Seamless Integrated Domestic and International Shipping in Archipelagic ASEAN

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1 Forum on 2012 State of Philippine Competitiveness: Strengthening PPP for Infrastructure Development and Regional Connectivity Seamless Integrated Domestic and International Shipping in Archipelagic ASEAN ENRICO L. BASILIO President, REID Foundation June 14, 2012 AIM Policy Center

2 Introduction Paper for the AEC Mid-Term Economic Blueprint Review (ERIA, February 2012) Co-authors: Drs. H. Lidasan and J. Castro, UP SURP Professors Main Objectives of the Paper Look at the challenges archipelagic ASEAN Member States face in facilitating a seamless integrated domestic and international shipping Come up with recommendations on how ASEAN could further strengthen its regional transport network to support its objective of a single market and production base.

3 2007 AEC Blueprint Transform ASEAN into a single market and production base - Establishment of an ASEAN Single Shipping Market to promote greater connectivity, efficiency, and competitiveness of the region s transport network which mainly involves seamless integrated domestic and international shipping for the archipelagic ASEAN Member States

4 2009 ASEAN Connectivity 15 th ASEAN Summit ASEAN Connectivity Initiative October 2009, Thailand ASEAN thus has the potential to physically anchor itself as the transportation, Information and Communication Technology, and tourism hub of this region. Enhancing intraregional connectivity within ASEAN and its sub-regional grouping would benefit all ASEAN Member States through enhanced trade, investment, tourism and development.

5 in billions USD ASEAN Total Merchandise Trade Exports Imports Source: World Trade Organization

6 2010 ASEAN Master Plan on Connectivity A High Level Task Force on ASEAN Connectivity (HLTF-AC) was created to craft the ASEAN Master Plan on Connectivity 3 CONNECTIVITY PILLARS Physical Connectivity (Transport Infrastructure, ICT and Energy) Institutional Connectivity (Investment, Trade and Service facilitation) People-to-People Connectivity (Tourism, Culture, Education)

7 43 rd ASEAN Foundation Day [t]he Philippines has major interests here, with its existing nautical highway or RO-RO project. Once it is implemented, ASEAN connectivity will bridge our nation to our neighbors, shorten transfer distances and open more economic opportunities for more people. President Benigno S. Aquino III August 9, 2010

8 2010 ASEAN Master Plan on Connectivity Establishment of an ASEAN RO-RO Network was identified as one of the key strategies on physical connectivity (maritime) The ASEAN RO-RO initiative was included among the 15 Flagship (Priority) Projects for

9 Maritime Connectivity Efficiency in maritime transport can be promoted at three (3) levels: Inter-island connectivity (domestic) Regional (ASEAN) and Sub-regional (IMT-GT, BIMP-EAGA, GMS) connectivity ASEAN connectivity with the rest of the world, Singapore, Thailand and Malaysia serving as regional transhipment hubs

10 Major ASEAN+ Sea Linkages 2010 In Million TEUs MAIN PORTS Singapore 28 Shanghai 25 Shenzhen 18 Busan 12 Guangzhao 11 K Lang 7 Tanjung 6 Laem Chabang 5 Tokyo 4 Ho Chi Minh 3 Manila 3 Yokohama 3

11 MCC Intra Asia 7 Roundtrip Source: MCC

12 ASEAN RO-RO NETWORK

13 European RO-RO France Morocco 770 NM (Sete Nador) United Kingdom Mainland Europe 360 NM (New Castle Amsterdam) 470 NM (New Castle Gothenburg

14 European RO-RO links Source: DFDS shipping M/F Primula Seaways Loading in Cuxhaven, Germany M/F Tor Botnia in the Netherlands

15 Asian RO-RO Shanghai, China Hakata, Japan (500 nautical miles) 20 nautical miles; 26.5 hours; 120-trailers

16 ASEAN Connectivity (Illustrative Framework)

17 East-West Economic Corridor Inter-modal Connectivity

18 Domestic Inter-Island Connectivity

19 DOTC Secretary bats for ASEAN RO-RO System Among the agreements to be firmed up in the President s visit [to China] include one that will see both nations eventually setting up a South China Sea roll-on, roll-off system or RORO to ensure the smooth transport of goods between them. SEC. MAR A. ROXAS II Department of Transportation and Communications August 30, 2011 Source: ASEAN Secretariat

20 Existing International RO-RO System in Japan Chassis-Trailers RORO Unloading Operations at the Port of Hakata

21 Existing International RO-RO System in Japan Chassis-Trailers RORO Loading Operations at the Port of Hakata

22 RO-RO Systems Philippine Domestic RO-RO Shipping Method (INTER-ISLAND: 4-20 truck capacity) Proposed ASEAN RO-RO Shipping Method : Chassis Trainer RORO (OCEAN-GOING: 300 TEUs)

23 Chassis-Trailer RO-RO Service Chassis-Trailer RORO (Cha-RO) addresses the issues of: Right-hand / left-hand land transport systems Movement of natural persons and labor displacement (truck drivers) Vehicle (Truck) registration

24 Economic Benefits Faster Cheaper Loading/unloading is 2.5x faster than conventional shipping; Sailing time is faster (RORO can cut sailing time by half compared to conventional ships) Door-to door cost of RO-RO is 20% lower compared with conventional shipping; 70-80% cheaper than air Better Greener No need for expensive gantry cranes (US$ 8-10 million) lower port development cost (US$ million vs. US 120 million for container port) lower draft requirement: 6.5 meters (for RO-RO) vs meters (for conventional ships) CO2 emission is 90% lower than air transport (24 tons vs 264 tons) 100 tons of cargoes from Shanghai-Hakata (using RORO) and Hakata- Tokyo (trucking) SOURCES : REID Foundation; M. Terauchi, President of Shanghai Super Express (Powerpoint presentation on RORO, Sept 14, 2011)

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26 Challenges: Infrastructure and Policy Gaps

27 ASEAN Highway Network (AHN) - The ASEAN Highway Network aims to form an inter-state road network connecting member-states with the goal of providing easy access to key markets and reducing transport cost. - The ASEAN RO-RO Network will extend this land highway to the archipelagic Southeast Asia. Source : ASEAN Transport Cooperation Framework Plan (ASEAN Secretariat, 1999)

28 AHN Missing Links and Road Upgrades COUNTRY ROUTE DISTANCE (KM) Myanmar AH112 (Thaton Mawlamyine Lahnya Khlong Loy) 60 Myanmar AH 123 (Dawei Maesamepass) 141 Myanmar/ Thailand Dawei Kanchaburi NA Myanmar EWEC Missing Link NA Source: ASTP COUNTRY ROUTE DISTANCE (KM) Lao PDR AH12 (Vientiane Luang Prabang) 393 Lao PDR AH15 (Ban Lao Namphao Myawadi) 98 Myanmar AH1 (Tamu MDY Bago Myawadi) 781 Myanmar AH2 (Meikthila Loilem Kyaington Tachieik) 593 Myanmar AH3 (Kyaington Mongla) 93 Source: ASTP

29 Port infrastructure Development COUNTRY NO. OF PORTS Myanmar 3 Kyaukphyu, Yangon, Thilawa PORTS Thailand 3 Bangkok, Laem Chabang, Songhkla Cambodia 2 Phnom Penh, Shihaoukville Vietnam 4 Cailan, Hai Pong, Da Nang, Ho Chi Minh Malaysia 10 Penang, Kemaman, Port Klang, Kuantan, Johor, Pelepas, Kuching, Bintulu, Kota Kinabalu, Sandakan Singapore 1 Singapore Indonesia 14 Belawan, Dumal, Palembang, Panjang, Pontianak, Tanjung Priok, Tanjung Emas (Semarang), Tanjung Perak, Banjarmasin, Balikpapan, Makassar, Bitung, Sorong, Jayapura Brunei 1 Muara Philippines 9 Subic, Manila, Batangas, Iloilo, Cebu, Cagayan de Oro, Zamboanga, Davao, General Santos Source: ASTP

30 Singapore Kunming Rail Link (SKRL) The SKRL is a 5,000- kilometer rail connection that would connect Singapore to Kunming located in Yunan Province in China. Two Routes: - Singapore Malaysia Thailand Myanmar China - Singapore Malaysia Thailand Cambodia Vietnam China Source: ASEAN Strategic Transport Plan ( )

31 SKRL Missing Links COUNTRY ROUTE DISTANCE (Km) COMPLETION DATE Thailand Aranyaprathet Klongluk Cambodia Piopet Sisophon Cambodia Phnom Penh Loc Ninh Vietnam Loc Ninh Ho Chi Minh Vietnam Mu Gia Tan Ap Ving Ang Lao PDR Vientiane Thakek Mu Gia Myanmar Thailand Thanbyuzayat Three Pagoda Pass Three Pagoda Pass Nam Tok Source: ASTP

32 Institutional and Regulatory Frameworks at the ASEAN Level Existing Framework Agreements aimed at improving transport facilitation: 1998 ASEAN Framework Agreement on the Facilitation of Goods in Transit (AFAFGIT): Signed only 4 of 9 protocols (by all countries, incl. Phils) 2005 ASEAN Framework Agreement on the Facilitation of Inter-State Transport (AFAFIST): Only 2 countries ratified the agreement 2009 ASEAN Framework Agreement on Multimodal Transport (AFAMT): Only 4 countries ratified the agreement (incl. Phils) CIQS NSW and ASW

33 Cabotage Restrictions COUNTRY Brunei Cambodia Lao PDR Indonesia Malaysia Myanmar Philippines Singapore Thailand Vietnam CABOTAGE PROVISION Without Without Without With With With With Without With With Source : PDP Australia Pty Ltd/Meyrick. Compilation of Country Reports (2005)

34 Cabotage Restrictions MODIFIED CABOTAGE REGULATIONS This might be done by adopting (a) a quota system allowing foreign flag vessels to gain partial access to coastal shipping markets or (b) a Single or Continuing Voyage Permit system, enabling foreign flag vessels to operate on the coast for a specified period of time. REGIONAL CABOTAGE Under this option national cabotage regulations would be replaced by regional free trade in shipping services. In this concept, asea members taking part in the scheme would simply exchange cabotage rights. A shipowner domiciled in a signatory nation would be able to operate international or coastal services throughout the region.

35 International-Domestic RO-RO Interface CIQS

36 RO-RO and Cabotage Domestic RORO Local Tractor Head (PORT) CIQS International / Regional RORO

37 Policy Imperative Amendment of RO-RO Policy (EO 170) to allow chassis-trailer as part of RO-RO service.

38 Thank you.