The world's seaborne trade exceeded 10 billion tons in a single year for the first time in 2015, according to the United Nations Conference on Trade and Development, with about 60% passing through Asia.
Sitting between the Indian and Pacific Oceans, Southeast Asia's big archipelagos should be well placed to capitalize as trade expands. Indonesia and the Philippines comprise about 17,000 and 7,500 islands respectively, while Indonesia, home to the world's fourth-biggest population -- about 260 million people -- has the second-longest coastline after Canada.
However, the bulk of this seaborne trade is moving between Europe and Asia's powerhouse economies in China and Japan, mainly through the South China Sea and the Strait of Malacca, which lies between Malaysia and the Indonesian island of Sumatra.
"The largest archipelagic countries in the world are not being optimized," said Fauziah Zen, an economist with the Economic Research Institute for ASEAN and East Asia, at the recent launch of a report on Southeast Asia's maritime infrastructure published by The Habibie Center, a Jakarta-based research organization.
Southeast Asia's total trade rose by nearly 50% between 2004 and 2014, but the combined container port throughput of Indonesia and the Philippines was around a third less than throughput in Malaysia, and less than half the level in Singapore, according to the report.
In Southeast Asia, only Singapore -- listed by the World Economic Forum as having the world's second-best port infrastructure -- and to a lesser extent Malaysia's Port Klang, attract enough business to place them among the world's top-ranked ports.
Singapore is the world's second-busiest port according to the World Shipping Council, with Malaysia's Port Klang ranking 12th. Six of the world's 10 busiest ports are in China, (seven, if self-governing Hong Kong is included), while South Korea's Busan is listed sixth. The highest-ranked Indonesian port was Tanjung Priok in Jakarta at 27th, with Manila the top Philippine port at 35th place.
Containers at a port terminal in Yangon, the commercial capital of Myanmar (Photo by Simon Roughneen)
Initiatives such as China's ambitious "Belt and Road" scheme to build or fund infrastructure upgrades in countries as far afield as those in Eastern Europe could prompt improvements to ports around Southeast Asia, but observers see most of the region as unable for now to make the most of the region's sea trade potential. Zamroni Salim, co-author of The Habibie Center report, said that ports in countries like Cambodia, Myanmar, even Indonesia, "all lag behind, compared to Singapore."
The 2016 World Bank Logistics Performance Index, based on a worldwide survey of 1,200 global freight forwarders and express carriers, ranks Singapore 5th out of 160 countries. Elsewhere in the Asia-Pacific region, Hong Kong came in 9th place, with Japan 12th, Australia 19th, South Korea 24th and China at 27th place.
Apart from Singapore, other Southeast Asian countries fared relatively poorly, with Malaysia 32nd and Thailand, Southeast Asia's second biggest economy, ranked 46th. The region's two major archipelagic countries were well down the rankings, with Indonesia 63rd and the Philippines 71st.
Triumph at sea?
While Southeast Asia's ports and related logistics lag behind, linking infrastructure such as road or rail links to facilitate onward transportation of goods is often not up to scratch either, further diminishing the region's maritime trade potential.
"Supply logistics are needed," said Zen, adding that planned new railways on the Indonesian island of Java -- backed by Japanese and Chinese investment -- as well as roads under construction such as the Trans-Sumatran Highway, could help better "integrate the port system into the national supply chain."
Zen cited distances between ports across Indonesia, which stretches around 4,800km from Aceh in the west to Papua in the east, as a factor in the country's laggardly transport performance. Another hurdle, she said, is that most of Indonesia's population and economic activity are concentrated in the west of the archipelago on Java and Sumatra, meaning that ships trading between east and west often sail empty for one leg of a round trip.
To offset the impact of these distances, Indonesia and the Philippines are aiming to develop port and seaborne trade links between the eastern islands of Indonesia and the Philippines, particularly Mindanao, a southern Philippine island that is much closer to eastern Indonesia than are Java or Sumatra.
Jakarta's busy Tanjung Priok port (Photo by Simon Roughneen)
Indonesia hopes to position itself as a leading maritime trading country, with President Joko Widodo invoking the slogan "jalesveva jayamahe" (in the sea we triumph) during his inauguration speech in 2014. To back up its grand maritime plans, the Indonesian government hopes to implement more than $400 billion worth of infrastructure improvements in roads, rail, power plants, airports and ports by the time of the next national elections in 2019.
Jakarta hopes to attract significant foreign funding for these projects through a mix of joint ventures and public private partnerships, with upgrades to the country's 161 ports, including Tanjung Priok and Belawan in North Sumatra, which sits on the Strait of Malacca. "We welcome foreign companies to join port management in Indonesia," said Liana Trisnawati, secretary general of the Port Corporation Association Indonesia.
Liana Trisnawati, secretary general of the Port Corporation Association Indonesia (Photo by Simon Roughneen)
Most Southeast Asian countries have big plans to improve infrastructure over the coming years -- upgrades that the Asian Development Bank, a Manila-based lender, estimates could cost $3.1 trillion through to 2030 -- if plans are realized across the region.
New and improved roads, railways, ports, airports and more are necessary if Southeast Asian's economies are to remain competitive. According to a June report by HSBC, a U.K. bank, "transport infrastructure has been neglected by most [Association of Southeast Asian Nations] countries, which have preferred to focus on power and telecom in the last 10 years. As a result, competitiveness has suffered."
However, with Singapore planning a mammoth new port terminal at Tuas in the southwest of the city-state, and Malaysia lining up a major extension of Port Klang, Indonesia and the Philippines will have to invest heavily if they are to try catch up with their wealthier neighbors' maritime infrastructure.
The Philippines under President Rodrigo Duterte aims to spend $144 billion on infrastructure -- hoping to attract Chinese investment as part of a trade-off under which Manila has eased previously strident criticism of Beijing's claims to most of the South China Sea.
"As a result of under-investment in the last couple of decades and bureaucratic obstacles, the Philippines has the ASEAN-5's worst infrastructure," the HSBC report noted, referring to Indonesia, Malaysia, the Philippines, Singapore and Thailand, ASEAN's five longest-standing members.