student at the University of Southeastern Philippines in Davao City, found that connectivity management in transport infrastructure is an important consideration among traders.

“The current condition of BIMP EAGA trade governance is marred with institutional and governance problems,” he wrote in his conclusion.

He added that it created difficulties and cumbersome engagements with small and medium traders in BIMP-EAGA corridors.

He identified six attributes with “availability of ships/planes as the major indicator.” The others include sufficient cargo ships and airplanes to ferry goods from one country to another and  that a sufficiently equipped port of entry as a good indicator of trade governance.

No connectivity, no tourists
Retired government employee Virna Gomez of Davao City said as a traveler she looks for destinations that do not only have commercial appeal.

“There are also those who look for historical and cultural purposes. This is the kind that we can see in Indonesia, for example,” she added.

More awareness, however, should be pushed on the points of interest in our neighboring countries in the BIMP-EAGA.

For her, the idea of connecting Davao and General Santos cities in Mindanao to Bitung in Indonesia is welcome news, especially for cargo shipping.  She said it would open up opportunities for local people to trade in the sub-region.  She would also be interested to explore the tourist attractions there. She hoped, however, that a comfortable passenger shipping service should be offered side by side with the cargo ships.

“It would be an entirely different set of expectations from passengers,” she added.

But she said the prospects of local tourists like her to go to Indonesia will not depend only on the availability of flights or shipping services.

“We will be encouraged to travel if there are budget fares available such as the promotional peso-fare package (offered by a Philippine airline), she added.

It all redounds to affordability as unaffordable trips take people from becoming tourists. Aside from the travel cost, there should also be affordable hotels that serve the interests of back packers, for example.

“We must also have more of those hotels so that we also draw tourists from Indonesia to our shores,” she added.

Unlike archipelagic Indonesia, she said, Malaysia seems to be a more attractive destination because you can take bus or train to go from one destination to another.

“But I like to go to Bali and Yogyakarta, given the chance,” she added.

Gomez, who in 2010 set up a small travel agency to keep herself busy, said rarely they get bookings for travel to Indonesia or Malaysia, especially in EAGA areas.

Get acts together
Businesswoman Mary Ann Montemayor said this should not be a cause for discouragement.

She said the nature of BIMP EAGA is really “going slow” and small, not grand, so hard work is needed to push ahead.

But Montemayor, who sat at the BIMP EAGA Tourism Council from 1998 to 2008, said private and public sectors should get their acts together.

“By all means, the impasse should be broken. It’s impossible to do trading without connectivity,” she added.

Any aggressive marketing, she said, could help us deliver in tourism and trade but it should be backed by physical connectivity.

There are a lot of things being done to capacitate the Micro-Small and Medium Enterprises (MSMEs) like providing mentors for them to enter the platform of the ASEAN market.

But Montemayor said connectivity is a big factor in the capacity of the MSMEs to participate in the market.

She said there was ease of travel when there was missionary direct and regular connectivity in the last decade in Mindanao with the airports of Manado in Indonesia, for example.

Business was starting to pick up, she said, although not as fast as expected.

“When it happened, the flights were already suspended,” she added.

She argued that it’s not entirely because of the lack of attractions but that other destinations just had the edge in the competition.

“The challenge is how to build up the market and prove to the airlines that it’s worth the risk,” she said in the sidelines of an ASEAN meeting in Davao last month.

Away yet at home
Joanna Ruth Paloma, an English teacher at Bukidnon State University, recalled fond memories of her visit to City of Manado in the Indonesian island of Sulawesi in June 2012. She was then a member of a 40-person delegation of the university’s chorale who performed in the city for the Philippine Independence Day celebration there organized by the Philippine Consulate.

The group flew with Wings Air, an Indonesian airline serving the route with a 70-seater aircraft.

Joanna said they traveled to another city and country but felt like she was home.

“I felt like we were closely related in culture and language (separated only by the seas),” she said. Indonesian food, she added, is familiar although a lot spicier. The style of the houses and buildings were also similar. In 2012, she compared Manado to Cagayan de Oro City. She said Manado folks were hospitable and were fond of Philippine tourists.

She was saddened that there are no more regular flights serving the route.

“I hope it will be revived. It’s good to connect with our neighbors. There were differences but there must be more similarities. It’s worth exploring,” she added. (Walter I. Balane)

(Next part: Physical Connectivity and Economic Integration in the BIMP-EAGA)  

This story was produced under the Reporting ASEAN program and media series implemented by Probe Media Foundation, supported by an ASEAN-Canada project, funded by the Government of Canada. It is also in partnership with AirAsia, and in collaboration with the ASEAN Foundation.