Indonesia Logistics Industry

The Way Forward

Presented by:

Gopal RGlobal Vice PresidentTransportation & Logistics PracticeJune 11, 2014

Growth of GDP and Service Segment, 2009 - 2014

Growth of Service Segment, 2009- 2014

Years

Gro

wth

(%)

Gro

wth

(%)

YearsSource: Indonesian Statistical Agency, Analysis by Frost & Sullivan

• GDP Growth between 5.7 to 6%

in 2014

• Services sector has been

growing at 10 percent during the

past years

• Service sector is estimated to

contribute 36.9 percent of GDP

• The trade sectors remains the

driver for the growth in service

sector

Economic Growth and Logistics Market

0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%16.0%18.0%

2009 2010 2011 2012 2013(e) 2014(f)

Nominal GDP Services Real GDP

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2009 2010 2011 2012 2013(e) 2014(f)Services Transportation, storage and courier

Source: Indonesian Statistical Agency, Analysis by Frost & Sullivan

Agriculture. forestry &

fishing15.0%

Mining & quarrying

10.4% Manufacturing23.8%

Construction10.3%

Transportation & storage

3.6%

Communication3.3%

Other Services 33.6%

Indonesia GDP by Key Sectorsin 2013

Railways Transport

0.86%

Road Transport53.09%

Sea Transport

6.84%

River, Lake and

Ferry Transport

3.05%

Air Transport21.65%

Services Allied to

Transport14.51%

Contribution to GDP

Transportation makes up 85.6 percent of the total transportation, storage and courier market

Indonesian Transportation and Storage Segment Distribution in 2013

(IDR 328.8 trillion)

Potential market for LSPsin Indonesia

Transportation, storage and

courier(IDR 328.8

trillion)

Logistics Expenditurr is hidden in:

Tran

spor

tatio

n &

Log

istic

s M

arke

t20

13M

arke

t Va

lue

2013

IDR 328.8 trillion IDR 1,254.5trillion

Source: Indonesian Statistical Agency, analysis by Frost & Sullivan

Other services(IDR 290.5

trillion)

Mining & quarrying(IDR 134.6 trillion)

Manufacturing(IDR 306.6

trillion)

Agriculture, forestry and fishing(IDR 193.2

trillion)

Construction(IDR 133.2 trillion)

Trade(IDR 154.2

trillion)

Communication(IDR 42.2

trillion)

IDR 1,583.3 trillion

Logistics Market Potential

Source: Indonesian Statistical Agency, Analysis by Frost & Sullivan

Transportation and Logistics Market Size

839 770876

1,0141,140

1,255

171 182 212 236 287 329

1,010 9511,087

1,2491,427

1,583

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2008 2009 2010 2011 2012 2013(e)

Hidden Logistics Cost Transport, storage and courier T&L Market Size

Growth (%)(5.8) 14.3 13.4 14.2 14.5IDR Trillion

Transportation & Logistics market in Indonesia has grown by 14.9 percent Compound Annual Growth Rate (CAGR) between 2008 to 2013

Transportion & Logistics Market Projection ( 2013-2018)

Growth in private consumption that increase trade volume and value , thus favoring freightdistribution

Growth in International trade stimulate regional integration, removal of trade barriers, coupled withthe rise in containerization levels

A rise in the middle class and disposable income drive up the demand for goods

Interconnectedness of economic development and good infrastructure development drivedemand for goods to be transported in connected region or province

Key Market Drivers and Restraints

Drivers

Restraints

Higher fuel cost and increasing labor wages impact service providers through higher transportationcost and wages

Logistics infrastructure hamper the distribution time for cargo distribution

Source: Analysis by Frost & Sullivan

Source: Consolidated, Analysis by Frost & Sullivan

776.0845.3 891.5

943.11,000.6 1,043.7

18.9 19.1 20.4 23.6 26.8 29.00.89 0.83 0.87 0.97 1.16 1.340

200

400

600

800

1000

1200

2009 2010 2011 2012 2013(e) 2014(f)

Sea freight Rail freight Air freight

Freight Movement in Indonesia (2009 – 2014)

Note:e : estimatedf : forecasted

• Growth in cargo volumes• Trade and domestic consumption to drive future volumes

Volume(m ton)

Freight Development in Indonesia

11.00

16.21

24.1021.50 22.50

25.88

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2009 2010 2011 2012 2013 2014 (f)

Total Indonesia Foreign Direct Investment (FDI) Realization, 2009 - 2014

Bn USD

• FDI is set to grow around 15%

• Inflows focussed on automotive,

pharmaceutical and mining industry

• FDI in transportation, warehouse and

storage sectors is around 1.1 % of

FDI in 2013

• 20.7 % is into mining sector.

• Sustainable trade growth over years

• Potential for positive trade balance with exports likely to gain

Economic TrendPositive outlook on capital inflows and trade

Source: Central Statistics Beuarau, Analysis by Frost & Sullivan

213.3293.4

380.9 382.1 369.2 387.66

050

100150200250300350400450

2009 2010 2011 2012 2013 2014(f)

Total Indonesia External Trade Value, 2009 - 2014Bn USD

Source: ASEAN Secretariat, Analysis by Frost & Sullivan

Countries/Year 2010 2011 2016 Average 2003-2007

Average 2012- 2016

Indonesia 6.10 6.30 6.90 5.50 6.60

Malaysia 7.20 4.60 5.60 6.00 5.30

Philipines 7.30 4.50 5.10 5.70 4.90

Singapore 14.50 5.60 4.80 7.50 4.60

Thailand 7.80 2.50 4.90 5.60 4.50

Vietnam 6.80 5.90 6.70 8.10 6.30

Average of 6 Countries 7.60 5.00 5.90 6.10 5.60

Indonesia

Singapore

Malaysia

Thailand

Cambodia

Vietnam

Brunei

Philippines

Laos

Myanmar

Real GDP Growth ( %)

Growing Economies…

ASEAN offers a big opportunity - Region’s significance on efficient logistics

Road map of Indonesian Logistics Industry Blue Print

2014 2015 2020 2025

Synchronization, coordination and interconnection with the ASEAN

logistics networks

Creation of ASEAN Economic

Community

Strengthening capacity of LSPs, Integrate National Logistics & Supply

Chain

Indonesian Logistics will be connected to the global logistics

network.

Source: Frost & Sullivan Analysis

• 2014-2015 Infrastructure development among ASEAN countries are expanded to support the transportation & logistics service in the region

• 2015-2020ASEAN Logistics Network Integration

• 2020-2025Integrated Global Logistics Network. Indonesia will be connected to the regional (ASEAN) and global logistics systems via InternationalHub Ports

Location Advantage…

Indonesia

Strategically located along key shipping routes

Source: Frost & Sullivan Anlaysis

Major Shipping Lane

1. Coordination and cooperation among all relevant institutional agencies to facilitate transportation between neighboring countries in ASEAN

2. Enhance transport security and safety in the regional Transportation and Logistics networks

3. Development of approaches and mechanisms to strengthen ASEAN’s role as “hub” in the East Asia integration

Well-connected with ASEAN

logistics Network

Domestic Logistics Network

1. Satisfactory logistics service offerings2. Growing technology implementation in

logistics operations3. Infrastructure and connectivity issues4. Distribution point to South East Asia from

shipping stand point

Moving Forward…

Source: Frost & Sullivan Analysis

Thank You

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