Frost & Sullivan Overview of Port Logistics Infrastructure Development in ASEAN

Overview of Port Logistics Infrastructure

Development in ASEAN 10th ASEAN Shipping & Ports, Jakarta, Indonesia | May 30, 2012

Presented by:

Gopal R, Vice President

Transportation & Logistics Practice

Frost & Sullivan Asia Pacific

2

Agenda

PORTS AND TRADE IN ASEAN

KEY INITIATIVES AND CHALLENGES FOR DEVELOPMENT

FUTURE OUTLOOK AND OPPORTUNITIES

3

PORTS AND TRADE IN ASEAN

4

Trade: Life blood of economies

Spice trading played an influential role in (Southeast Asian) civilization

5

Hong Kong,1898

Hong Kong, Now

One of the busiest ports in the world; Key factor for HK’s economic development

The Trade Influenced Transition: Hong Kong

6

The Trade Influenced Transition: Singapore

Singapore,1960

Singapore, Now

From tiny fishing village to international transshipment hub

7

Shanghai, 1843

Shanghai, Now

Critically important as transport hub for Yangtze River

The Trade Influenced Transition: Shanghai

8

ASEAN has a population of approximately 600 million people and a

total nominal GDP of US$ 2.09 trillion

Indonesia

237.4

Singapore

5.2

Malaysia

28.4

Thailand

66.7

Cambodia

14.8

Vietnam

90.5

Brunei

0.4

Philippines

94.1

Laos

6.3

Myanmar

54.3

Source : ASEAN.org, International Monetary Fund, World Bank,

Analysis: Frost & Sullivan

Countries Nominal GDP, 2011 (est.) (US$, Billion)

Indonesia 822.63

Thailand 332.47

Singapore 253.74

Malaysia 247.78

Philippines 227.74

Vietnam 122.57

Myanmar 51.26

Brunei 16.31

Cambodia 13.00

Laos 6.95

Population, 2011 (Est.) (Million)

Population in ASEAN expected to grow at an

average of 1.6 percent annually

9

Major ASEAN Countries Continue to Dominate

GDP Growth in Major ASEAN Countries

2007-2011 ASEAN GDP split in 2011

-5.0%

0.0%

5.0%

10.0%

15.0%

2007 2008 2009 2010 2011

Indonesia

Malaysia

Singapore

Thailand

Vietnam

SEA

• Indonesia, Thailand, Malaysia, Singapore and Vietnam account for 85% of the ASEAN GDP

• Thailand’s economy in 2011 shrank due to flood crises in 2011 Q3 but expected to rebound in

2012

Source : ASEAN.org, World Bank , Analysis: Frost & Sullivan

43.3%

19.5%

13.0%

12.8%

10.9%

5.8%

1.4%

0.6% 0.6%

0.4%Indonesia

Thailand

Malaysia

Singapore

Philippines

Viet Nam

Myanmar

Brunei Darussalam

Cambodia

Lao PDR

10

Key ASEAN ports handled more than 66.3 millions TEUs in 2011, accounting

for about 80 percent of the total container throughput in ASEAN

Port of

Singapore

29.9

Container Throughput at Major ASEAN Ports, 2011 (million TEUs)

Port of Tanjung

Pelepas

7.5

Port Klang

9.5*

Saigon New

Port

3.0

Hai Phong

Port

1.2

Laem Chabang

Port

5.7

Port of Tanjung

Priok

5.7

Source: From various publications and port authorities

Penang Port

1.2*

Port of

Manila

3.5*

11

Major ASEAN Ports Gearing for Expansion

Source : Port authorities and various publications

Where

Port of

Singapore

Port of Tanjung

Pelepas

Laem Chabang

Port

Port of

Tanjung Priok

Port Klang

Current Capacity (million TEUs) Expansion Plan (million TEUs)

29.9M 55M

8.4M 10M

10.5M 18M

5.9M 11M

8.0M 10M

2018

2013

2013

2015

2017

Year

12

Asian Ports Gear Up to Accommodate Higher Trade Flow

13

Intra ASEAN Trade Remains Strong

Source : asean.org, Analysis: Frost & Sullivan

ASEAN top trading partners Intra/Extra ASEAN trade

• Trading among ASEAN countries continue to dominate with 27% of total trade in 2011.

• With weakening demand from US and Europe and continued efforts in trade facilitation among

ASEAN members, Intra- SEAN trade is expected to grow from 27% to 29% moving into 2012.

0%

20%

40%

60%

80%

100%

1993 2008 2010 2011 2012

Intra-ASEAN

Extra-ASEAN

0%

5%

10%

15%

20%

25%

30%

35%

1993

2008

2010

2011

2012 (forecast)

forecast

14

KEY INITIATIVES AND CHALLENGES FOR DEVELOPMENT

15

ASEAN Connectivity Initiative

Intra-ASEAN

Connectivity

Enhancement

Initiative

Creates a Unified Bonding Among

ASEAN Member States and Rest of the World

Narrows Development Gaps Among Member

States

To reinforce ASEAN’s position as the hub of the East Asia region

Enhances the Competitiveness of

ASEAN

Promotes Economic Growth of ASEAN

Pooling Resources and Sharing Benefits

with Other Groups

Source : asean.org, Masterplan of ASEAN Connectivity, Analysis: Frost & Sullivan

Its Objective…….

16

Current Key Trading

Barriers Among

ASEAN Members

Lack of Border

Management

Capabilities

Lack of Trade

Facilitation

Competency

Level in

Infrastructure

ASEAN: Key Trading Obstacles

ASEAN

Connectivity

Initiative

17

Lack of Border Management Capabilities

Develop procedures of

border management

across ASEAN

Synchronized control

and processes at

border

Promote “One Single

Inspection and

Processing Point”

practice

• Cross-border movements needs to be improved

across ASEAN Member States to facilitate trade

movements

• No standard practice in place to control related

agencies; i.e. Customs, Immigration and Quarantine,

across ASEAN to manage cross-border movements

• Lack of implementation in harmonization with

processes at regional level to strengthen conformity

• Lack of awareness to simplify and expedite

procedures and promote paperless practice across

18

Lack of Trade Facilitation

National Single

Window & ASEAN

Single Window

initiative

Improve quality of

customs services

Tariff liberalization

across ASEAN

• Low adoption level across ASEAN of National Single

Window practice. Only major ASEAN members have

started; Singapore, Malaysia, Thailand and

Philippines are among them

• Latest ranking by World Banks’ Logistics

Performance Index 2011, with a diverse ranking of

SEA countries, range from 2 to145

• The potential to achieve economies of scale among

ASEAN members looks bleak if tariff liberalization is

not put in place

19

Variation of Competency Level in Infrastructure

Logistics development

plan to further improve

competency

Remove restrictions

on trade

Liberalization of ICT

services across

ASEAN

• Part of the ASEAN Economic Community Blueprint

needs to be initiated as soon as possible to spur

• Trade facilitation

• Inner-state transport facilitation and

• Multi-modal transport practice across ASEAN

20

Port Development: What are the priorities?

Singapore

• Continuous effort to achieve a sustainable port

• Increase port capacity to facilitate expansion

Malaysia

• Continuously improving port infrastructure

• Constant innovation in customs process to facilitate trade

• To attract more main line operators

Indonesia

• Improvement in port infrastructure

• Invest on quality road networks between ports

• Exercise strict and transparent policy in customs processes to attract foreign trade

Thailand

• Improve port infrastructure to compete with SG and MY

• Develop more dry ports to stimulate trade among neighboring countries especially Vietnam, Cambodia, Laos and Myanmar

Vietnam

• Improve on fundamental port infrastructure

• Regulating body needs to play a bigger role

• Invest on road & rail networks

Current Future

21

FUTURE OUTLOOK AND OPPORTUNITIES

22

0.36 0.44

0.14 0.07 0.13

0.33

0.22

0.37

0.63

0.22 0.13 0.26

0.44

0.51

0.33

0.19

0.21

0.11

0.23

0.47 0.57

0.07

0.47

0.12

0.07

0.22

0.09

0.16

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

Africa Rest of Asia Latin America, Caribbean and

Oceania

North America Europe India China

Po

pu

lati

on

in

Bil

lio

n

65 Years and Above 35-64 15-34 0-14

1.69

2.56

2.1

1.2

Global Population in 2020: Out of 2.56 Billion Population Between 15-

34 years, >61% from Asia

Source: US Census Bureau, 2010 and Department of Economic and Social Affairs of the United Nations

2010 2020 World Population: Breakdown by Region (Global), 2020

6.83 Billion

7.55 Billion Around 37% of 15-34

Population Will Live in India

and China Alone

Population in Billion

23

Beyond BRIC: The Next Game Changers in 2020 – Asian Countries

India:

$4.5

Trillion

China: $8

Trillion

Russia: $7

Trillion

Brazil: $2.7

Trillion

Indonesia:

$800 Billion

The

Philippines:

$250 Billion

BRIC Countries

Next Game Changers includes: Mexico, Argentina, Poland, Egypt, South Africa, Turkey, Indonesia,

Philippines, Vietnam

Vietnam: $175

Billion

Note: The figure denotes GDP at

market prices

24

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

2008 2009 2010 2011 2012(f)

Indonesia Malaysia Singapore Thailand Vietnam ASEAN

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

2008 2009 2010 2011 2012

Ports play an important role in supporting trade and economic

growth of the country

Nominal GDP Growth, 2008 – 2012(f)

Source : IMF, Monetary Authority of Singapore, Department of Statistics Malaysia, World Bank, asean.org, UN

External Trade Growth, 2008 – 2012(f)

25

Moving Forward

Indonesia

Malaysia

Vietnam

Thailand

Singapore

Vietnam’s port sector has a lot of potential with ample capacity to

accommodate future growth. Underdeveloped supporting infrastructure

remains as the main setback to the industry

Port of Tanjung Priok will benefit from the MP3EI through the

development of Greater Jakarta Area and the improvement of national

connectivity

Momentum likely to continue for Malaysia’s port sector supported by

steady external trade volume and government’s efforts in IMP3 and ETP

World-class infrastructure, excellent connectivity and pro-business

environment will continue to drive the growth of Singapore’s port sector

Thailand’s port activities are expected to pick up from second half of

2012 onwards, after recovering from its recent flood situation

MP3EI: Master Plan for the Acceleration and Expansion of Indonesian Economic Growth

IMP3: Third Industrial Master Plan ; ETP: Economic Transformation Programme

26

Trade Recovery and

Growth

Hinterland improvement need to match

Seaside improvements

Security & Carbon

Emission Challenges

Manage Increasing number of

Uncertainties

The Growth

Considerations

for Ocean

Freight

27

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28

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