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Indonesia plans to build more railways, seaport infra

Publication Date : 23-04-2014


The Indonesian government is planning to build more railway and seaport infrastructure in cities across the archipelago in a bid to reduce the country’s dependence on roads and private transportation.

The plan is mentioned in the Transportation Ministry’s medium-term roadmap to boost connectivity in Indonesia.

To develop railway infrastructure, the ministry will build new commuter lines and improve existing rail infrastructure in at least 14 cities, including Jakarta, Bandung, Surabaya, Batam, Medan, Palembang, Pekanbaru, Makassar and Manado, according to the Transportation Ministry’s Strategic Roadmap for 2015-2019.

It says that the development of commuter line infrastructure, which will be integrated with other modes of transportation such as bus stops and airports, will result in the building of at least 3,760 kilometers of new railways as well as 6,016 new train carriages.

The ministry also plans to improve seaport infrastructure to encourage the shipping of goods through sea-based transportation. At the moment, many seaports in Indonesia do not have the required berths or other facilities to support inter-island transportation called “coastal shipping”, which could be carried out only by certain types of ships.

“Our fast economic growth will translate to higher demand for movement of goods or people, which is why we need to upgrade railway and shipping infrastructure,” Deputy Transportation Minister Bambang Susantono told reporters on Tuesday.

“If we continue to be over-reliant on road infrastructure, then there would be an extremely severe traffic problem within the next five years,” he added.

The roadmap noted that the ministry would earmark a least US$12.4 billion for additional investments to improve seaport infrastructure in Indonesia from 2015 to 2019. It did not detail the budget allocated to improve railway infrastructure.

A study jointly conducted by the National Development Planning Board (Bappenas) and the Japan International Cooperation Agency (Jica) revealed that Indonesia might need 1.26 trillion rupiah ($110 billion) for its infrastructure development within the next five years.

Bambang highlighted the need for the private sector to participate more actively in the government’s infrastructure projects, as it would be unfeasible for the state budget to disburse such funds.

“The private sector’s participation has been way too small. For the next five years, we hope that they could play a greater role,” he said. “Our initial estimates show that at least two-thirds of total projects are still funded by the government,”

Indonesia has been perceived by economists as punching below its weight due to the lack of supporting infrastructure, with local business stakeholders frequently complaining about the country’s high logistics costs.

In Indonesia, logistic costs account for 27 per cent of gross domestic product (GDP), significantly higher than its regional peers such as Thailand (20 per cent), Malaysia (13 per cent) or Singapore (8 per cent), according to data from the State of Logistics Indonesia 2013 report.

“It’s a fact that the cost of transporting oranges from Pontianak [in West Kalimantan] to Jakarta is more expensive than importing oranges from China to Jakarta,” complained Chairul Tanjung, a noted businessman who is also the head of the National Economic Committee (KEN).

The best way to tackle Indonesia’s high logistics problem is through reducing the country’s dependency on road infrastructure, according to Kuntoro Mangkusubroto, the head of the Presidential Working Unit for Supervision and Management of Development (UKP4).


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