0. INDONESIA TRANSPORT INFRASTRUCTURE DEVELOPMENT: Political Economy and Implementation Strategy
Danang Parikesit
Prof. Dr-Tech. Ir. MSc (Eng), IPU
Founder and Senior Research Fellow
The Centre for Transportation and Logistics
Universitas Gadjah Mada
UMJ,

1. About the speaker Danang Parikesit Professor, Universitas Gadjah Mada
Certified Professional Engineer (highest level) and Fellow of ASEAN Engineers
Graduated from:
Ir., UGM, Civil Engineering, 1988
MSc Eng, Univ. of Leeds, Transportation, 1990
Dr-Tech, TU Wien (summa cum laude), Transportation, 1996
Board of Commissioner and Chair of Risk Management Supervisory Committee , The Indonesia Railway Company
Board, Indonesia Infrastructure Initiative
Chairman, University Network for Indonesia Infrastructure Development
Chairman and founder, Nusa Patris Infrastructure Foundation
Investment Committee, Mizuho Asia Infra
Chair, Centre for Engineering and Industrial Policy Study, The Institution of Engineers, Indonesia
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2. STRUCTURE OF THE LECTURE
Indonesia Economic Landscape and the needs for a better national logistics system
International trade route: How can we benefit?
Land connectivity: issues (still) unsolved
Future direction of the current government
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3. INDONESIAN ECONOMIC LANDSCAPE AND REGIONAL DEVELOPMENT CHALLENGES
REGIONAL ECONOMIC DISPARITY
VULNERABILITY: ECONOMIC, DISASTER, RESOURCE
POPULATION GROWTH, BUT WITH RISING PRODUCTIVE AGE GROUP
INTERNATIONAL COMPETITIVENESS
Source: The World Bank, 2009
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4. ECONOMIC GROWTH AND MACROECONOMIC STRATEGY
LONG-TERM CHALLENGE
12% nominal growth
6% + 6% OR
7% + 5% OR
9% + 3%
Real growth in 2015
4.79%
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5. KEY MACROECONOMIC ISSUES
INCREASING REAL GROWTH
REDUCING INFLATION
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6. HOW EFFECTIVE IS OUR CAPITAL INVESTMENT?
ICOR trends
Source: IMF April 2013, WEO. JICA Study Team analysis.
ICOR Averages
Source: IMF April 2013, WEO. JICA Study Team analysis.
China
4.36
India
4.92
Indonesia
5.12
Malaysia
6.11
Brazil
2.55
Russia
3.41
ICOR
5.12
What does it mean?
Original justification of ICORs dates back to Walters, Economic Journal, 1966
Well-established link between incremental investment and economic growth
Actual ICOR depends on the efficiency of the economy
For Indonesia. ICOR is currently around 5.2 (32% investment for 6.2% real growth)
If ICOR is maintained, real growth of 9% requires incremental investment of 47% of GDP, 15% more than at present
BPS shows Gross Domestic Fixed Capital Formation (GDFCF) in 2012 of 32% of GDP
Of this, infrastructure comprises just over 5%
The other 27% is mostly construction and trade (houses, offices, factories, agriculture) by both public and private investors.
To achieve 9% real growth either have to substantially increase investment/GDP ratio or reduce ICOR which will require investment.
Increasing investment will be achieved by accumulating both public investment and encourage private investment.
Real Growth of 9% implies an increased requirement of about 15% of GDP at current ICOR
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7. AND …. INDONESIAN LOGISTICS COST IS BURDENING ECONOMIC GROWTH
World Average 10-20%
Dev Countries Avg 15-25%
TRANSPORT COSTS COMPONENT: 12%
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8. BUT…..INFRASTRUCTURE INVESTMENT IS CRITICAL FOR OUR DEVELOPMENT
New roads 2,650 Km
Toll-road1,000 Km
Road maintenance 46,770 Km
New airports 15 locations
Pioneering aircraft 20 units
Airport development for Cargo services 6 locations
Construction of 24 new ports
Procurement of 26 Pioneering freight ships
Procurement of 2 Livestock ships
Procurement of 500 units small-scale fishing boats
New rail track 3,258 km in Java, Sumatera, Sulawesi and Kalimantan (and Papua), regional rail 2,159 km and urban rail 1,099 km
Ferry crossing ports 60 location
Pioneering ferry service vessels 50 units
Construction of BRT in 29 cities
Mass Rapid Transit 6 metro cities and 17 large cities
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9. 10% 30% 50% AT OPERATIONAL LEVEL LAND TRANSPORT SERVICE TO PORTS
SEA CARGO EFFICIENCY TO INDONESIAN EASTERN ISLANDS
COST OF PERMITS THAT SHOULD BE REDUCED TO ALLOW COMPETITIVE SERVICES
30%
50%
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10. DOMESTIC CONNECTIVITY REMAINS AN ISSUE
COFFEE FARMER MANGGARAI, FLORES
RICE PRODUCER IN MAMASA, SULAWESI
Sumber: SDC,
Sumber: Syaf dkk, 2010
FACT:
Transport is responsible for 20-25% final/market price of agriculture products – mostly cultivated by poor farmers, but only 2% of large agriculture estate prodced by large industries (palm oil, sugar)
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11. INDONESIAN MODERN SEA TRANSPORT ROUTES End of 19th Century Indonesia
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12. CURRENT NATIONAL NETWORK AND THE NEEDS FOR A HIGH CAPACITY MARINE TRANSPORT CORRIDOR
2014
No new large ports built in the 20th century
More than 140 export/international ports
Imbalanced cargo east-west
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13. International sea trade and promoting Indonesia as a hub port
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14. GLOBAL MARITIME AND CONNECTIVITY MAPS
GLOBAL MARITIME ROUTES
GLOBAL CONNECTIVITY
MAP
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15. WORLD CONTAINER TRAFFIC
EUROPE
8.75 %
12.29 %
16.85 %
27.45 %
0.81 %
0.67 %
0.13 %
0.86 %
2.26 %
2.91 %
2.75 %
ASIA
15.79 %
AMERICA
7.86 %
AUSTRALIA
0.49 %
AFRICA
0.30 %
(Mio TEUS)
INTRA-ASIA : 24.32
ASIA-AMERICA :
ASIA-EUROPE :
ASIA-AFRICA :
ASIA-AUSTRALIA :
RELATED-ASIA :
(65.2%)
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16. INBOUND-OUTBOUND CONTAINER TRAFFIC INDONESIA
EUROPE
3.61%
11.45 %
11.07 %
AMERICA
AUSTRALIA
AFRICA
12.94 %
60.93 %
ASIA
(Mio TEUS)
ASIA-IND :
AMERICA-IND :
AFRICA-IND :
AUST-IND :
EURO-IND :
RELATED IND :
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17. INTERNATIONAL PORTS-OF-CALL
MAIN CONTAINER ROUTES & HUB PORTS
HUB EUROPA
ROTTERDAM
HAMBURG
ANTWERPEN
HUB SE ASIA
SINGAPORE PORTKLANG
HUB EAST ASIA 1
SHANG HAI
SHEN ZHEN
HONGKONG
KAO SHIUNG
HUB EAST ASIA II
PUSAN
TOKYO
YOKOHAMA
HUB US WEST COAST
LOS ANGELES
LONG BEACH
HUB US EAST COAST
NEW YORK
NEW JERSEY
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18. CHINA FACTOR AND INTERNATIONAL SEA-TRADE
CHINA INVESTMENTS IN THE MARITIME SILK ROUTES ARE ENORMOUS
POSSIBLE EXPANSION OF THE NETWORK TO AUSTRALIA AND NEW ZEALAND
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19. IMPORTANCE OF LAND CONNECTIVITY
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20. INDONESIAN URBAN AREAS ARE HEAVILY CONGESTED
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21. PORT ACCESS IS BOTTLENECKED
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22. FUTURE DIRECTION: 1 goal, 2-pronge strategy for maritime transport, and 3 main policies intervention
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23. TWO-PRONGED STRATEGY WORLD MARITIME ACCESS DOMESTIC CONNECTIVITY
International transshipment  Competitive global port
Hub Port KUALA TANJUNG
DOMESTIC CONNECTIVITY
Domestic transshipment  return cargo n repo container
Land connection  rail/road access to container yard (CY)
Port costs  CHC (OPP unloading + OPT loading), TKBM, port productivity (port stay)
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24. POLICY INTERVENTION CONSOLIDATION CONSOLIDATION CONSOLIDATION
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25. POLICY INTERVENTION #1: SEA NETWORK CONSOLIDATION
TRAMPER
Island A
COORDINATED NETWORK
TRUNK – FEEDER
HIGH CAPACITY
LOWER COST/TEUS
Island B
Unconsolidated network
LINER
Island C
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26. POLICY INTERVENTION #2: consolidation of supply chain and Deregulation of shipping and port industry
Sumber, Robinson, IAME Panama 2002 Conference Proceedings, 2002
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27. EXPLOITING SCALE AND SCOPE OF PORT ECONOMIES
POLICY INTERVENTION #3: REGULATION OF IMPORT THROUGH DESIGNATED INTERNATIONAL PORTS TRADE CONSOLIDATION
2014
EXPLOITING SCALE AND SCOPE OF PORT ECONOMIES
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28. And …… Logistics is not just about transport
Market segmentation vs consolidation and expansion at the same time, creating a complex undertaking
Land connectivity remains an issue
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29. THANK YOU Line_ID: dparikesit
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