Government Pushes Bali Airport as Alternative Regional Cargo Hub

Ngurah Rai International Airport, Bali (Image credit : Angkasa Pura I)

JAKARTA (TheInsiderStories) – The Indonesian government is pushing Ngurah Rai International Airport in Bali, as an alternative regional hub for international carriers to deliver goods from East Asia, Europe and the Middle East, in competition with Singapore’s Changi Airport, Heru Pambudi, General Director at Customs and Clearance, said.

Heru told TheInsiderStories that the Bali Airport that has bonded logistic zones that offer various facilities in the form of exemptions to pay import taxes, taxes on luxury goods and value-added tax to international carriers.

He claimed that the air carrier operators have responded with positive feedback, as the bonded zone tariffs are much more competitive, compared to Changi Airport.

“Bali has 104 international flights per day. The idea is to offer international carriers the opportunity to optimize empty cargoes after transporting passengers to Bali. They are quite happy because it (delivering goods) can reduce costs up to 25 per cent,” he said.

In addition, the Customs and Clearance General Directorate will not become involved in such services and it will thus be fully operated by Angkasa Pura I, as the authority of Ngurah Rai International Airport. In return, the government will receive benefits in the form of branding, as well as income tax.

The Indonesian government has been in a race with Singapore to attract more logistics companies from overseas; with a total of 76 bonded logistic zones, and inventory value of around Rp920 trillion, Bali is still far below Singapore logistics inventory. Changi currently is serving around 6,800 weekly flights to 330 cities. The island nation’s trade value amounts reached 3.5 times its GDP.

Singapore’s achievements did not occur by chance. There were at least three key factors of success: building connectivity, innovative infrastructure, and processes as well as encouraging private sector participation.

Singapore developed high-frequency connections to hundreds of destinations across the globe by establishing the Civil Aviation Authority of Singapore, which concluded Air Services Agreements (ASAs) with other 130 States and Territories, to increase the number of flight connections.

Likewise, the island nation has been working closely with shipping lines to build one of the world’s densest maritime transport networks. Singapore has an extensive network of Free Trade Agreements with more than 30 trading partners to enhance access to major markets. This encourages companies across the logistics chain to operate from Singapore, as they can count on frequent and reliable connections to reach global markets quickly.

In addition, there are plans to double the capacity of the Airport. Air cargoes are encouraged to use Singapore via specialized infrastructure and processes. There is the Airport Logistics Park for time-sensitive cargo, the cold-chain centers for perishables, and regional express facilities to accommodate burgeoning e-commerce activity.

Staffs are also provided with regular training to ensure they can keep up with new technologies and have the right skills to process different cargo types. For example, one of the airport’s cold-chain centers was the first in the world to be awarded the IATA CEIV Pharma Certification for handling pharmaceutical cargoes.

Over time, airport operators are required to ensure they remain responsive to the needs of the air carrier industry. Since airport operators pay more attention to air cargo companies, cargo volumes for port operators have multiplied, and the company has invested in some 40 terminals around the world. Increasing private sector competition has encouraged industry players to be commercially nimble, and helps to make Singapore’s logistics sector more efficient.

Today, 20 of the world’s top 25 logistics companies manage their global or regional operations from Singapore. Indonesia has the opportunity to emulate the success of Changi Airport in luring logistic companies to use Ngurah Rai International Airport as an alternative cargo hub.

Written by Yosi Winosa, email: yosi.winosa@theinsiderstories.com