Southeast Asia's Infrastructure Potential
By Mark Young
Southeast Asia has a great deal of catching up to do when it comes to infrastructure – good news for breakbulk and project cargo service providers.
Speaking in an interview with Breakbulk, Mark Yong, director of BMT Asia Pacific, said that infrastructure development and demographics were powering the growth of all types of cargoes between the region and China.
“When you look at Southeast Asia, there is still a lot of work that needs to be done,” he said. “Indonesia has about 10 times the population of Malaysia, but only one-tenth of the infrastructure, so they have a lot of catching up to do, and catch up means they need equipment to help.
“ ‘I need equipment’ equals ‘I need to ship lots of equipment’ – equals ‘I need lots of breakbulk services.’ ”
In the interview, Yong gave the example of how Indonesia, with a population of 250m, has a growing middle class with an income that is increasing quickly, and that growing infrastructure was necessary because the country was falling behind.
Indonesia has therefore been importing a lot of capital equipment, goods and big bulk materials for infrastructure programs, said the director of the consultancy firm, a subsidiary of BMT Group.
“This trend is happening across Southeast Asia: Vietnam, Malaysia, and, to some extent, Laos and Cambodia,” he explained. “These governments need to spend $7tr on infrastructure over the next few years.”
Growth on Two Pillars
Yong said there were two aspects to the growth of cargoes between China and Southeast Asia.
First, free trade flow exists within the Association of Southeast Asian Nations (ASEAN), with Thailand, for example, having had success in exploiting free trade areas between ASEAN nations with its car part-manufacturing.
Indonesia was also beginning to take advantage of this, Yong explained, mainly to import cars as ready-made kits and add some local components to them.
“So, there is a lot of breakbulk stuff, plus local, small supply chain niches, which involve many stakeholders – typical of the ASEAN itself,” he said.
The second part of the growth, Yong continued, was the result of the China link in Southeast Asia. Compound growth here has been 20% per annum as a result of the Anti-Counterfeiting Trade Agreement between China and ASEAN.
“China now has moved from basic shoe and garment manufacturing to large capital equipment and to advanced technologies. These require breakbulk shipping,” Yong said. “These units are less inclined to be containerized, and they need ships chartered to handle them, or container vessels with breakbulk handling facilities to handle them.”
Associated Port Development
Asked how the leading ASEAN ports and operators are adjusting to the growth, Yong said that Sabah Ports had become an international port in Kota Kinabalu in northern Borneo, and was positioned to serve the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area, a remote part of Southeast Asia, to handle breakbulk and containerized goods.
In the southern Indonesian part of Borneo, Kijing Port was moving towards construction, something that will involve capital equipment and imports in the short and medium-term, while long-term, big equipment will be needed for a free trade zone, he said.
He also highlighted the new port in Jakarta, Indonesia – Kalibaru – and said there were “pockets of port development in Malaysia”.
Mark Yong is the keynote speaker at a conference session entitled “Asian Ports Rising to Meet Project Cargo Demand” at Breakbulk China 2018. In this session, Yong will identify the demographic trends and most promising areas for breakbulk professionals, as well as focusing on how to introduce Chinese companies and make them aware of what is happening in ASEAN. The event takes place in Shanghai, March 26-28.
Photo credit: BMT Asia Pacific
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