Indonesia Freight Transport Report Q3 2011
Includes 3 FREE quarterly updates
President Susilo Bambang Yudhoyono, who was re-elected in July 2009, has claimed that infrastructure projects will be among his major priorities over the next five years, as the country seeks to boost growth and reduce poverty.
The National Development Planning Agency (Bappenas) has estimated that US$121.65bn will be needed for Indonesia's infrastructure over the coming half decade. However, the government has admitted that it cannot bear the burden of financing its long-term infrastructure programme (2010-2014) - which consists of 87 projects - solely though public funds, and is thus seeking private sector participation. The government estimated that it can cover only about 30% of the amount required.
BMI sees great potential for infrastructure-based sukuk issuance in Indonesia. This assessment is based on the scale of infrastructure financing needs, combined with size and proportion of the Muslim population, which although not directly related to infrastructure project finance per se, nevertheless means that shari'a compliance is part of the local culture, therefore facilitating its proliferation. Malaysia is currently the region's leading sukuk issuer, with Islamic assets making up 20% of the country's total banking assets, as opposed to 3% in Indonesia, according to data from government agencies cited by Bloomberg.
The country also registered robust real GDP growth of 6.5% year-on-year (y-o-y) in Q111, very impressive considering the high base effect in Q110. This underscores BMI's view that domestic demand (in particular, investment-led demand) will drive the economy strongly in 2011.
Headline Industry Forecasts
Key Trends
Chinese Contractors Line Up For Toll Road Project
In May 2011 the Indonesian Ministry of Public Works declared that three Chinese companies - CHEC CSEC, cooperating with PT Hutama Karya, Shanghai Construction General Company, PT PP and Sinohydro Corporation, and PT Waskita Karya - all passed the pre-qualification stage relating to the Medan-Kualanamu toll road project, Sumatra.
Indonesian Concession To Attract International Interest
We welcome the news of a tender to construct new container facilities at the Indonesian port of Tanjung Priok. With international operators recognising the potential of the country's underdeveloped port sector, we expect concessions to attract widespread international interest. Nevertheless, we caution that considerable investment will be needed to enable the port to handle increasing throughput volumes.
Risks To Outlook
On the upside, there are various infrastructure projects in the pipeline in Indonesia as the government recognises the fact that significant investment is necessary in order to deal with increasing levels of traffic, particularly the country's ports.
Despite this, however, on the downside, there is a risk that the port investments may not be sufficient to deal with the congestion and low efficiency levels, raising the fear that lines could avoid the port, calling at more competitive neighbouring facilities instead.
President Susilo Bambang Yudhoyono, who was re-elected in July 2009, has claimed that infrastructure projects will be among his major priorities over the next five years, as the country seeks to boost growth and reduce poverty.
The National Development Planning Agency (Bappenas) has estimated that US$121.65bn will be needed for Indonesia's infrastructure over the coming half decade. However, the government has admitted that it cannot bear the burden of financing its long-term infrastructure programme (2010-2014) - which consists of 87 projects - solely though public funds, and is thus seeking private sector participation. The government estimated that it can cover only about 30% of the amount required.
BMI sees great potential for infrastructure-based sukuk issuance in Indonesia. This assessment is based on the scale of infrastructure financing needs, combined with size and proportion of the Muslim population, which although not directly related to infrastructure project finance per se, nevertheless means that shari'a compliance is part of the local culture, therefore facilitating its proliferation. Malaysia is currently the region's leading sukuk issuer, with Islamic assets making up 20% of the country's total banking assets, as opposed to 3% in Indonesia, according to data from government agencies cited by Bloomberg.
The country also registered robust real GDP growth of 6.5% year-on-year (y-o-y) in Q111, very impressive considering the high base effect in Q110. This underscores BMI's view that domestic demand (in particular, investment-led demand) will drive the economy strongly in 2011.
Headline Industry Forecasts
- Air freight volumes are predicted to be up 6.39% in 2011, with an average growth of 6.65% during our forecast period.
- Rail freight volumes are estimated to rise 1.08% in 2011, with an average growth of 1.25% during our forecast period.
- Tanjung Priok total tonnage is predicted to rise 5.50% in 2011, with an average growth of 5.23% over our forecast period.
- Palembang total tonnage is predicted to rise 5.57% in 2011, with an average growth of 5.57% over our forecast period.
Key Trends
Chinese Contractors Line Up For Toll Road Project
In May 2011 the Indonesian Ministry of Public Works declared that three Chinese companies - CHEC CSEC, cooperating with PT Hutama Karya, Shanghai Construction General Company, PT PP and Sinohydro Corporation, and PT Waskita Karya - all passed the pre-qualification stage relating to the Medan-Kualanamu toll road project, Sumatra.
Indonesian Concession To Attract International Interest
We welcome the news of a tender to construct new container facilities at the Indonesian port of Tanjung Priok. With international operators recognising the potential of the country's underdeveloped port sector, we expect concessions to attract widespread international interest. Nevertheless, we caution that considerable investment will be needed to enable the port to handle increasing throughput volumes.
Risks To Outlook
On the upside, there are various infrastructure projects in the pipeline in Indonesia as the government recognises the fact that significant investment is necessary in order to deal with increasing levels of traffic, particularly the country's ports.
Despite this, however, on the downside, there is a risk that the port investments may not be sufficient to deal with the congestion and low efficiency levels, raising the fear that lines could avoid the port, calling at more competitive neighbouring facilities instead.
Contents
Executive SummarySWOT Analysis
Indonesia Freight Transport Industry SWOT
Indonesia Political SWOT
Indonesia Economic SWOT
India Business Environment SWOT
Industry Trends And Developments
Road
Air
Maritime
Market Overview
Air
Road
Rail
Maritime
Container Shipping Overview
Drivers
Bellwethers
Rates
Players
Industry Forecast
Air Freight
Table: Air Freight, 2008-2015 (‘000 tonnes)
Rail Freight
Table: Rail Freight, 2008-2015 (‘000 tonnes)
Maritime
Table: Maritime Freight – Throughput, 2008-2015 (‘000 tonnes)
Trade
Table: Trade Overview, 2008-2015
Table: Key Trade Indicators, 2009-2015 (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
Macroeconomic Outlook
Table: Indonesia – Macroeconomic Activity, 2009-2015
Company Profiles
Garuda Indonesia (Cargo)
Trada Maritime (TRAM)
Samudera Shipping Line
BMI Methodology
How We Generate Our Industry Forecasts
Transport Industry
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