New gov’t could unleash logistics potential

Indonesia’s new government needs to remove obstacles to investment in its transport and trading infrastructure to realise its enormous economic and logistics potential, according to a new report by Transport Intelligence (Ti).


New gov’t could unleash logistics potential


Indonesia’s new government needs to remove obstacles to investment in its transport and trading infrastructure to realise its enormous economic and logistics potential, according to a new report by Transport Intelligence (Ti).

By most rankings Indonesia lags behind its regional competitors in Southeast Asia in terms of logistics performance. However, Ti’s latest report – Indonesia Transport & Logistics 2015 – A New Dawn? – argues this could soon change if the new government of President Joko Widodo follows through on its promises to fund new transport and infrastructure investments and attract private investors and operators.

Widodo, the country’s first nonestablishment president, has announced plans to spend US$22 billion on infrastructure development in 2015 to help revive Southeast Asia’s biggest economy from the weakest expansion in at least five years. In his first three months in office, Widodo freed up 230 trillion rupiah (US$17.7 billion) of budget funds for infrastructure development by scrapping gasoline subsidies and capping government aid on diesel purchases. He plans to boost Indonesia’s economic growth to more than seven per cent during his term in the office, from about five per cent last year.

“Ti believes that if the country’s logistics performance could be improved by boosting investment, Indonesia’s low land and labour costs, huge domestic market and easy access to neighbouring ASEAN markets could make it a highly attractive location for manufacturers seeking alternatives to China,” said Michael King, Ti’s head of operations in Asia. “This would have huge benefits for all sectors of the logistics and forwarding business.