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Indonesia Logistics Industry Outlook
2013: An Executive Insight
Presented by:
Gopal R
Global Vice President
Transportation & Logistics Practice
March 6, 2013
1 Indonesian Logistics Market
2 Market Projection, Drivers and Restraints
4 Key Industry Trends
5 Strategic Roadmap
3 Freight Movement in Indonesia
Agenda
2
Indonesia's Logistics Sector Offers Growth Opportunity
Growth of GDP and Service Segment, 2008 - 2013
Growth of Service Segment, 2008- 2013
Years
Gro
wth
(%
) G
row
th (
%)
Years
Source: Indonesian Statistical Agency, World Bank, analysis by Frost & Sullivan
• With dynamic industrial activities, Indonesia’s
real GDP in 2013 is estimated to witness an
increase above 6.5 percent, slight increase
from last year’s 6.3 percent.
• Services segment will follow the pace of the
economy, as sectors such as financial
services, hotels, hospitals, retail,
telecommunications and airline are
experiencing continuous expansion
• The rise in Indonesia’s middle class will result
in profound changes, including growth
opportunity for transportation & logistics
industry
• Transportation, storage and courier segment is
expected to expand 13.1 percent next year,
aided by the growth in exports and
manufacturing sector as well
3
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
2008 2009 2010 2011 2012(e) 2013(f)
Services Transportation, storage and courier
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
2008 2009 2010 2011 2012(e) 2013(f)
Nominal GDP Services Real GDP
Transport and Storage segment contributes 3.5 percent
to the economy
Source: Indonesian Statistical Agency, analysis by Frost & Sullivan
Indonesia Economy, 2012 Indonesian Transportation and Storage Segment
Distribution, 2012(e) (IDR 287.36 trillion)
4
Transportation makes up 85.5 percent of the total
transportation, storage and courier market
Total transportation & logistics market in Indonesia
estimated at IDR 1426.9 trillion in 2012
Potential market for the outsourced / contract
logistics service providers in Indonesia
Transportation,
storage and
courier
(IDR 287.4
trillion)
Logistics Expenditure is hidden in:
Tra
ns
po
rta
tio
n &
Lo
gis
tic
s
Ma
rket
Ma
rket
Va
lue
IDR 287.4 trillion IDR 1139.5 trillion
Source: Indonesian Statistical Agency, analysis by Frost & Sullivan
Other services
(IDR 258.27trillion)
Mining & quarrying
(IDR 137.83 trillion)
Manufacturing
(IDR 280.14 trillion)
Agriculture, forestry
and fishing
(IDR 169.04trillion)
Construction
(IDR 122.26trillion)
Trade
(IDR 134.82trillion)
Communication
(IDR 37.17trillion)
5
Transportation & Logistics market in Indonesia: The
Evolution
Transportation & Logistics Market Size, 2007 - 2012
Growth (%)
IDR
, T
rill
ion
s
Years
Source: Indonesian Statistical Agency and other sources, analysis by Frost & Sullivan
Transportation & Logistics market in Indonesia has grown by a Compound Annual Growth Rate (CAGR) of
12.7 percent between 2007 to 2012
27.8 (5.8) 14.3 13.4 14.2
6
1 Indonesian Logistics Market
2 Market Projection, Drivers and Restraints
4 Key Industry Trends
5 Strategic Roadmap
3 Freight Movement in Indonesia
Agenda
7
Key drivers and restraints for Indonesia transportation
& logistics market
8
Strong economic growth fuelled by high domestic consumption
Relocation and strong flows of capital drive manufacturing
activities and boost logistics demand DR
IV
ER
S
RE
ST
RA
IN
TS
Underdeveloped logistics infrastructure and slow pace in addressing infrastructure
bottlenecks
Geographically dispersed market increases logistics cost
Availability of qualified logistics industry professionals
Source: Frost & Sullivan
Government’s initiatives in economic transformation and development
of logistics industry
1 Indonesian Logistics Market
2 Market Projection, Drivers and Restraints
4 Key Industry Trends
5 Strategic Roadmap
3 Freight Movement in Indonesia
Agenda
9
Freight movement in Indonesia
• Seaports handle more than 90 percent of total non-road freight traffic in Indonesia
• Cargo transportation in Java-Sumatra region is still dominated by the freight trucks accounting more
than 80 percent for the movement of mining, industrial, plantation and agricultural products
Freight Traffic, 2008 - 2013
Years
Source: Indonesian Statistical Agency, analysis by Frost & Sullivan
To
ns
, M
illi
on
s
10
1 Indonesian Logistics Market
2 Market Projection, Drivers and Restraints
Key Industry Trends
5 Strategic Roadmap
3 Freight Movement in Indonesia
Agenda
4
11
Transportation & Logistics Market: Key Trends
12
Service Trend
• Higher inclination toward outsourcing variety of value added services
• Logistics service providers need to work toward more value-added services
while strengthening the intermediate services
Customer Trend
• Service quality and reliability are top priorities when selecting logistics service
providers
• End users are moving toward integrated supply chains with professional service
providers
Economic Trend
• Growth of Indonesian logistics market fuelled by growth of external trade and sustained inflow of FDI
• Rising intra-Asia trade favors the transportation & logistics industry
Business Trend
• Oil & Gas Logistics
• Infrastructure Project Logistics
• Food & Fresh Produce Logistics
1 Indonesian Logistics Market
2 Market Projection, Drivers and Restraints
4 Key Industry Trends
5 Strategic Roadmap
3 Freight Movement in Indonesia
Agenda
13
National Logistics Blueprint, 2010 - 2025
14
Source: National Logistics Blueprint, Asia-Pacific Economic Cooperation
6 key drivers to promote the success of the logistics revitalization programs
Indonesia’s logistics to
be Locally
Integrated &
Globally
Connected effectively & efficiently,
for national
competitiveness by
2025
Laws & Regulations
Key
Commodity
Focus
Logistics Infrastructure
Human
Resources &
Management
Information,
Communication
& Technology
Logistics
Service
Providers
Indonesia is determined to become an important player in
international trade & markets. The government focuses
particularly on 6 key areas with the objectives of:
• ensuring the availability of strategic commodities
• promoting low cost economic activities
• strengthening national competitiveness
The implementation strategy of MP3EI will integrate 3
main elements:
1. Developing the regional economic potential in 6
Indonesia Economic Corridors;
(Sumatra Economic Corridor, Java Economic Corridor,
Kalimantan Economic Corridor, Sulawesi Economic Corridor,
Bali – Nusa Tenggara Economic Corridor, and Papua –
Kepulauan Maluku Economic Corridor)
2. Strengthening national connectivity locally and
internationally
3. Strengthening human resource capacity and
national science & technology to support the
development of main programs in every
economic corridor
Master Plan for the Acceleration and Expansion of Indonesian
Economic Growth (MP3EI), 2011 - 2025
15
Source: Master Plan for the Acceleration and Expansion of Indonesian
Economic Growth (MP3EI) 2011 – 2025
TARGET: Transforming Indonesia into one of the 10 major
economies in the world by 2025
1. Connecting the centers of major economic growth
based on the principles of integration and not
similarity, through “inter-modal supply chain systems”
2. Expanding economic growth through accessibility
improvement from the centers of growth to the
hinterland
3. Distribute the benefits of economic development by
improving the quality of connectivity to the less
developed areas, isolated areas, and border areas in
order to achieve equitable economic development
Aims and objectives of the National Connectivity
Strengthening
ASEAN Economic Community(AEC) in 2015 will amplify
the export value to ASEAN countries
16
Low export value in several ASEAN countries. Eg:Myanmar, Laos, Brunei and Cambodia
Indonesia has not fully capitalized ASEAN market opportunities
Indonesia coordinates 5 potential products out of 12 priority products in AEC regulation scheme, namely Agricultural,Electronics, Fishery,Woods and textile products
AEC free flow of goods and service regulation will enable Indonesia leverage
low export trade countries in ASEAN bounderies
Accelerating the Development of Transportation & Logistics Industry in the region
Gateway Opportunity:
“ASEAN Economic
Community
(AEC) in 2015”
Moving forward…
17
Next Step
• Specialized logistics solutions for specific industries (e.g
FMCG, construction, mining)
• Develop a logistics network of industrial centers on the
outskirts of Jakarta for improved access to the Port of
Tanjung Priok
• Integrate transportation hubs (seaports, airports, terminals,
distribution centers) with the transport network and develop
state-of-the-art logistics infrastructure for efficient distribution
• Strengthen human resource capability with professional and
experienced logistics personnel along with the market
expansion
• Improve cross sector regulations and streamlining permit
applications
• Focus on basic logistics services with common value-
added services
• High traffic congestion in Jakarta results in longer lead
time, shipment delay and inefficient supply chain
• Underdeveloped infrastructure and poor connectivity lead
to increased logistics costs
• Growth of logistics market is not supported by the growth of
professional human resources
• Overlapping regulations at the central and local
government levels as well as among sectors and
institutions cause hassle and inefficiency
INDONESIA
M o v i n g t o w a r d
Current
Domestic Logistics
Focus
Locally Integrated,
Globally Connected