Indonesia Freight Transport Report Q1 2012
Includes 3 FREE quarterly updates
BMI View: Indonesian Freight Demand To Remain Resilient
Our overall outlook for freight demand is dependent on the performance of the Indonesian economy in 2012. We remain relatively bullish on this point, believing that the economy is resilient enough to resist increasing global economic headwinds. BMI now forecasts 2012 GDP growth in Indonesia of 5.8% (following the 6.3% expansion experienced in 2011). Our outlook for 2013 is for growth to accelerate again to 6.2%. In the five years to 2016, we expect growth to average 6.2% a year, confirming the country as a regional outperformer.
Industry-specific factors also remain broadly positive. Investment interest in modernising the country's port, road and rail infrastructure is gathering strength. If the government can reduce red tape and political risk, a series of major projects may go ahead over the next couple of years.
Headline Industry Data
Russia Continues To Pursue Kalimantan Rail Project
State-owned Russian Railways continues to pursue a US$2.5bn freight rail project in Indonesia, designed to carry coal for export. The 300km railway line would connect the provinces of Central Kalimantan and East Kalimantan, reaching to Balikpapan port, from where the coal would be shipped to export markets. Completion of the project would allow coal production in Central Kalimantan to be boosted from 5.0mn tonnes per annum to 30.0mn tonnes.
Chinese Help For Port Infrastructure Problems?
Chinese investment may be the answer to Indonesia's particular situation: encouraging export and manufacturing growth prospects, poor infrastructure, high logistics costs, and inadequate port capacity - a classic bottleneck. China Investment Corporation (CIC), an investment arm of China's sovereign wealth fund, may invest up to US$25bn in Indonesia's mining and infrastructure industries. BMI believes this investment by China highlights a trend set other countries, whereby China secures access to national resources through investing in a country's infrastructure.
Port Of Jakarta Expansion Project To Start
Five major groups have been lined up for a US$1.37bn expansion project at the Port of Jakarta, also known as Tanjung Priok. The project, which will boost the handling capacity of the port by 1.8mn containers, is expected to begin construction before the end of 2011 and be completed by 2015. Among the various consortia competing for the job are big international groups such as Hutchison, Mistui, Evergreen, and the Port of Singapore Authority.
Key Risks To Outlook
We highlight two main risks to our Indonesian freight forecasts. First, the country is exposed to another slowdown in global growth, or even the full 'double-dip recession' that many commentators have been fearing. However, it must be stressed that this is a smaller risk than it is for many other countries: based on a strong domestic economy, Indonesia was able to remain on a growth path throughout the 2009 recession; if anything, in 2012 we see the economy as more resilient as we believe Indonesia's long-held status as a high-risk country among investors is gradually changing for the better.
A second downside risk to our outlook is the possibility that the country's ports, roads and rail system will not be able to handle the increasing levels of traffic if sufficient investment is not made. Indonesia's freight transport system suffers from congestion and low efficiency levels, raising the fear that bottlenecks could continue to hold back growth.
BMI View: Indonesian Freight Demand To Remain Resilient
Our overall outlook for freight demand is dependent on the performance of the Indonesian economy in 2012. We remain relatively bullish on this point, believing that the economy is resilient enough to resist increasing global economic headwinds. BMI now forecasts 2012 GDP growth in Indonesia of 5.8% (following the 6.3% expansion experienced in 2011). Our outlook for 2013 is for growth to accelerate again to 6.2%. In the five years to 2016, we expect growth to average 6.2% a year, confirming the country as a regional outperformer.
Industry-specific factors also remain broadly positive. Investment interest in modernising the country's port, road and rail infrastructure is gathering strength. If the government can reduce red tape and political risk, a series of major projects may go ahead over the next couple of years.
Headline Industry Data
- Air freight volumes are forecast to grow by 6.6% in 2012, with average annual growth of 6.3% during our forecast period to 2016.
- Rail freight volumes are estimated to rise by 1.2% in 2012, with average growth of 1.4% during our forecast period.
- Tanjung Priok total tonnage growth forecast for 2012 is 5.1% to 44.337mn tonnes, with average growth of 5.2% expected over our forecast period to 2016.
- 2012 Tanjung Priok container growth forecast is +9.4% to 5.173mn twenty-foot equivalent units, with average growth of 8.9% over the forecast period.
- We expect the total value of Indonesian trade to grow by 9.0% in real terms in 2012, up marginally from 8.9% in 2011.
Russia Continues To Pursue Kalimantan Rail Project
State-owned Russian Railways continues to pursue a US$2.5bn freight rail project in Indonesia, designed to carry coal for export. The 300km railway line would connect the provinces of Central Kalimantan and East Kalimantan, reaching to Balikpapan port, from where the coal would be shipped to export markets. Completion of the project would allow coal production in Central Kalimantan to be boosted from 5.0mn tonnes per annum to 30.0mn tonnes.
Chinese Help For Port Infrastructure Problems?
Chinese investment may be the answer to Indonesia's particular situation: encouraging export and manufacturing growth prospects, poor infrastructure, high logistics costs, and inadequate port capacity - a classic bottleneck. China Investment Corporation (CIC), an investment arm of China's sovereign wealth fund, may invest up to US$25bn in Indonesia's mining and infrastructure industries. BMI believes this investment by China highlights a trend set other countries, whereby China secures access to national resources through investing in a country's infrastructure.
Port Of Jakarta Expansion Project To Start
Five major groups have been lined up for a US$1.37bn expansion project at the Port of Jakarta, also known as Tanjung Priok. The project, which will boost the handling capacity of the port by 1.8mn containers, is expected to begin construction before the end of 2011 and be completed by 2015. Among the various consortia competing for the job are big international groups such as Hutchison, Mistui, Evergreen, and the Port of Singapore Authority.
Key Risks To Outlook
We highlight two main risks to our Indonesian freight forecasts. First, the country is exposed to another slowdown in global growth, or even the full 'double-dip recession' that many commentators have been fearing. However, it must be stressed that this is a smaller risk than it is for many other countries: based on a strong domestic economy, Indonesia was able to remain on a growth path throughout the 2009 recession; if anything, in 2012 we see the economy as more resilient as we believe Indonesia's long-held status as a high-risk country among investors is gradually changing for the better.
A second downside risk to our outlook is the possibility that the country's ports, roads and rail system will not be able to handle the increasing levels of traffic if sufficient investment is not made. Indonesia's freight transport system suffers from congestion and low efficiency levels, raising the fear that bottlenecks could continue to hold back growth.
Contents
Executive SummarySWOT Analysis
Indonesia Freight Transport Industry SWOT
Indonesia Political SWOT
Indonesia Economic SWOT
Indonesia Business Environment SWOT
Industry Trends And Developments
Road
Rail
Air
Maritime
Market Overview
Global Oil Products Price Outlook
Industry Forecast
Air Freight
Table: Air Freight, 2007-2016
Maritime Freight
Table: Maritime Freight – Throughput, 2007-2016 ('000 tonnes)
Rail Freight
Table: Rail Freight, 2007-2016
Trade
Table: Trade Overview, 2007-2016
Table: Key Trade Indicators, 2010-2016 (US$mn and % change y-o-y)
Table: Indonesia’s Main Import Partners, 2002-2009 (US$mn)
Table: Indonesia’s Main Export Partners, 2002-2009 (US$mn)
Political Outlook
Long-Term Political Outlook
Macroeconomic Outlook
Table: Indonesia – Macroeconomic Activity, 2011-2016
Company Profiles
Garuda Indonesia (Cargo)
Trada Maritime (TRAM)
Samudera Shipping Line
Country Snapshot: Indonesia Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2000-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2010 (US$)
Table: Average Annual Manufacturing Wages, 2000-2012 (IDR)
BMI Methodology
How We Generate Our Industry Forecasts
Transport Industry
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