As infrastructure improvements race to keep track with economic growth, the developments in transportation and logistics are providing an exceptional investment opportunity all of their own.
There are many different factors that will ultimately decide if Indonesiai’s capable of maintaining its robust economic growth and ambitious targets. A holistic approach would seem to be the most prudent approach and the Indonesian government certainly appears to be working along this line of reasoning. However, transportation and logistics may yet hold the largest piece of the puzzle. If infrastructure is a recurring theme in Indonesia’s present day story it’s with good reason. It is closely tied into everything that surrounds the country’s development and represents all that is simultaneously frustrating, challenging and hopeful about its immediate future. A comprehensive understanding of the obstacles that must be overcome, as well as the potential that is locked inside this fascinating country, isn’t possible without a closer look at the traffic and logistics sector of Indonesia.
Much of Indonesia’s road networkneeds replacement or renovationbut this is a minor problemcompared with the more pressing concern over congestion. Appreciationof the scale of the problem is best served by consideringJakarta, which serves as a microcosm for the dilemma andprovides a glimpse of what other parts of the country could soonbe facing.A report in 2010 indicated that there were over 11 million vehiclesin the Greater Jakarta area with around 1.5 million of thosewithin the capital city. The problem is exacerbated by the relativelylow number of roads; compared to other similar-sized cities, atleast in terms of percentage; Tokyo and New York have almostthree times as many roads. How serious is the problem? Jakarta,despite being one of the largest cities in the world, is predicted toexperience total gridlock sometime during 2014.The cause of the problem is fairly straightforward – the rate atwhich Indonesians are reaching income levels sufficient to purchasea private vehicle is outstripping road network growth by afactor of ten – the solution less so. Private vehicles account foraround three-quarters of the traffic in Jakarta and use of publictransport is dropping despite efforts to reverse this trend.In 2011, Vice President Boediono announced a 17-point plandesigned to reduce traffic in Jakarta, combining a mixture ofshort-term, intermediate and long-term initiatives that include acrackdown on illegal buses, a master plan for revising the publictransportation system and the creation of six inner-city toll roads. Inthe same year a new Transport Authority was set up, exclusivelydesigned to implement the necessary changes in the capital city.This move has been welcomed by the private sector who perhapsmost of all feel the pain of the congestion.As with much of Indonesia’s plans, the proposed solutions aremulti-faceted and attack the problem from a number of differentangles. If proven to be successful in the capital, this could proveto be an effective template for tacklingthe road transportation problemacross the rest of the country.