Indonesia to Overhaul its Transport Infrastructure

May 24 – The Indonesian government has announced plans to overhaul their unreliable transport system. The ambitious plans will cost more than US$110 billion to upgrade Indonesia’s railways, roads, airports and seaports. The current state of the transport infrastructure threatens to choke growth, with prices rising and waiting times extending.

“The [Indonesian] government recognizes that lagging infrastructure, underdeveloped inter-island connectivity, and an inefficient logistics system are among key constraints on achieving its target of higher growth, faster poverty reduction, and lower inflation,” according to a recent report by the Asian Development Bank.

With an expected growth rate of well over 6 percent in the coming years, and a middle class that is expected to triple to 150 million by 2014, it is crucial that Indonesia revamps it transportation infrastructure.

It can take up to three hours to travel the 30 kilometers distance from the airport to the port of Tanjung Priok due to the poor state of the roadways. Similarly, it costs more than US$600 to ship a container from Jakarta to Padang, double the price of what it would cost to send it from Singapore to Jakarta.

Railway conditions are also increasingly debilitating, with a single delay often leading to a long series of hold-ups.

“We have had road-biased development, and 90 percent of goods and people are carried by road. We’ve neglected the development of railways,” commented Vice-Minister Bambang Susantono in an interview with the Straits Times.

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