Transport & Logistics
From The Report: Indonesia 2012
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With logistics costs among the highest in ASEAN at around 25-30% of GDP, transportation improvements are high on the priority list when it comes to boosting Indonesian growth. Indonesia is investing in plans to boost the road network from 4400 km to 8666 km of roads by 2015. Rail is set for a similar upgrade, with plans that include the Trans-Java high-speed railway. Meanwhile, with 17.6% growth in traffic at Jakarta’s international airport, capacity expansion is highly necessary. The airport opened a third terminal in 2011 and will renovate the existing two, although rumours of a new airport are gaining momentum. Many of these expansion projects will be funded under public-private partnership agreements, which have been the focus of political contention over apparent delays.

This chapter includes interviews with Emirsyah Satar, President & CEO, Garuda Indonesia; and Shanti L Poesposoetjipto, Chairman, Samudera Indonesia Group.

Articles from this Chapter

Overview

Stepping up to the task: The government speeds up the development of land, sea and air connections
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Faced with ever-growing congestion in the movement of people and goods across the archipelago, the government is clear that improving and diversifying Indonesia’s logistics network stands at the heart of its efforts to boost economic growth above 7%. Air passenger traffic has continued to grow, with the large domestic market flocking to the growing pool of low-cost airlines (see analysis). As travellers take to the air, rail and sea modes have dropped, with passenger transport falling some…

Analysis

Rise in the skies: Increasing airport capacity as passenger numbers grow
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Domestic passengers have been the main drivers of growth in air transport for the past decade – more than 52m Indonesians were expected to fly domestically in 2011, around half of which on a single low-cost operator, Lion Air, which also runs Wings Air. Sustained competition in the low-cost segment has continued to keep rates low, while rising disposable income levels are set to sustain growth in demand over the medium term. “The average Indonesian traveller flies five times a year, which…

Analysis

Liberalised but protected: Shipping law introduces new cabotage rules and welcomes private sector participation
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The year 2011 marks the implementation of the 2008 shipping law, a far-reaching reform of maritime transport that provides space for private sector participation in infrastructure development. Yet the rules also include a degree of protection in that they require domestically flagged vessels to ship goods across the archipelago. “There is a clear dichotomy in the law: while it protects the interests of domestic shipping through cabotage, it also liberalises port management,” Damas Jati, the…

Interview

Shanti Poesposoetjipto, Chairman, Samudera Indonesia Group: Interview
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Interview:Shanti Poesposoetjipto How have economic conditions perpetuated the need to address issues of connectivity? SHANTI POESPOSOETJIPTO: While Java continues to be the country’s production centre for consumer goods, growth has actually been higher outside Java. As a result, migration rates to the major cities of Java have declined, with a higher percentage of the population choosing to remain in the provinces where favourable employment opportunities have become more readily available.…

Analysis

Greater connectivity: Building partnerships with the private sector for increased infrastructure development
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The government is pressing ahead with its liberalisation drive to upgrade physical infrastructure and reduce the cost of doing business for the nation’s dynamic private sector. The Regional Long-Term Development Plan, (Rencana Pembangunan Jangka Menengah, RPJM), running from 2005 to 2024 in a succession of fiveyear strategies, provides the umbrella for developing and integrating the four main modes of transport. The National Development Planning Agency, BAPPENAS, forecasts that if total…

Analysis

Easing congestion: Getting traffic moving in the Jabodetabek area
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Traffic in the Greater Jakarta region is increasingly slowing down, as the number of vehicles on the roads rise. In 2010 there were 11.3m vehicles in the metropolitan priority area of Jabodetabek (Greater Jakarta), with 1.5m of these in Jakarta alone, according to the Ministry of Transport. The majority of these are two- or three-wheelers weaving their way through traffic. GRIDLOCK: Streets only account for roughly 6% of Jakarta’s landmass, far less than the 15% or so in comparable cities…

Analysis

On the move: Addressing bottlenecks in the competitive logistics industry
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Strong domestic market growth has been a boon to Indonesia’s logistics industry. Although the concept of “just-in-time” may seem inappropriate given congestion levels, the sector has grown on average 7.7% annually over the past seven years, showing its resilience to the recent global economic crisis. If the government is successful in improving the nation’s hard and soft infrastructure, transport costs should drop from the excessive 25% of GDP. EXPANSION CONTINUES: The logistics business…

Analysis

Charting a safe course: Domestic fleets work to meet rising demand
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The advent of new rules on cabotage, coupled with vibrant GDP growth, a strong rupiah and robust domestic consumer demand, has put Indonesia’s merchant fleet under considerable pressure on to deliver. This has resulted in a surge of boat buying by the country’s shipping companies, with financing for this capital expenditure (capex) a going concern for the sector. Thus, 2011 saw initial public offerings (IPOs), financing deals, as well as a significant amount of leasing and borrowing as…

Analysis

Back on track: Rail infrastructure is set for a dramatic overhaul
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As part of its new drive to address the country’s historic transport problems, the government is turning its attention to Indonesia’s rail network. The rail system is currently far shorter and more fragmented than its neighbours, with one Trans-Java network and three self-contained lines in Sumatra. Moreover, of the roughly 6900 km of narrow-gauge (1067 mm) lines, only around 4800 km is operational. PRIVATE SECTOR INVOLVEMENT: The 2007 Railway Law was amended twice in 2009, ending the…