Waking up a sleeping economic giant

A pioneering sustainability project launched by Maersk in Bitung aims to regenerate a struggling region of Indonesia and help trade to flourish again.

Bitung Port 6
Coconuts is the prime commodity in Bitung.

This week on Time for global action

  • A film about the Enabling Trade project in Bitung will air this week on Bloomberg TV as part of the Time for global action series under the theme Infrastructure Partnerships for Socio-Economic Growth.
  • The episode will also visit a container factory in San Antonio, Chile constructed and operated by Maersk Container Industry (MCI).
  • The factory in Bitung is one of the first manufacturing plants in a region otherwise known for export of raw materials and fruit. The need for a more skilled workforce have resulted in technical and professional training, positively impacting on employment rates, in particular on women, and contributing significantly to socio-economic development in the region.

In September last year, a dwindling number of exports forced Maersk Line to suspend its direct service to the Port of Bitung in Eastern Indonesia.

It was yet another sign of the dire economic situation faced by the region. Indonesia might have one of the fastest growing economies in the world, but with over 90% of the country’s GDP concentrated around Jakarta in the West, life in the East is a very different story.

“For decades, Western Indonesia has progressed in terms of investment and development, whereas life in the East is a struggle with high poverty and unemployment rates. Young people migrate to the main island. They don’t see a future here in Bitung,” says Yahya Yumirat, sustainability advisor in Maersk Line.

A new approach
Yumirat is an Indonesian national who has worked for Maersk Line for 10 years. He moved to Bitung in 2015 to launch a pioneering new sustainability project which aims to turn this situation around.

“The project is about getting rid of the barriers to trade. It’s a new approach,” explains Yumirat. “With our direct call – it was ship-promoted trade, but it failed so we are trying a different angle which involves building up trade first by regenerating the area. Maersk Line will benefit because as industries grow, demand for shipping increases.”

Poster image
Learn more about the Bitung enabling trade project 1:00

Watch the stories on Bloomberg

The Time for Global Action series explore how infrastructure, training and local economic development can deliver inclusive growth and expand opportunities for both global business and local communities.

The stories will be broadcast as follows:

United States

  • Saturday 10 December 2016 at 19:30 (ET)
  • Saturday 17 December 2016 at 19:30 (ET)

Latin America

  • Saturday 10 December 2016 at 19:30 (ET)
  • Saturday 17 December 2016 at 19:30 (ET)

Asia Pacific

  • Sunday 11 December 2016 at 13.30 (HKT)
  • Sunday 18 December 2016 at 13.30 (HKT)

The ultimate goal is to turn Bitung into an international and inter-island hub port – and for Maersk Line to eventually reinstate its direct call.

Identifying the barriers
The project looked into why export of Bitung’s two biggest commodities – coconut and tuna fish – were struggling and tried to find solutions.

“I see myself as a partnership broker,” says Yumirat. “I bridge the stakeholders – national and local government, local businesses and NGOs. I work with them to take their message to the government.”

Yumirat found that the fishing industry in Bitung had suffered major decline after a moratorium on fishing licenses was imposed in a bid to crackdown on illegal fishing. Fish produce slumped by 80% and factories were shut down leaving tens of thousands unemployed.

Maersk facilitated a dialogue with the government to come up with a new solution that would allow the fishing industry to flourish again in a sustainable way. The moratorium was lifted, but quotas were imposed and only companies that passed an audit were granted a license. The government also provided fishermen with subsidised fishing vessels.

Port of Bitung

The project is about getting rid of the barriers to trade. Maersk Line will benefit because as industries grow, demand for shipping increases.

YAHYA YUMIRAT, SUSTAINABILITY ADVISOR IN MAERSK LINE

Cost of export is another barrier. Certification of the cargo had to be done via Jakarta and was time consuming and expensive. But after further dialogue a new certification centre is soon to open in Bitung.

Maersk has also been instrumental in bringing new technology for coconut processing to the area, allowing for six different products to be made from one coconut. Yumirat estimates the new machines could quadruple the number of containers needed to export coconut products from Bitung.

Other positive steps have been the introduction of a Trade Point - a trade facilitator to help local businesses reach the global market, and a National Single Window where exporters can submit all the required paperwork in one location.

A brighter future
Today the future in Bitung looks much brighter. The fishing industry is slowly regenerating and jobs have returned to the area. A new container yard has been constructed at the port and there’s a plan in place to expand it to accommodate bigger vessels.

Exports have already increased 30% year-on-year. As testament to the growing potential, a new weekly feeder service by Maersk Line partner Multiline has opened, connecting Bitung directly to Davao in the Philippines. The new service bypasses the need to export via Jakarta, making for a much faster transit time and cutting export costs by up to 50%.

Bitung Port
The city of Bitung has 250,000 inhabitants. Out of 14 fish packaging industries in Indonesia, 7 are situated in Bitung city.

It’s about building up an ecosystem, better understanding our customers and taking the inefficiencies out. When we do that, business will follow.

Annette Stube

ANNETTE STUBE, HEAD OF GROUP SUSTAINABILITY

Annette Stube, Head of Group Sustainability says the success of the Bitung project could be replicated in other remote ports as a way of unlocking economic development.

“This has been a new approach to opening up high-potential growth markets. It’s not about sales, it’s about building up an ecosystem, better understanding our customers and taking the inefficiencies out. When we do that, business will follow because it becomes easier to trade - and if the project succeeds it brings value to everyone.”

The project has also paved the way for a new direct call from Maersk Line in the not too distant future.

“I feel very optimistic about our direct call coming back a few years from now,” says Yumirat. “Previously the eastern part of Indonesia was a sleeping beauty economic region, but now everything here is waking up.”