S&P Global| Platts (Dec 9):
Feature: Malaysia, Philippines, Indonesia mull high security Sulu Sea corridor to curb piracy
Malaysia, the Philippines and Indonesia are considering to establish a high security corridor along the Sulu Sea and Sabah to tackle the piracy menace that has resulted in several attacks and kidnappings this year, shipping industry sources and maritime analysts said. There has been a spate of attacks which have imperiled movement of commercial vessels prompting trilateral negotiations between these countries to find ways of securing the region under what is being termed as an IND-MAL-PHI program.
The plan assumes significance because billions of dollars worth of commodities move to and fro on commercial ships in the vicinity of the Sulu Sea, according to industry estimates. Matters came to a head in June this year when Indonesia raised safety concerns over coal shipments to the Philippines, when seven of its sailors were kidnapped.
Earlier, one of Indonesia's ministers raised fears that it did not want the region to become a "new Somalia."
"The idea behind the initiative is to set up a jointly managed and monitoring security system which can serve as a deterrent for the would be pirates," said Martin A Sebastian, head of the Centre for Maritime Security and Diplomacy at the think tank, Maritime Institute of Malaysia, on the sidelines of a conference organized by Singapore's Institute of South Asian Studies, or ISAS.
A similar initiative started in 2009 in the Gulf of Aden, called the Internationally Recommended Transit Corridor, or IRTC, successfully curbed piracy attacks in the region over a span of several years.
The corridor included creation of separate eastbound and westbound transit lanes, each five nautical miles wide and separated by a two nautical miles buffer zone.
Upon entering the detailed reporting area, or leaving a port within the region, commercial ships were encouraged to voluntarily report their position, course, speed and actual times of arrival to the designated authorities.
A joint working group on the trilateral cooperative arrangement in Southeast Asia is currently discussing modalities for a possible setting up of a similar corridor in the Sulu Sea, Sebastian said.
The objective of the negotiations is to have a Graduated Response Program, or GRP, with distance-based multiple layers of security around the commercial vessels, he said. Last month, the anti-piracy watchdog, Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia, or ReCAAP, expressed deep concern over the abduction of crew from ships while passing through the Sulu-Celebes Sea and the eastern Sabah region.
Since March, there have been 11 sea-robbery and piracy related incidents in this region resulting in the abduction of 44 crew members of which 11 are still captive, ReCAAP said. For most of the incidents, the responsibility has been claimed by the Philippines-based terrorist group Abu Sayyaf, it said.
"The perpetrators have begun to target ships of larger tonnage," ReCAAP said, citing the example of Vietnam-registered bulk carrier, the Royal 16, from which six crew members were abducted on November 11 near Coco Island when it was enroute from Hai Phong to Davao.
PRIVATE ARMED GUARDS
Such incidents have sharpened the debate for having private armed guards on board commercial ships to prevent offshore crime. Other sources participating in the ISAS conference said on its sidelines that one of the reasons for the success of anti-piracy measures around the Gulf of Aden was contribution of private armed guards on-board the ships moving in the region.
Most, Southeast Asian countries don't permit Private Maritime Security Companies, or PMSCs, to function in their territorial waters.
Sebastian said Malaysia was now permitting PMSCs to operate in its Exclusive Economic Zone provided the guards are only Malaysian nationals.
"Even if private agencies aren't allowed to initiate maritime security, the piracy problem can still be tackled, provided stringent sea-patrols are undertaken by the Coast Guard and naval ships," said Mohammed Khurshed Alam, head of the Maritime Affairs Unit in Bangladesh's foreign ministry.
There also has to be greater synchronization between maritime agencies and the land administration. Most countries do not have thorough anti-piracy laws and "criminals on sea" go scot free "on land" due to a dearth of witnesses and a lack of evidence, Alam said.
If the Gulf of Aden experience is taken into account, private armed guards use arms only as a last resort and their basic objective is risk mitigation, or deterrence and alerting the official security agencies of any threats.
The crisis response or hot pursuit and warfare, if any, with the pirates is supposed to be done only by the security agencies of the governments involved, maritime analysts said.
These guards also serve as a source of employment for the retired servicemen from national security agencies and revenue for the government, they said.
SOCIAL PROBLEMS AND PIRACY
Experts also point towards the social angle to the piracy problem.
"Improving the livelihood of people onshore by providing them with the alternative sources of income such as agriculture and fisheries will not leave them with a reason to resort to piracy," said Hosena Lunogelo, a senior adviser at Tanzania's Economic and Social Research Foundation.
Massive trawlers belonging to multinational companies catch fish and seafood along the African coastline, leaving precious little for the locals, he said, adding that Europe and the US also need to give greater market access to African agricultural produce as part of efforts to control crime on sea.
This will go a long way to bolster maritime security at a time when new offshore oil and gas discoveries have been made near Tanzania and Mozambique, which can also serve as a source of employment for locals, Lunogelo said.
INSURANCE PREMIUMS
Maritime insurance premiums are directly proportional to the risk threat in the region and inversely to the security arrangements made by commercial ships to tackle them.
In April, BIMCO had reduced the size of The High Risk Area for Somalia-based piracy, cutting its boundaries in both the Red Sea and the Gulf of Aden.
Baltic and International Maritime Council, or BIMCO, is the world's largest international shipping association, with more than 2,200 members and its standard contracts and clauses, which cover the entire lifecycle of ship-related operation and activity, are widely used in the industry.
While negotiating contracts with insurance companies, commercial ship carriers list out the risk mitigation measures, including the use of BIMCO Guardcon, the standard contract for deployment of security guards on vessels.
"Such risk control measures entail a cost but at the same time also bring down insurance premiums," said Sebastian.
The overall costs are only slightly higher than the gains made by shipping companies due to lower insurance premiums and more importantly the chances of a piracy attack come down drastically, he said.
Navies and Coast Guard do not have enough assets to be "everywhere, every time, while PMSCs can provide security during loading and discharge of ships and parameter protection within port limits or for oil rigs and platforms," he added.
The economic stakes of tackling piracy in the Sulu Sea region are huge. There are an estimated 55 million mt of goods that transit these waters annually, according to shipping industry estimates.
Indonesian coal shipments from East Kalimantan to the Philippines are valued over $800 million annually, according to Indonesia's official data, accounting for 70% of the Philippines' total coal imports of around 15 million mt.
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