Infrastructure & Transport
From The Report: Indonesia 2019
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Inadequate infrastructure has long been a challenge for Indonesia, the world’s largest archipelagic state. With more than 17,000 islands and a population of around 265m, it may be the most complicated country in the world in terms of logistics. Since President Joko Widodo was inaugurated, transport and infrastructure investment has become a key pillar of the Indonesian government’s policy agenda. The scale of infrastructure investment under “Jokowinomics” significantly exceeds that of previous administrations. Among the administration’s initial aims was the construction of 1000 km of toll roads, over 3000 km of railways, 15 airports, 24 seaports, 33 dams and power plants to supply 35,000 MW of energy, altogether costing some $355bn. A further 2650 km of new non-toll roads are targeted in the government’s National Medium-Term Development Plan 2015-19. This chapter also contains interviews with Luhut Panjaitan, Coordinating Minister for Maritime Affairs, and Bambang Brodjonegoro, Minister of National Development Planning.

Articles from this Chapter

Overview

Results-oriented: Ambitious plans to improve connectivity are being supported by private sector participation, though some projects still face financing constraints and structural challenges
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Inadequate infrastructure has long been a challenge for Indonesia, the world’s largest archipelagic state. With more than 17,000 islands and a population of around 265m, it is probably the most complicated country in the world in terms of logistics. Since President Joko Widodo was inaugurated, transport and infrastructure investment has become a key pillar of the Indonesian government’s policy agenda. The scale of infrastructure investment under “Jokowinomics” exceeds that of previous…

Interview

Positive signal: Luhut Panjaitan, Coordinating Minister for Maritime Affairs, on working with the private sector to expand port infrastructure
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Interview:Luhut Panjaitan What steps are being taken to capitalise on Indonesia’s strategic location for maritime logistics? LUHUT PANJAITAN: Particular progress has been made in the development and modernisation of sea ports, many of which are linked to the private sector. This has been one of the government’s key objectives since 2014, when Rp243trn ($17.2bn) was allocated to updating port facilities to make them more competitive. We are increasingly relying on the private sector to…

Analysis

Transit en masse: Attempts to address urban traffic congestion ramp up
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An estimated 4m people commute from Greater Jakarta into the city centre for work every day. Public transport has not matched the capital’s rapid growth in recent decades, leading to its international notoriety as a congested mega-city. With Jakarta representing about a fifth of all economic activity in Indonesia, congestion costs the economy an estimated $5bn per year. In response, the government has set the ambitious goal of having 60% of travellers use public transport in the capital…

Analysis

Paying the toll: Outside Java, private investment is key to road development
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If infrastructure development has not matched the rate of economic growth in Java, outside of the most populous island the challenges are even starker. As a result, the administration of President Joko Widodo has increasingly focused on building major roads outside of Java – namely the Trans-Kalimantan, TransPapua and Trans-Sumatra toll road networks. The length of new toll roads constructed in the first three years of the Widodo administration was greater than total length of toll road…

Interview

Diversified funding: Bambang Brodjonegoro, Minister of National Development Planning, on the role of the private sector in modernisation
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Interview:Bambang Brodjonegoro How is the government allocating expenditure and resources to reduce inequality? BAMBANG BRODJONEGORO: Spending to cover Indonesia’s basic needs – such as infrastructure, health and education – must come from the public budget. We have identified the regions with the highest rates of poverty, unemployment or inequality, and we allocate resources where they are needed to address those issues. West Java, for instance, has a 9% poverty rate, which is lower…

Analysis

Alternative financing: A series of new developments signal a shift in funding policy
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In early October 2018 officials unveiled 79 infrastructure projects worth $42bn as part of the Indonesia Infrastructure Investment Forum. The projects, which will be undertaken in partnership with state-owned enterprises (SOEs), cover a number of sectors, including transport, energy and industry. In addition to unveiling the new developments, the government used the forum to encourage SOEs to make greater use of equity-based finance to fund infrastructure projects. The approach appears to…

Analysis

Growing greener: ASEAN green and sustainable bonds on the rise
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This year 2018 marked the first anniversary of ASEAN’s inaugural bond issue under the organisation’s common Green Bond Standards (GBS) – a RM2bn ($480m) issue by the Malaysian government-controlled asset manager, Permodalan Nasional. Since then, the green bond market in Asia Pacific has won many accolades, with 2018 seeing the region record the second-highest volume of outstanding, climate-aligned bonds worldwide, according to a study by the London-based Climate Bonds Initiative (CBI).…

Overview

Skybound: Rapid expansion of global aviation industry propels investment
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The aviation sector is experiencing rapid growth worldwide, propelled by booming tourism industries, lower air fares and the push for greater connectivity in an increasingly globalised economy. Middle-class expansion has also fuelled air travel, as more people are able to afford flights for holidays or business travel. According to Boeing, commercial airlines experienced annual average passenger growth of 6.2% in 2012-17. It also estimated that by 2036 an additional 41,000 plane deliveries will need to be fulfilled in order to meet service needs for both passengers and cargo. To accommodate these developments, civil aviation authorities…

Overview

Skybound: Rapid expansion of global aviation industry propels investment
OBG
plus

The aviation sector is experiencing rapid growth worldwide, propelled by booming tourism industries, lower air fares and the push for greater connectivity in an increasingly globalised economy. Middle-class expansion has also fuelled air travel, as more people are able to afford flights for holidays or business travel. According to Boeing, commercial airlines experienced annual average passenger growth of 6.2% in 2012-17. It also estimated that by 2036 an additional 41,000 plane deliveries will need to be fulfilled in order to meet service needs for both passengers and cargo. To accommodate these developments, civil aviation authorities…