2013-02-01 01:47:38 - Recently published research from Business Monitor International, "Indonesia Freight Transport Report Q1 2013", is now available at Fast Market Research
BMI View: Indonesia Remains An Outperformer
We have modified our outlook for the Indonesian economy in 2012 and 2013. We have raised our growth estimate for 2012 on the strength of better-than-expected data, but reduced the forecast for 2013 because we see hints of overheating, so expect a more restrictive monetary policy. We now see growth of 6.0% in 2012, easing back to 5.6% in 2013. It has to be noted however that in relative terms Indonesia remains a regional outperformer, so even taking into account these adjustments, the macroeconomy is supportive of the ports and shipping industry.
The growth outlook for Indonesia's freight sector is encouraging, particularly because there are signs that one of its key problems, an infrastructure investment deficit,
is beginning to be tackled. Capacity problems remain an issue, but new investment projects in ports, airports, road, and rail are being launched. The last quarter has seen a cluster of announcements on this front, including inward investment from Japan and Russian interest in railway development.
Full Report Details at
- www.fastmr.com/prod/529362_indonesia_freight_transport_report_q1 ..
Headline Industry Data
* Air freight volumes are forecast to grow by 6.7% in 2013, with average annual growth of 6.8% during our forecast period to 2017.
* Rail freight volumes are estimated to rise by 6.2% in 2013, with average growth of 7.1% during our forecast period.
* Tanjung Priok total tonnage growth forecast for 2013 is 5.2% to 51.660mn tonnes, with average growth of 5.5% expected over our forecast period to 2017.
* Tonnage at the Port of Palembang is set to grow by 3.3% in 2013 to reach 11.445mn tonnes; average growth to 2017 will come in at 4.0% per annum.
* We expect the total value of Indonesian trade to grow by 7.0% in real terms in 2013, compared to an estimated 6.4% in 2012.
Key Industry Trends
Japanese Help For Transport Infrastructure Plan
Indonesia and Japan have agreed the outlines of a master transport plan for the Indonesian capital and hinterland - involving upto 45 road, railway, airport and other strategic projects and IDR410trn (US$43bn) worth of investment. The projects are to be completed by 2020, with work on the top 18 priority projects due to start in 2013. The priority projects will include the construction of Jakarta's Mass Rapid Transit system and Cilamaya International Airport, the expansion of Soekarno-Hatta International Airport, the creation of a new academic research cluster and the development of the city's sewage system. Approximately 55% of the total investment needed to make the masterplan materialise would come from private investors, said Coordinating Economic Minister Hatta Rajasa, who represented Indonesia at a planning meeting in Tokyo.
Russians Plan Railway And Mining Investment
The Russian ambassador to Indonesia has said his country continues to plan to invest billions of US dollars in Indonesian refineries, smelters, and infrastructure, including railways and powerplants. The investments would be made mainly by three Russian companies: the state-owned Russian Railways, Norilsk Nickel (one of the world's largest nickel, platinum, and copper producers) and Russky Aluminiy, the country's leading aluminium producer. Russian Railways plans to build a railway line in East Kalimantan to support coal delivery, with an anticipated investment of US$2.4bn in 2013, and operations set to begin in 2017. The firm already signed a memorandum of understanding with the local administration in February 2012, and is still conducting its feasibility study on the railway project.
Indonesia Could Become 'Automobile Hub' But Needs Port Investment
The country could become a key South Asian automobile production and trade hub, but requires investment in port infrastructure if it is to seize this opportunity. That was the implication of new BMI analysis. We believe the rapid and timely expansion of the Tanjung Priok car terminal will be critical. The port is a key route for Japanese car exports to other emerging markets in Asia, Africa and the Middle East. It is projected to handle 320,000 units in 2012 and 535,000 units in 2013, more than its current intended capacity of 265,000 units. The current delays in export shipments (due to the stretched capacity) might turn off other automakers from setting up production facilities in the country as they do not want to be sitting on unshipped inventory, which is falling in value.
Key Risks To Outlook
We still warn that there are downside risks to our freight outlook. Despite a degree of insulation, Indonesia remains exposed to any faster-than-expected slowing of China's growth boom. Should such a scenario play out, we believe that Indonesia would suffer, as was the case in late 2008. However, we do not believe the negative impact on growth would be as harsh as was seen during the global financial crisis of 2009.
A second downside risk to our outlook is the possibility that some of the current projects to expand port and general freight transport capacity might suffer a high-profile setback, such as a legal dispute or allegations of corruption. Any such development might damage the gradual improvement in investor perceptions of Indonesia that has taken place over the last few years. More specifically, it would lead to delays in the much-needed drive for modernisation.
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