indonesia 2050, infrastructure: unlocking indonesia's potential for future growth beyond 2050...

INDONESIA 2050 INFRASTRUCTURE:

“Unlocking Indonesia's Potential for Future Growth Beyond 2050”

Paper Presented for the “Indonesia 2050 Student Paper Competition” Permias Congress 2013 | Cover Photo Credit © Kartapranata G. | Permias Congress 2013 logo © Permias Nasional | Buffalo Logo © Indonesian Student Association (PERMIAS) Buffalo, The State University of New York |

ROADS

PORTS

RAILWAYS

Teuku Arckyansyah “Arcky” Meraxa Alex Brian Ticoalu Ted Sielski Annisa Dian P. Harinto

Permias Congress 2013 Infrastructure: Unlocking Indonesia’s Meraxa, Ticoalu, Sielski, Harinto

Potential For Growth Beyond 2050

2

Preface

This paper is submitted by the Indonesian Student Association (PERMIAS) Buffalo, University at

Buffalo, The State University of New York, for the 2050 Paper Competition, which is organized by the

2013 Permias Congress.

About the Authors

Teuku Arckyansyah “Arcky” Meraxa | [email protected]

Arcky is a Ph.D. Candidate in Economic Geography & International Business at the University at

Buffalo, The State University of New York. Arcky is currently working in his dissertation, which

focuses on Indonesian firm network dynamics. His project and internship experience includes

placements at J.P. Morgan, Deutsche Bank and Bank Mandiri. He is the former President and the

current Senior Advisor for the Indonesian Student Association (PERMIAS) Buffalo.

Alex Brian Ticoalu | [email protected]

Brian is a Ph.D. Candidate from the Department of Geography with Geographic Information System

(GIS) concentration at the University at Buffalo, The State University of New York. His dissertation

explores the utilization of social network analysis to analytically measure research interest dynamics

among geography faculties. His work experience includes several projects on improving science

education and promoting healthy commuting behavior in the city of Buffalo, NY. Brian also holds

M.S. degree in Industrial System Engineering and Six Sigma Black Belt certification.

Ted Sielski | [email protected]

Ted is a B.A./M.A. Combined Degree Candidate in International Trade and Commerce at the

University at Buffalo, The State University of New York. For his master’s thesis, Ted examines the

role of social corporate social responsibility strategies for energy firms in Indonesia. In 2012, Ted

conducted a field study in Indonesia, while working as a summer lecturer at STKIP Surya in

Tangerang, West Java. After graduating, Ted hopes to start a career in Indonesia.

Annisa Dian P. Harinto | [email protected]

Annisa is an M.S. Candidate in Water and Wetland Resources at The State University of New York –

Environmental Science and Forestry, Syracuse NY. She is currently working on her master’s thesis,

focusing on management policy analysis on Jakarta’s coastal areas. Annisa is a staff at The

Indonesian Ministry of Public Works (Kementrian Pekerjaan Umum). Her responsibilities include

strategic planning and budgeting for infrastructure projects.

Indonesian SA (PERMIAS) Buffalo is an official student organization under the International Council

of the University at Buffalo's Student Association.

Web: http://Permiasbuffalo.moonfruit.com

350 Student Union

University at Buffalo

Buffalo, NY 14260



3

EXECUTIVE SUMMARY

By 2050, Indonesia economists predict Indonesia to become 7th largest economy exceeding the GDP of

Germany and the U.K., by 2030. The nation has huge potential for future growth from its current state.

However, the poor condition of transportation infrastructure due to chronic underinvestment and poor

maintenance has caused many problems. Indonesia suffers from various bottlenecks in trade, commercial

activities, and also labor mobility. These issues hinder current economic growth, and will continue to

impact the future growth potential if they are not addressed. Road and railway networks are one of the

most under and undeveloped among Southeast Asian countries, port infrastructure is also inadequate

when compared to similar countries.

As a 2050 vision, Indonesia should become a developed nation with high quality transportation

infrastructure servicing the economy. Indonesia should have modern road, and railway networks,

associated with world class ports to promote intra, inter-island linkages and international trades.

It is imperative that Indonesia adopts various milestones in order to seize economic opportunity. We

propose a four-phased approach, consisting of periods for strategic planning, implementation, re-

evaluation and completion.

25 30 40 41

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PHL VNM IDN THA MYS SGP

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2009 2020 2030 2040 2050

3.6 4.5

5.5

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2011 2025 2050

2011-2050, Improvement of Indonesia’s

Quality Port Infrastructure Scoring Range: 1 (underdeveloped) – 7 (most efficient by

international standards

2009-2050, Expansion of

Indonesia’s Total Road Network Thousand (000s) Kilometers

2012, Port Quality

Infrastructure, Select Countries Scoring Range: 1 (underdeveloped) – 7

(most efficient by international standards)

2009, Road Network

Coverage (%)



4

I. INTRODUCTION

By 2050, Indonesia has the opportunity to become one of the world’s leading economies. Indonesia’s

economy has been growing by about 6% for the past 5 years. Indonesia has done exceedingly well in

comparison to other member of the Association of Southeast Asian Nations (ASEAN). Indonesia’s recent

robust growth is led by a high level of domestic consumption, which is strongly supported by an

increasing middle class (Irawan, 2010; Oberman et al. 2012). According to economic experts, Indonesia

will soon to be on par with the world’s leading emerging markets, also known as BRIC nations (Brazil,

Russia, India, China) (Mellor & Adi, 2012). In 2030, Indonesia’s is expected to have US$1.8 trillion

market opportunities (Oberman et al. 2012). Furthermore, middle class consumers will continue to grow,

exceeding 140 million people by 2020 (Rastogi et al., 2013).

2011 GDP of ASEAN 5 and BRIC Countries

US$ Billion

Source: The World Bank 2013

The current infrastructure condition in Indonesia is insufficient to support its current economic growth

(OECD, 2010). Indonesia is the largest archipelagic nation in the world, consisting of five major islands

(Java, Sumatra, Kalimantan, Sulawesi and West Papua) and thousands of smaller islands. Indonesia

currently has uneven development retaining to infrastructure. Most of the current development is

concentrated in the island of Java, while other major islands remain under and undeveloped. The case is

also similar when it comes to transportation infrastructure. Indonesia suffers from a poor and inadequate

transportation infrastructure, which limits the accessibility of intra- and inter-island movement of people

and goods. In addition, this leads to reduced productivity, increased costs and high numbers of delays. If

Indonesia’s transportation infrastructure development remains stagnant, it is likely that the nation’s future

economic growth will be hindered (OECD, 2010).

In this paper we will (1) analyze Indonesia’s current infrastructure focusing upon ground (roads and

railways) and sea transport infrastructure, (2) investigate current infrastructure issues pertaining to

development and implementation and lastly, (3) provide recommendations to strategically improve

Indonesia’s infrastructure.

Transport infrastructure has been proven to positively increase the speed at which economic development

occurs (Straub, 2008). Good transport infrastructure enhances productivity (Albala-Bertrand &

Mamatzakis, 2001), increases the marginal rates of return, promotes private investment, and increase the

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VNM PHL SGP MYS THA IDN IND RUS BRA CHN



5

total volume of trade (Bougheas et al, 1999). The quality and quantity of transport infrastructure is also a

critical determinant of transportation costs (Limao & Venables, 2001). Reducing transportation costs

between Indonesia’s islands is a critical process in order to provide Indonesians with inexpensive

products and services. By investing in capital expenditure projects such as, physical infrastructures

including, roads, ports, and bridges, Indonesia can improve its competitiveness as an emerging nation

(Porter, 2006 & 2009).

II. CURRENT CONDITION OF INDONESIA’S TRANSPORT

INFRASTRUCTURE

Today, Indonesia’s transport infrastructure condition is relatively limited and it deters optimal economic

growth (OECD, 2012). After the 1998 Asian Financial Crisis, Indonesia has been under-investing in

infrastructure. Thus, the overall quality and quantity of transport infrastructure is inadequate, when

compared to the current level economic of growth. Indonesia is lacking in many areas in roads, railways

and sea transport infrastructure. According to the World Economic Forum’s (WEF) Global

Competitiveness Report (Schwab, 2011), Indonesia’s transport infrastructure is deficient in comparison to

other countries in Southeast Asia. Indonesia currently ranks 76th out of 140 nations in the report.

Moreover, the WEF placed infrastructure as the 3rd

most problematic factor for doing business in the

Indonesia.

Ground Transport Infrastructure: Roads

Ground transportation infrastructure is important to facilitate the movement of goods, services and

passengers from and within geographical locations (Kaplan et al., 2004). Indonesia’s road infrastructure

quality and capacity is one of the lowest in the region. Indonesia has a landmass of about 1.9 million

square kilometers, which about half of India’s. However, current road network coverage is severely

limited (Hui et al., 2011). Indonesia’s roads are mostly concentrated in the Island of Java. Other islands

such as Sumatra, Kalimantan, and Sulawesi still have limited road coverage. Indonesia’s total road

network coverage stands at 25% in 2009. This figure is marginally lower than other ASEAN members

such as Malaysia (30%), Thailand (67%) and the Philippines (67%). Furthermore, there is only 690

kilometers of highways, compared to the total 473,000 kilometers total road network length. Highways

represent a mere 0.15% of the total road network.

2009 Road Infrastructure Indicators, Select Countries

Road

Coverage (%)

Roads ('000 km)

Land Area ('000 km)

India 112 3320 2973

Philippines 67 202 300

Thailand 41 212 517

China 40 3860 9570

Malaysia 30 100 329

Indonesia 25 473 1905

Source: Standard Chartered Research 2011



6

Indonesia’s road network also suffers from inadequate maintenance. Only 51% of Indonesia’s roads are

rated medium or good condition (OECD, 2010; Sri Hartati et al., 2012). The quantity and quality of

Indonesia’s road infrastructure causes various bottlenecks. Traffic jams are prevalent in urban areas and

industrial districts which causes delays in commercial activities.

Ground Transport Infrastructure: Railway

Indonesia’s railway system is one of the oldest modes of transportation which dates back to the country’s

colonial history. Indonesia’s railway system has been declining in regards to development and utilization

for the past 10 years. In 2003, there were 5,324 kilometers of railways in Indonesia. But by 2009, there

were only about 4,500 kilometers of active railways. Many railroad networks in the country are no longer

operational (World Bank, 2013; Ministry of Transportation, 2012)

Indonesia’s current railway system mainly serves passenger transportation (Hidayat & Arjadi, 2009). Java

is the only region that has comprehensive railway integration. Most major cities and provincial areas from

West Java to East Java are well connected though an intermodal transportation system. Nonetheless,

railway networks in Sumatra are still partially integrated. In Sumatra, railway systems are only available

in North Sumatra, West Sumatra and South Sumatra. Unfortunately, these networks only connect cities

within each of the province. They do not serve as inter-provincial transport. Meanwhile railroad networks

in Kalimantan, Sulawesi and Papua, are non-existent.

1998-2009 Rail Network, Select Countries

Kilometers/Km

Source: Ministry of Transportation 2012, The World Bank 2012

The Indonesia Infrastructure Initiative (IndII, 2010a & 2010b) considers that the surging economic and

population growth in many areas within Indonesia would require expansions in its railway system.

However, the condition of Indonesia’s railway is insufficient to satisfy current needs of Indonesia’s

growth. When compared to regional peers, Thailand and Korea seem to have been expanding their

railway networks extensively in the past decades. Indonesia, on the other hand, shows a decline.

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Sea Transport Infrastructure: Ports

Being an archipelagic nation, ports play important role in connecting the thousands of islands available in

Indonesia. Currently, there are over 1,700 ports in Indonesia, which are divided by 111 commercial ports,

1000 special purposes ports, and 600 non-commercial ports. However, Indonesia’s port infrastructure in

general still lacks quality and capacity (OECD, 2010). The quality of Indonesia’s port infrastructure is

one of the lowest when compared to similar regional peers.

The WEF’s Quality of Port Infrastructure (QPI) is an assessment of a nation’s port facilities, based on

business executives’ interviews. The QPI is based on scores ranging from 1 (underdeveloped) to 7 (most

efficient by international standards). Indonesia’s QPI stands at 3.6, it is much lower than Thailand and

Malaysia, while is only marginally higher than Vietnam and Philippines. The issue of low port

infrastructure quality is prevalent across the nation. For example, the Jakarta Container Terminal is one of

the best performing terminals in the country, yet it is still ranked as one of the poorest performing ports in

Southeast Asia (Ray, 2008).

Singapore 6.8

Malaysia 5.7

Thailand 4.7

Indonesia 3.6

Vietnam 3.4

Philippines 3

Source: The World Bank 2013

Additionally, the Liner Shipping Connectivity Index (LSCI) measures how connected countries are to the

global shipping network. The measurement is based on five components of the maritime sector: number

of ships, container-carrying capacity, maximum vessel size, number of services, and number of

companies that deploy container ships in a country’s ports. In terms of LSCI, Indonesia is ranked 4th

among the ASEAN 5 members. Malaysia ranks highest, while the Philippine is the lowest. However,

Vietnam seems to offer the most compelling case within the past few years. Vietnam has improved from

12.8 in 2004 (the lowest among ASEAN 5), and is now scored at 49.71 (the 2nd

highest among ASEAN 5

members).

Singapore 105.02

Malaysia 90.96

Vietnam 49.71

Thailand 36.7

Indonesia 25.91

Philippines 18.56

2011 Liner Shipping

Connectivity Index,

ASEAN 5 plus Singapore Maximum Value in 2004 = 100

2011, Quality Port

Infrastructure, ASEAN 5

plus Singapore Scoring Range: 1 (underdeveloped) – 7

(most efficient by international

standards)



8

III. INDONESIA 2050: A VISION

Indonesia is expected to become one of the world’s leading economies in 2050. By 2030, economists

assert that Indonesia will become a top-10 economy in the world, surpassing the GDP of Germany and the

United Kingdom (Oberman et al., 2012; Rastogi et. al. 2013). To ensure Indonesia’s positive development,

it is imperative for Indonesia to envision advanced and improved transport infrastructure by 2050.

Indonesia’s Ground Transport Infrastructure by 2050: Roads

By 2050, Indonesia should have a modern and integrated road network across the nation. The improved

networks should enhance intra and inter-island connections, support commercial activities and passenger

movements. For example, provinces, urban areas, industrial zones and regional hubs should be connected

by high-quality highways and road networks, where bottlenecks are virtually non-existence.

Indonesia‘s road network coverage should increase to at least 65% in 2050. This means that Indonesia’s

total road network length will reach to over 1 million km, about three times longer the current state. The

quality of Indonesia’s infrastructure should be improved as well. By 2050, 90% of Indonesia’s roads

quality should be rated as good.

Expansion of Indonesia’s Total Road Network, 2009-2050

Thousand (000s) Kilometers

Indonesia’s Ground Transport Infrastructure by 2050: Railways

Indonesia’s railroad networks should be integrated broadly among the major Islands. By 2050, we expect

to see developments of trains across the nation. Java currently has the most comprehensive railway

system. Thus, we envision that more trains will run in Sumatra, Borneo, and Sulawesi in future.

It is projected that Indonesia’s population will be highly urbanized in the future as 71% of the population

will be living in urban areas by 2030 (Oberman et al., 2012). A good railway system will serve as a means

for interprovincial transport, as well as passenger service within metropolitan regions. Indonesia should

also have a high speed railway connection for passengers and rapid transit systems for metro access. Most

developed economies such as Japan, France and Germany have extensive high-speed rail systems which

link major cities. For future development, Indonesia should consider building high-speed railways from

Jakarta to Surabaya or from Medan to Palembang.

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In regards to freight trains, Indonesia should have a connected railway system which caters to growing

industrial centers, urban areas and mining sites, connecting shipping hubs between airports, seaports and

other areas in the region. For example, freight train networks should form linkages between MP3EI’s

proposed industrial districts. Specialized commodities train would serve to connect mining areas in with

shipping terminals in Kalimantan and Sumatra. Properly developed freight railways are one of the most

effective means of transporting bulk goods from one place to another due to their economies of scale, low

fuel consumption and speed.

Indonesia’s Sea Transport by 2050: Ports

In future, Indonesia’s port infrastructure should be world class. Each major region should have suitable

ports to service domestic and international needs. We expect Indonesia’s inter-island and international

connection to become highly integrated. Therefore, the country will be better connected into global

commodity chains and production networks

Currently Indonesia’s Quality of Port Infrastructure score is 3.6. We expect major improvements and

upgrades in the next 30 years which should increase our ratings to beyond 5.5. As a maritime nation,

Indonesia’s port infrastructure quality should surpass its regional peers.

Improvement of Indonesia’s Quality Port Infrastructure, 2011-2050

Scoring Range: 1 (underdeveloped) – 7 (most efficient by international standards)

By 2050, Indonesia should have improvements in its port and shipping regulatory framework. Perhaps

one area which can be refined is the cabotage law. Lifting cabotage law means that foreign shippers can

ship goods domestically in Indonesia. Although it may affect the local shipping firms in its initial

induction, in the future, lifting cabotage law should decrease the cost of shipping as competition drives

price down (OECD, 2010). We believe that this method will allow local shippers to become more

competitive.

Funding Options for Transport Infrastructure Improvement Programs

Developing Indonesia’s infrastructure would be difficult as it requires substantial amount of financing.

Budget allocation for infrastructure development is currently less than 15% of the annual government

expenditure. At this particular stage of development, infrastructure budget has to compete with other

crucial expenditures such as education, oil subsidy, and interest payment. However, we cannot ignore the

fact that a rapid transport infrastructure development is integral for Indonesia’s future economic

sustainability.

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In the short term, Public-Private Partnership (PPP) is one viable option, to fund immediate development

projects which have not received proper budget allocations from the government (OECD, 2010).

Indonesia should consider in promoting better PPP initiatives by effectively coordinating investment

programs between government bodies such as BKPM, Ministry of Public Works, Ministry of

Transportation and potential domestic and overseas investors. In the medium term, Indonesia should

slowly increase infrastructure development funds through its national budget (APBN), while maintaining

high levels of PPP across existing infrastructure development programs. Finally, in the long run,

Indonesia should have robust infrastructure budgets allocations, funded by excess government receipts

from the growing economy.

IV. PROPOSED MILESTONES

To achieve sustainable economic growth it is important that Indonesia plans its infrastructure

development properly. This can be achieved by implementing a four-phased approach:

The first phase will start from the present until 2020. This phase will focus upon strategic planning

and the preparation for rapid implementation.

The second phase, which will begin after 2020 until 2030, is the implementation period where

Indonesia will rapidly increase its infrastructure development. During this phase, the majority of the

suggested infrastructure projects will be in the various stages of completion or reaching maturity.

Between 2030 and 2040 will be the third phase, which will consist of a re-evaluation and

readjustment period based on then technological advancement and economic improvements in

Indonesia.

The fourth phase will focus on the completion of Indonesia’s advancement as a developed nation,

along with the completion many flagship transportation projects by 2050.

The following set of tables shall conceptualize our proposed the milestones, which entails key actions and

accomplishments that should be completed within the respective phases.



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Proposed Milestone for Ground Transport Infrastructure: Road

Achieve over 1 million km of total road network which connect majority

of all cities across Indonesia

Completion of an exhaustive highway networks across Indonesia

90% of road network quality should

be rated as good or better

Achieve 800,000 km of total road network and fully integrated road

network in Kalimantan, Sulawesi and

West Papua with more highways Improved road network coverage in

the minor islands with higher priority

Improved road network integration

according to demographic transitions

among major population and

economic centers across Indonesia 80% of road network quality should


Achieve 600,000 km of total road network and fully integrated road

network in Java and Sumatra with

more highways Better road network integrations in

Kalimantan, Sulawesi and West

Papua, accompanied by concrete and

further expansion plan

Realization of road linkages based on

MP3EI Completion of Java-Sumatra Bridge

70% of road network quality should


Establish a robust and tangible plan to improve road network in Indonesia

Improved road network and expanded

the toll road network in Java and Sumatra, thus removing bottlenecks

between major industrial areas

Completion of a sustainable highway

network which ease the congestion

between the major metropolitan areas

Improved regulations to promote better coordination between the

central, regional, and municipal

governments 60% of road network quality should


Accomplishments

Expansion of overall road network,

and construction highway to cover all

areas which cover lacking areas Target completion of exhaustive

highway network which connects all

Indonesia’s major cities and economic corridors

Continuously maintain good road

condition across Indonesia


and construction of extensive

highway network in Kalimantan, Sulawesi and West Papua

Initiate road network improvement

projects in Indonesia’s minor islands Re-evaluate and adjust the road

network expansion projects by

anticipating new major population and economic centers across

Indonesia in order to achieve

competitive advantages against regional peers

Continuously maintain good road condition across Indonesia


and construction of extensive

highway network in Java and Sumatra

Initiate the expansion of road network

in Kalimantan, Sulawesi and West Papua

Link major cities and industrial hubs

(As per MP3EI) Target the completion of Selat Sunda

(Java-Sumatra) bridge

Continuously maintain good road

condition across Indonesia

Develop a general strategic planning

for road network improvements along

with individual plan for each major island all the way to the year 2050

Commence road network

improvement and expansion between critical industrial linkages in Java and

Sumatra

Improve and build new highways to ease congestion between major

metropolitan areas

Generate plan to further improve regulatory framework.

Develop a continuous maintenance and road network improvement

program

Key Actions

2040-2050

Maturity Period

2030-2040

Reevaluation Period

T2020-2013

Current to 2020



12

Proposed Milestone for Ground Transport Infrastructure: Rail

Fully integrated railway system, which links industrial clusters and

major cities.

Development of high-speed railway system in Java-Railway, Light Rapid

Transit - for major cities in Indonesia

to improve competitiveness

Improved overall railway network and achieve competitive advantage

against regional peers,

Specialized railways in Borneo and Sulawesi which specialized on local

industry and commodities

Completion of rapid transportation

system in major population with

higher priorities

Faster and cheaper connectivity between major cities in Java

Major efficiency improvement on

freight transport between Java and Sumatra

Completion of a sustainable rapid

transit system, easing the congestion

between the major metropolitan areas

Creation of new economic corridors

in Sumatra which focus on areas competitive advantage

Develop railway system with air/sea

freight terminal in Java and Sumatra, along with intermodal railway

connections

Enhance connectivity and increased railway passenger in Java and

Sumatra economic corridors

More efficient freights transportation cost due to economic of scale

Establish concrete plan to expand

railway network in Sumatra

Achieve better train operation

efficiency from increased quality and

reliability Achieve better train scheduling and

safety by using modern train control

system

Accomplishments

Expansion of overall railway network

to cover all major cities within major

island across Indonesia Target completion of exhaustive high

capacity railway system connecting

all major cities, productions areas, and economic corridors across

Indonesia.

Re-evaluate railway improvement

program by adjusting to current

population and economic condition to ensure that railway quality is met

while continued expansion is

maintained Plan and initiate project to construct

to railway system based which

specialized upon economic and population needs in Kalimantan and

Sulawesi.

Plan and target completion of rapid transit system to remaining major

cities in Indonesia based on anticipated major population center.

Plan and initiate project to construct

high-speed railway system to connect

major cities in Java Target the completion of Selat Sunda

(Java-Sumatra) bridge

Target completion of rapid transit system within major urban areas in

Java (Jakarta, Bandung, Surabaya)

Initiate expansion of larger capacity railway network in Sumatra with

focus upon commodity freights

production areas and ports Strategically plan specialized

railways system connecting major cities, ports and industry/commodity

specific regions

Strategically plan and initiate railway

improvements in major areas based

on economic and passenger needs in Java and Sumatra

Generate plan to promote railway as

alternative freight transport Identify and plan upon key

population and production areas in

Sumatra to be connected by railway network

Plan and develop program to

continuously improve and maintain the overall railway network quality

Start initiatives to upgrade railway operation using advance train control

system (ATCS)

Key Actions

2040-2050

Maturity Period

2030-2040

Reevaluation Period

T2020-2013

Current to 2020



13

Proposed Milestone for Sea Transport Infrastructure

Achieved comprehensive sea transportation network across

Indonesia.

Improve QPI to at least 5.5, and improve LSCI to at least 80

Either continuation with deregulatory policies or consider new strategies to

further improved shipping efficiency

Further development on port specialization based on the economic

climate.

Improve QPI to at least 4.5, and

improve LSCI to at least 55

Improved sets on new key ports which focus upon international

shipping

Completion of fully functional economic corridors as per MP3EI

Greater domestic competition a

further reduced in domestic shipping

cost

Improve Quality of Port

Infrastructure (QPI) to 3.5 (on par with other SEA countries), and

improve Liner Shipping Connectivity

Index (LSCI) to at least 35

Increased capacity on existing international freight ports (Tj. Priok,

Surabaya, Medan)

Achieve a concrete plan to improve specific ports based on potential for

industrial specialization

More efficient transportation of goods

to and from ports

Improved competitive advantage

bringing down overall shipping cost between domestic ports

Accomplishments

Complete project on improving ports

across Indonesia which are focused

on local industry. Continue to improve overall port

infrastructure metrics

Assess if deregulatory measures have

been successful

Re-evaluate and adjust the sea port improvement initiatives by

anticipating major industrial hubs

across Indonesia to achieve competitive advantages against

regional peers

Continue to improve overall port infrastructure metrics

Identify sets of key ports across

Indonesia which will focus upon

serving international markets (hub and spoke models) and start

improvement projects.

Link major cities and industrial hubs (As per MP3EI) thus establishing

economic corridors across Indonesia

Consider deregulatory measures to lift cabotage law

Continue to improve overall port

infrastructure metrics and continue initiatives to improve upon ports

specialization.

Commence project on already

identified major ports to improve

capacity, container ship size, and decreased turnover time

Strategically plan and identify ports

specific potential for industrial specialization

Generate strategy and initiate projects

to improve the connectivity between major ports and inland transportation

services

Consider deregulatory measures to increase competition of domestic

shipping.

Key Actions

2040-2050

Maturity Period

2030-2040

Reevaluation Period

T2020-2013

Current to 2020



14

V. CONCLUSION

In order for Indonesia to become one of the world’s economic powerhouses by 2050, comprehensive

infrastructure improvements will be necessary. Currently, Indonesia under invests in its road, railways

and ports; all of which are critical to robust economic growth. Our findings conclude that numerous

flaws exist in Indonesia’s current infrastructure plans. Indonesia usually ranks among the lowest for

most categories compared to Southeast Asian peers. Economic stagnation will occur in future given

Indonesia continues to ignore the necessity to improve its infrastructure,

Indonesia’s road network lacks comprehensive connectivity between major metropolitan areas, while

cities suffer from severe bottlenecks and congestion. In addition, the overall road quality is rather poor,

due to a lack of maintenance. Expanding the current road network in terms of capacity and total

overall length is imperative. Similar to roads, the railway network also lacks connectivity between

nodes of production and consumption. Railways are also important for the transportation of freight as

they are highly efficient due to economies of scale. Furthermore, being primarily an island nation,

maritime transport is the key to the economy success. However chronic underinvestment in ports has

led to inefficiencies such as high shipping costs and increased delays for loading and unloading.

In this project we have proposed numerous challenges which Indonesia will have to overcome.

However we assert that it is possible for Indonesia as a country to achieve the goals outlined if it

recognizes the urgent need for infrastructure reform. Although the proposals may seem demanding,

other nations have already accomplished and exceeded similar milestones. To achieve these goals,

Indonesia has more than thirty years, which is more than an ample amount of time to reform its

current infrastructure through strategic planning and dedication. The result of enhancing infrastructure

will provide Indonesia with a robust economic growth, while also providing a foundation for

increased market dominance in Southeast Asia by 2050.

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