About 70 percent of Indonesia's exports, excluding oil and gas, move through neighboring Singapore because of port bottlenecks here and lower costs there.
The Indonesian shipping industry is in decline and shipowners must examine their "weaknesses and shortcomings," Minister of Transportation Haryanto Dhanutiro told local shipowners.The industry relies on foreign shipping firms on most routes, even for domestic inter-island transport.
Industry analysts said the rapid growth of exports is making it even more difficult - but also more important - for the local shipping industry to keep pace.
In 1988, the national industry handled only 4.6 percent of Indonesia's trade. By 1992, it had slipped to 3.2 percent, Transportation Department figures show. Over the same period, the 74 percent share of the huge inter- island market fell to 55 percent.
The minister said unspecified steps will be taken against Indonesian shipowners "who only become accomplices of foreign shipping companies."
Singapore was the largest foreign investor in Indonesia in 1993, providing US$1.2 billion of the US$7.5 billion tallied, said Sanyoto Sastrowardoyo, the investment funds mobilization minister.
Singapore's rise to first place was in part a result of declining Japanese investment due to the stronger yen. Officials said they have no figures on Singaporean investment in the maritime sector, but suggest it is substantial.
Indonesian shipowners said their preference for Singapore's port facilities has more to do with a shortage of qualified Indonesian personnel to implement port expansion here than any shortcomings on their own part.
Some said they were skeptical of ambitious, high-cost government efforts to develop port facilities on Batam Island, 12 miles south of Singapore in the Malacca Strait, as part of a 25-year national development plan.
In addition, transportation officials and shipping sources believe no progress is being made in negotiations between Singapore, Indonesia and Malaysia to form an official body to improve safety in the strait, one of the world's busiest.
"The Malacca Strait is an international shipping lane that will be accident-prone in coming years. Most important, however, is how to make Batam port more competitive," one shipping source said.
Singapore's port, the world's busiest, is easier to use, faster and about 50 percent cheaper than facilities currently available in Indonesia, others said.
The transportation minister said Batam is being expanded to accommodate containerships with capacities equivalent to 4,000 20-foot containers a year. He said he hoped more than half the exports currently shipped through Singapore would eventually be routed via Batam.