YASIR, et al. A ModelMIMBAR of Communication, Vol. 33, toNo. Empower 2nd (December, Fisherman 2017) Community pp 341-349 in Bengkalis Regency

The Potential Development Effect of ASEAN Connectivity: The Case of Corridor

ADIWAN FAHLAN ARITENANG

Regional and City Planning, Institut Teknologi Bandung, Jl. Ganesha No.10, Bandung, email: [email protected]

Abstract. The implementation of Masterplan on ASEAN Connectivity (MPAC), especially on transportation and connectivity, includes plan to connect the member countries. This paper examined the issues and potential effects of ASEAN Connectivity in Indonesia. The paper conducted qualitative analysis on literature study, policy content analysis, and interviews allowing detail information on the MPAC implementation in Indonesia. The paper findings are as follows; (i) The lack of MPAC implementation at both ASEAN and Indonesia levels. The ASEAN lacks a designated authority and leadership to carry MPAC forward the masterplan, whilst in Indonesia there is no institution to lead the MPAC delivery. (ii) The important role of a leading institution in Indonesian government is to define and determine the strategic projects with higher value added. The paper concludes that the national government should regulate and lead the MPAC projects to ensure regional-wide connectivity with ASEAN, whilst at the same time integrate local development in Indonesia. Keywords: indonesia, ASEAN connectivity, regional development

Introduction MPAC remains to be limited in Indonesia since 2010 to 2015. For instance, in the physical The vision of ASEAN Leaders to build connectivity, the projects are dominantly an ASEAN Community by 2015 calls for well- at the feasibility study (FS) stage including connected ASEAN member countries that Sunda Straits Bridge (SSB), the Singapore- will contribute towards a more competitive Kunming Rail Link (SKRL) to Surabaya and and resilient ASEAN, as it will bring people, Roll-On/Roll-Of (RO-RO) development in goods, services and capital closer together. Indonesia. In the institutional connectivity, Enhanced ASEAN connectivity is essential to Indonesia has generally ratified the protocols; achieve the ASEAN community’s economic however, the implementation should be growth aspirations. monitored. This includes The Facilitation The MPAC is considered as a stepping of Inter-State Transport (AFAFIST) and stage on building the connectivity of physical, “The Facilitation of Multimodal Transport institutional and people mobility that is crucial (AFAMT) that have not been ratified, and The to accelerate integrated ASEAN market through Facilitation of Goods in Transit (AFAFGIT) the ASEAN Economic Community (AEC) that has only been six protocols ratified by (Tongzon and Cheong, 2014). Considering its Indonesia. Whilst the ASEAN Single Shipping strategic geographical location, there will be Market and ASEAN Single Aviation Market much to gain from two of ASEAN’s flagship remains at the discussion stage. transport infrastructure projects, the ASEAN Thus, this paper aims to explore issues Highway Network (AHN) and the Singapore - and potential role of ASEAN Connectivity Kunming Rail Link (SKRL) for Indonesia. implementation in Indonesia under the MPAC Despite many construction and plans. This paper relies on formal documents development plans, the implementation of such as MPAC, national RPJM (Medium-Term

Received: June 02, 2017, Revision: September 31, 2017, Accepted: December 15, 2017 Print ISSN: 0215-8175; Online ISSN: 2303-2499. DOI: http://dx.doi.org/10.29313/mimbar.v33i2.2590.341-349 Accredited B based on the decree No.040/P/2014, valid on February, 18, 2014 until February, 18, 2019. Indexed by DOAJ, Sinta, IPI

341 Adiwan Fahlan Aritenang. The Potential Development Effect of ASEAN Connectivity: The Case of Riau...

Development Plan) 2015-2019, and the The connectivity will not only reduce business provincial and municipality RPJM. The paper transaction cost, time and travel but also conducts qualitative analysis on literature connects among cores and between the core study, policy content analysis, and interviews and peripheral parts of ASEAN to accelerate allowing detail information on the MPAC growth in the region. As such, the MPAC implementation in Indonesia. integrates aims of ASEAN development; first, it aims to consolidate three existing The paper is structured as follows: pillars of ASEAN (political-security, economic, the following section revisits the MPAC, and socio-cultural) to achieve the goals of followed by section three which examines ASEAN Community and second, to coordinate MPAC implementation progress and issues in infrastructure system to integrate physical, Indonesia. In section four the paper examines institutional and people-to-people link within the potential of MPAC projects implementation as well as outside the region (Abidin and Rosli, in the Riau corridor. The last section discusses 2013, p. 153). the paper conclusion. In the MPAC, there are 125 measures which comprise of 55 physicals, 50 institutional Research Method and 20 people-to-people connectivity measures. The assessment of MPAC This paper employs two research implementation by the ASEAN Secretariat methodologies. First, the content analysis of shows that 96 are due for completion by 2015, various law, regulations, and development nine are due to be completed after 2015, while paper published by Indonesian government no specific timeline is given for 20 measures. and ASEAN Secretariat. This analysis provides background and current update progress of ASEAN Connectivity in Indonesia. Second, the paper also conducts interviews with many stakeholders in the development of ASEAN Connectivity. This allows in-depth information and analysis from competent and authorized government officials regarding the ASEAN Connectivity. Among stakeholders that were included in this survey were BAPPENAS, Ministry of Trade, Ministry of Transportation, and Ministry of Public Works. This comprehensive data gathering and analysis ensure the paper provides an accurate analysis of the current situation of MPAC and its potential role to support Indonesia development. Figure 1. Interaction Between ASEAN Connectivity and ASEAN Community ASEAN Connectivity The connectivity has been viewed as an Until early 2015, 22 measures have important issue related to global economic been completed, 55 measures have been growth. The growing countries such as Brazil, assessed and likely to be completed by 2015 Russia, India, China, South Africa (BRICS) as substantive progress has been achieved, economies are suggested to have connectivity 19 measures are expected to be completed related issues including basic access to after 2015 because the implementation plan infrastructure, lack of integration between put in place will go beyond 2015. For MPAC transport types, and over-dependence on measures due by 2015 and without timelines, road transport that impinging domestic it was estimated that 65% of the measures market access which are likely to accentuate (or 74 measures) would be completed by these challenges (Coe, 2014). 2015. Out of the 74 measures that were or are expected to be completed by 2015, 26 In ASEAN, the spirit of MPAC is to measures are in the physical connectivity achieve integration in the region for all dimension, 32 in institutional connectivity, dimensions through physical, institutional, and 16 in people-to-people connectivity as and personal connectivity (Das, 2013) (Fig.1). illustrated in Table 2.

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Table 1 leads to missing links largely in Thailand Prospective Assessment of and Cambodia, Thailand and Myanmar, and Implementing MPAC Measures by 2015 between Cambodia and Vietnam. Currently, the project is only operated in Singapore, Mea- Measures sures , and Thailand (Chin, 2012). Measures Assessment beyond without Total by 2015 2015 time- The establishment of the ASEAN lines Broadband Corridor (ABC) has been completed Completed 17 0 5 22 following the ASEAN ICT Masterplan 2015 Mid- Likely to Term Review. ASEAN Member States (AMS) be Com- 41 1 11 53 is currently deploying one or more high- pleted speed national broadband network backbone Expected 15 4 3 22 beyond 2015. The West Kalimantan– Sarawak power interconnection project is Unlikely to expected to be commercially operational be Com- 19 2 1 22 pleted in 2015, but the implementation of other Not Yet energy interconnection projects under the 3 0 0 3 Started ASEAN Power Grid and the Trans-ASEAN Not Gas Pipelines face delays due to resource 1 2 0 3 Prioritised constraints, lack of commercial viability of the Total 96 9 20 125 projects, challenging terrain, and technical challenges. Source: Summary assessment of MPAC implementation Institutional Connectivity: While efforts as per February 26th 2015 to operationalise the three transport facilitation agreements of ASEAN Framework Agreement Table 2 Prospective Assessment of MPAC on the Facilitation of Goods in Transit Measures to be completed by 2015 in (AFAFGIT), ASEAN Framework Agreement terms of Physical, Institutional and on the Facilitation on Inter-State Transport People-to-People Connectivity (AFAFIST) and ASEAN Framework Agreement on Multimodal Transport (AFAMT) are currently Measures Connectivity Measures ongoing, completion of the relevant protocols without Total Dimension by 2015 to AFAFGIT and the ratification of agreements timelines and their protocols remain pending. Both the Physical 16 10 26 Connectivity Air Transport Economic Cooperation Work Institutional Plan (2014-2015) and Air Transport Technical 31 1 32 Connectivity Cooperation Work Plan (2014-2015) were People- adopted to further facilitate the establishment to-People 11 5 16 of the ASEAN Single Aviation Market (ASAM). Connectivity The Implementation Framework of the Total 58 16 74 ASEAN Single Shipping Market including its Action Plan is expected to be developed by Source: Summary assessment of MPAC implementation 2015. Trade facilitative measures are being th as per February 26 2015 undertaken to achieve free flow of goods and services. The ASEAN Trade Repository The following key action lines have / National Trade Repositories (NTRs) are been or are expected to be achieved in expected to be in place by 2015. the 3 dimensions of physical, institutional, The ASEAN Policy Guidelines and people-to-people connectivity. Physical on Standards, Technical Regulations Connectivity: The ASEAN Highway Network and Conformity Assessment Procedures (AHN) is progressing with sections which (STRACAP) and the ASEAN Policy Guidelines are still being upgraded to “Class III” roads on Accreditation and Conformity Assessment within ASEAN’s designated Transit Transport are expected to be adopted by 2015. Routes (TTRs) in Lao PDR and Myanmar. The exchange of ASEAN Trade in Goods The implementation of Singapore-Kunming Agreement (ATIGA) Form D and ASEAN Rail Link (SKRL) sections from Singapore Customs Declaration Document under to Phnom Penh are on schedule. The GoI the scaled-down version of the ASEAN should identify the importance of this project Single Window (ASW) Pilot Project was as the SKRL project in the north part also successfully conducted by 7 participating has been identified with funding issue that

Accredited B based on the decree No.040/P/2014, valid on February, 18, 2014 until February, 18, 2019 343 Adiwan Fahlan Aritenang. The Potential Development Effect of ASEAN Connectivity: The Case of Riau...

Member States (The 7 participating Member implemented under this scheme. There States are Brunei Darussalam, Indonesia, are 5 MPAC projects in Indonesia that are Malaysia, the Philippines, Singapore, Thailand, recommended under the PPP scheme as and Vietnam). The Protocol on the Legal suggested by the World Bank (World Bank, Framework to Implement the ASW that 2015). would govern cross-border data exchange Another issue in the ASEAN is the among AMS for “live” implementation would limited capability in planning at the regional be completed by 2015. Most of the work on level and the cross-border projects, as most the enhancement of border management developments in this level are conducted capabilities is being done at the sub-regional by multilateral development institutions and bilateral levels while efforts at the ASEAN (Abidin and Rosli, 2013, p. 157). The lack of level require further acceleration. experience is also coupled with the complexity People-to-People Connectivity: This of the cross-border projects as it is usually pillar enhances development through large, require long-term payback periods, high promoting deeper intra-ASEAN social and risk of revenue due to pricing and currency cultural understanding. A few plans are The fluctuation, and prone to environmental and ASEAN Curriculum Sourcebook (for primary societal impact. The overlapping projects will and secondary schools) was developed in also cause non-optimal use of resources, thus 2012, and ASEAN is now promoting utilization national development plans, which usually of the Sourcebook, in addition to the existing preceded regional development, have to supplementary materials on ASEAN studies in correspond and fit with regional vision. schools. The ASEAN Studies Course is being Thus, national planning and regulatory implemented under the ASEAN University among AMS is important to avoid duplication Network for undergraduate students to and conflicting systems, efficiently and further promote the study of ASEAN among effectively promote economic growth, and youths. The development of the ASEAN transparency and consultation process Virtual Learning Resources Centre (AVLRC) is between national and regional infrastructure progressing well with the first phase, focusing plans. This shows the importance of on ASEAN’s peoples, culture, history, places of coordination to minimise investment to interest, education, youth and ICT, expected achieve regional infrastructure standard and to be completed by 2015. quality. For instance, ASEAN could support The main obstacle of MPAC is the AMS road development by linking missing sustainable source of funding and good parts of national road system and harmonize governance has been identified to be crucial the various infrastructure standards into a in the current state by Das (2013). The paper regional one. The latter would ensure flow highlights both issues will be important to of movement of vehicles, people, goods and support the building of ASEAN Community as services (Abidin and Rosli, 2013, p. 160). The the integration would lead to the increasing study by Warsilan and Noor (2015) shows that volume of goods, services, people and road construction in the Kalimantan City of information across the region. The projects Samarinda is significant for economic growth in the MPAC clearly required a large amount and reduces poverty as it accelerates trade of funding and continuous flow of capital. and economic activities. To address this, the ASEAN has established Despite promising development due to the ASEAN Infrastructure Fund (AIF) that the rapid number of protocol that has been commenced in 2012. The fund initial capital ratified in the institutional and people-to- was of US$ 485.2 million, with contributors people agreements, the implementation will from AMS (US$ 335.2), ADB (US$ 150) and need time. These agreements are crucial and hybrid capital (US$ 162). However, there important to ensure the trade facilitation and were concerns that AIF may not be utilized infrastructure development. The final report optimally due to unclear institutional setup by ADB (2016) highlights the persistent of and the amount may not be sufficient enough ASEAN Way governance that plays important to finance infrastructure development plans. role in shaping ASEAN activities. As the non- Beside ADB, the World Bank also supports the interference principles including economic implementation of MPAC through a numerous and political policies, ASEAN Way would study such as the join study between ASEAN limit the ASEAN Blueprints implementation Secretariat and World Bank that offers the if the blueprint plans are not align with the alternative budget mechanism through the national interest. For instance, the limited PPP. However, there is no project has been

344 ISSN 0215-8175 | EISSN 2303-2499 MIMBAR, Vol. 33, No. 2nd (December, 2017), pp. 341-349 collaboration between Indonesia and the 24 ports (5 hub ports and 19 feeder ports) Philippines has extended the negotiation on to accelerate Sea Toll, (5) Construction and RORO transportation and trade facilitation. development of 163 non-commercial ports as Thus, ASEAN Way has been criticized to hinder Sea Toll sub feeders, (6) The study by JICA- and slow-down the process of economic ASEAN suggesting three routes for ASEAN integration (Masilamani and Peterson, 2015). RORO development in Indonesia (2013), (7) In order to support Sea Toll logistic As a result of the ASEAN Way, program terminal and priority zones, there will be a and project implementation in ASEAN are Presidential Decree to establish Land Banking unwilling to point out party that should be Institution, (8) Railway construction in Java, blamed for. For instance, Kartika and Atje , Kalimantan, Sulawesi, and Papua to (2013) argues that the AEC scorecard became strengthen national connectivity and integrate unclear and not informative due to its vague with Sea Toll to enhance competitiveness, report that does not blame any party on the and (9) National transportation provision lack of progress on implemented measures through transportation industry empowerment in AEC. The paper also highlights the lack of including N-219 plane development and available recent data on exclusion list of each shipping industry, locomotive, railway and AMS, tariffs and non-tariff barriers. Another busses. impact is the slow progress of institutional connectivity with measures under trade The Effective and efficient improvement facilitation including customs modernization, in infrastructure financing program relates standards, services liberalization, investment, to the following MPAC projects: (1) Provide and ratification of transport agreements. This financing support to achieve infrastructure shortfall is due to the delay in ratification of development through alternative funding signed ASEAN agreements and its protocols. scheme such as PPP, the establishment of This reflects two issues in the institutional development bank, and other innovative of ASEAN; first, the issue shows the poor financing schemes, (2) Accelerate access for conveyance of regional commitments into broadband development, and (3) Develop national policies that may suggest lack of broadband infrastructure in bordering regions. policy-making capacities and poor political The Energy Sovereignty program relates will to achieve regional plans. Second, the to the following MPAC projects: (1) Expand importance of the mechanism to monitor, gas pipeline and LNG terminals development identify issues and address implementation by the government, State-Owned Enterprises gaps among AMS. Third, the need of stronger (SOE), and private with prioritizing national institutional capacity of ASEAN to enforce interest in investment centres and distribution rules and monitor the progress of integration network, and (2) Energy Storage System (Rillo, 2013). (ESS) Construction to support electricity system and smart grid expansion ASEAN Connectivity Projects in Indonesia Projects that are related to national development vision from the Peripheral This section provides synchronization includes the ASEAN RORO Projects ( analysis between the MPAC and RPJMN 2015- and Bitung ports), Dry port project (Entikong 2019. However, as the MPAC projects detail dan Nanggabadau in West Kalimantan), FS in both location and type of project, there connectivity between archipelagic AMS and are several projects that are not directly mainland ASEAN, Trans-ASEAN Gas Pipeline found in the RPJMN. The following discussion (TAGP) projects in Gresik dan Natuna, elaborates the activity. The MPAC projects Power grid projects in Kalimantan Barat are mainly related to the following program (Bengkayang) dan Sumatra, establish an in RPJMN: ASEAN Broadband Corridor in regencies and The Construction of national connectivity cities, and prioritize and expedite roll-out of to achieve a balance development program broadband Internet capable infrastructure to with the following MPAC projects such as schools in regencies. upgrade all “below Class III” sections of AHN into at least “Class III”, (1) Upgrade all “below Class III” sections of AHN into at least “Class Constrains and Its Impact III," (2) Construction of High Grade Highway Despite the promising development, in Sumatra, (3) Construction of Kuala Tanjung there are few constraints found in implementing and Bitung ports, (4) Enhance capacity of MPAC physical infrastructure projects and

Accredited B based on the decree No.040/P/2014, valid on February, 18, 2014 until February, 18, 2019 345 Adiwan Fahlan Aritenang. The Potential Development Effect of ASEAN Connectivity: The Case of Riau... institutional connectivity: Resources Issues transportation that challenges people and as the lack of budget from ASEAN and limited goods movement within ASEAN. In Indonesia, budget of the line Ministries. There are MPAC the RORO should be integrated with the Sea projects that differ and not harmonized with Toll project that is the main project in the national development plan (RPJMN). As a current government. The RORO could be a result, some MPAC project in Indonesia is lack feeder for people and goods movement for of and without a budget. It is lack of physical the Sea Toll. Related to Sea Toll, the main project constructions that require a large issue in Indonesia sea transportation is sum of funding. The ASEAN Secretariat and professionalism and individual competencies ACCC have proposed the use of PPP scheme. of human resources, national sea vehicles, However, it remains as a discussion topic. and logistic capacities (Malisan, 2013). These The limited communication and collaboration constrain would hamper the “Development between AMS and AMS with ASEAN Secretariat from the peripheral regions” concept, a causes institutional issues that constrain the concept scheme under the new GoI as physical infrastructure project development. lack of telecommunication and maritime For instance, the import regulation that infrastructure. applies to vehicles crossing the border causes On the other hand, the impact of the issues to accelerate RoRo development. elimination of non-tariff barriers to Indonesian There is a need for inter-agency market potentially increases import products coordination that includes the responsibilities to have a lower price than domestic ones and and commitments of participating poor infrastructure from the hinterland. In the administrations. This should also share long run, this would harm the local economy. information on project agenda and budget. Additionally, by combining elimination of trade For instance, the issues in public work projects barriers with spatial proximity, for example include land acquisition, environmental between Indonesia and the Philippines, RORO aspects such as forestry and environment would also pressure local economy. This is impact assessment, and the budget guarantee crucial as it will be challenging for Indonesia for multi-year road construction. Another issue to enter the ASEAN integrated market in happens within the Ministry of Transportation: 2015, as with abundance population, lack there is no single division responsible for of infrastructure and institutional problems, Multcapital Transport issues, so it has to be Indonesia would be a potential market handled cross divisions. destination for AMS products. Furthermore, the lack of negotiation results to develop In addition, coordination between AMS procedures of border management (Customs, governments is also important to ensure Immigration, Quarantine/CIQs) would be progress on project implementation at each a problem to manage the cross-border AMS. Regulation - Project agenda and budget movement of passengers and goods. Thus, between MPAC and National Development it hinders good governance in ASEAN market should be harmonized. The MPAC 2009-2015 integration. projects are detailed that hinder Indonesia’s flexibility to implement projects if it is not included in the national development The Riau Corridor: A Case Study agenda. The Importance to understand how ASEAN Works – The GoI should find a way In this section, three case studies on to accelerate MPAC implementation despite potential and issue of MPAC implementation ASEAN Way and principles that may hinder are discussed. The three case studies highlight its progress. the importance of the MPAC projects on the regions. The case studies are an integrated The impacts of the constraints are development in the Riau corridor as part of as follows (i) hinder physical infrastructure the Dumai- corridor. The value added construction in telecommunication and for the project can comprise the creation of maritime sector and single market a bonded transport process (road and rail), implementation which causing Indonesia’s to streamline documentation and processing lag development in these sectors. Thus, this time for goods between Indonesia and will hinder Indonesia’s potential to implement Malaysia (a principle of MPAC), specific and MPAC projects if it is not included in the streamlined documentation and processes, national development agenda, such as the to facilitate buses and vehicle movement RORO project and the Toll Sea development between ports, and creation of increased concept, and to implement cross-border capacity for the movement of goods and

346 ISSN 0215-8175 | EISSN 2303-2499 MIMBAR, Vol. 33, No. 2nd (December, 2017), pp. 341-349 services. On the other hand, the corridor to provide RO-RO service connection with provides access to AHN and the SKRL without Island. The area is becoming a popular locking into Singapore as the connectivity shipping terminal area since DGST constructed point. another jetty for domestic and international passenger ferries to be relocated from the This paper observes the Malaka-Dumai existing passenger terminal in the Port of corridor as both ASEAN’s flagship transport Dumai. To accommodate an international RO- infrastructure projects, the AHN and SKRL, RO vessel, passenger and vehicle terminals are found here and the high potential of the will have to be constructed in addition to the RORO. The AHN and RORO projects are under existing facilities with total cost estimated at construction with guaranteed budgets from US$ 1.3 million. All infrastructure development the Ministry of Public Works and the Ministry in Dumai is completed and ready for the route of Transportation respectively. At the regional operationalization. The Malaysian company, level, Indonesia has ratified all protocols Lestari Indomar Bahari is ready to serve in transport, except for the SKRL because 5 calls/day, while RoRo terminal in Dumai there is currently no physical connection. and Malacca will be ready in 2018. For land Furthermore, there is synchronization between transportation, the development of the dry physical projects such as in Malaka-Dumai port is included in the President Instruction Economic Corridor Multimodal Transport with No. 6/2015 to accelerate bordering regions the toll road. and it is currently under construction. The analysis compromised through synchronization and reviewing formal documents of ASEAN at national and local Expressway Pekanbaru to Dumai levels such as MPAC and RPJMs for each study The Dumai – Pekanbaru road is a part of cases. In addition, other formal documents the Trans-Sumatra road which is designated used including local government working as ASEAN Highway No.25 as well as Transit plan and strategic plans by local government Transport Route (TTR). Presently, the GoI agencies. is constructing and upgrading the Sumatra highway as part of the AHN. However, the GoI argues that the Sumatra highway will not meet the AHN standard as a class II since RORO facilities the Ministry of Public Works expects that the In this corridor, there is also a plan user volume of the highway does not require to develop an RO-RO service that can a higher class road. The Dumai-Pekanbaru road is part of the Trans-Sumatra road and benefit businesses and the local economies designated as AHN 25 in Sumatra which has by increasing trade, business, investment met the class 2 AHN. Despite they are aware and tourism across the route (JICA, 2013). of AH obligations under MPAC, as the traffic Furthermore, the study also emphasizes is very low, there is no use to improve the that the State of Malacca prioritizes tourism AH to class 1. Overall, the project has already development through RO-RO shipping rather achieved the target. The Government of than freight trade, which correspond to the Indonesia has the plan and construct the road development of this corridor. Among potential for a few years, and it was included in the users of this route is supporter of RO-RO Master Plan for Acceleration and Expansion of that can complement existing air and ship Indonesia’s Economic Development’ (MP3EI). passenger services that can attract certain Now the toll road project which included in the RPJMN 2015-2019 (135 km) is ongoing in travel market segments such as traders, parallel with the existing road (199 km). The overseas workers, and medical tourists (JICA, toll road will reduce the current travel time 2013). Malacca residents may utilize the new (5-6 hours) to only one third. route to go shopping on weekends with their own cars, both for personal consumption and The above two infrastructures of RoRo commerce. In addition to the passenger, there and expressway highlighted the importance of Dumai city as an emerging new growth are interests from cargo stakeholders and tour center in the province. The city is the highest operators to use the RO-RO service. Hence, contributor to the manufacturing and oil these economic activities could accelerate a industries for Riau province. Furthermore, region-wide development in this corridor. Alhempi et al. (2014) suggest that Dumai city The JICA (2013) study shows that could also function as a hub and transshipment center for manufacturing products from the international RO-RO terminal is planned its neighboring districts, Rokan Hilir and at Pangkalan Sesai, Dumai City where the Bengkalis regencies. domestic RO-RO terminal was constructed

Accredited B based on the decree No.040/P/2014, valid on February, 18, 2014 until February, 18, 2019 347 Adiwan Fahlan Aritenang. The Potential Development Effect of ASEAN Connectivity: The Case of Riau...

Rail Connectivity and other Projects institutional relationship that ASEAN stands for. It is known as the ASEAN Way (Nesadurai, Under the Mid Term Plan (RPJMN), the 2003). In this sense, the loose governance GoI envisions to extend the SKRL rail link in system under which the ASEAN operates Sumatra, through Dumai and across Java to emphasizes the commitment of member Surabaya. The construction has commenced countries. This problem is complicated by in 2015 for connection between Rantauprapat, the diversity of economic development that the last station in Northern Sumatera railway leads to variation of capacity and international to Duri-Dumai in Pekanbaru Province. This competitiveness of the logistics sector. cross-border rail link will connect Indonesia Hence, the logistics policies and regulations with mainland ASEAN, China and India. The are difficult to harmonize in the context railway projects in RPJMN are in line with of liberalization, as suggested by Tongzon expected SKRL that will be completed in 2020. (2011, p.26). Another project is the expressway Second, the fact that the ASEAN between Pekanbaru and Dumai (new Connectivity policy is not equipped with development Pekanbaru – Kandis 90 Km (EIA), additional and appropriate funding from rehabilitation of Kandis-Duri 20 km (SID), and ASEAN has curtailed the implementation of Duri-Dumai 63 Km (SID). The expressway is the project in the AMS and requires the ASEAN planned for 107 km with 300 passengers and as an association to integrate programs 150 tons traffic and it is expected to reduce and projects that have similar targets. For the current travel time (5-6 hours) to only instance, the MPAC could be integrated one third (JICA, 2013). Currently, the BPJT with the proposed establishment of ASEAN has purchase 25 km of ROW and there are Infrastructure Financing Mechanisms (AIFM). plans for more ROW acquisition. Expressway Both programs share two critical aims; is planned for completion in 2025. There accelerating the infrastructure development is also another important project that may to promote regional economic growth accelerate the development of the corridor, and prosperity, and strengthening intra- that is the Batam Island Expressway. The regional links and dynamics growth with land is made ready by the Batam Authority a view to accelerate the realization of the and the President Regulation 100/2014 ASEAN Economic Community 2015 vision supports the construction. The FS by ADB (Bhattacharyay, 2009). is completed and currently under review by Batam Authority. The land already purchased Third, at the state level, Indonesia has by the Batam Authority Supported by the no institution to lead the MPAC delivery. The President Regulation 100/2014 on the presence of such institution is critical to define acceleration of 4 highway construction in and coordinate strategic projects with higher Sumatra. The project value approximately value added. Surveys of public and private about IDR3 billion, however, the estimated stakeholders suggest the lack of leading in and secured budget remain undisclosed. the national agency to coordinate and direct These expressways would improve economic national development programs that link with and trade connectivity between both regions. the ASEAN Connectivity. Fourth, the survey Finally, another low profile development plan to national ministries and private companies is the Malacca strait bridge from Dumai. regarding ASEAN Connectivity suggest the Presently, the development plan remains as lack of knowledge about the existence of a feasibility study (Lestari, 2015). MPAC and how it may promote integrated supply chain in ASEAN. However, it should also be noted the lack of knowledge on supply Conclusions chain management as surveyed by Tongzon and Cheong (2014). This paper has presented the issues and potential of ASEAN Connectivity Finally, the potential economic and implementation in Indonesia. There are a welfare benefit from ASEAN Connectivity few findings from this paper, which are the could only be achieved through national lack of MPAC implementation at both ASEAN policies to accommodate projects into the and Indonesia levels. At the ASEAN level, national development plan. Hence, the the association lacks a designated authority national plan could integrate with regional- and leadership to carry MPAC forward in the wide connectivity with ASEAN. As Coe member countries. This lack of institutional (2014) who argues that physical logistics support linked closely to the political and infrastructures will become less important has

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