Government Initiatives and Expanding Infrastructure Drive Market Expansion and Efficiency
The Indonesian freight and logistics market is set to experience substantial growth in the coming years. With a market size estimated at $122.2 billion in 2024, it is projected to reach $178.1 billion by 2030, reflecting a compound annual growth rate (CAGR) of 6.48% during the forecast period from 2024 to 2030. This growth trajectory is driven by significant government investments in infrastructure, strategic enhancements to logistics operations, and increasing demand from various sectors.
The Indonesian government has embarked on an ambitious plan to transform the nation's logistics sector. Under Presidential Instruction No. 5/2020, the government aims to significantly reduce logistics costs from 24% to 17% of GDP by 2024. This goal is central to enhancing Indonesia's logistics ecosystem and improving its global competitiveness. A critical aspect of this reform is increasing port efficiency, which is expected to streamline operations and reduce costs.
Infrastructure development has garnered global attention in recent years, and Indonesia is no exception. Despite the pandemic's adverse effects on the motor vehicle industry, foreign direct investment (FDI) in Indonesia’s vehicle and transportation sectors remained strong, amounting to $1,502 million in 2021 and rising to $1,522 million in 2022. This continued investment highlights Indonesia's resilience and commitment to economic growth even during challenging times.
In addition to FDI, Indonesia has actively pursued several trade agreements to bolster its economic position. In 2021 alone, the country signed eight trade agreements. Ongoing negotiations include high-profile agreements such as the Indonesia-Chile Free Trade Agreement (FTA), Indonesia-EFTA FTA, Indonesia-South Korea FTA, Indonesia-US FTA, and Indonesia-EU FTA. These agreements are poised to enhance Indonesia's trade relations and support its logistics industry by opening new markets and improving trade flows.
By the first quarter of 2023, Indonesia had made notable progress in its infrastructure projects. The government set a target to develop 36 ferry ports by 2024 and had already completed 11 of these projects. The maritime highway program, a key component of this effort, has been optimized, with 32 ships operating on 32 routes, serving 114 ports, including those in Papua and West Papua.
In parallel, the government is focusing on enhancing air transportation infrastructure. As of 2023, Indonesia boasts 251 operational airports. The completion of four new airports between 2020 and 2024 has been instrumental in supporting the growth of the air freight transport market. By the end of 2024, Indonesia aims to construct 10 additional airports and develop 43 new air routes. This expansion is expected to facilitate better connectivity and efficiency in air freight, further bolstering the logistics sector.
These statistics underscore the vital role and crucial position of Indonesia's logistics sectors in the national economy. They serve as pillars for Indonesia's economic growth, providing robust support and impetus for stable economic development. Within indonesia's evolving Import and Export growth and the growing need for regional trade alliances, Mail Boxes Etc.’s service plays a pivotal role in catering to the escalating demands for efficient freight services such as meticulous cargo tracking, robust supply chain management, and adaptable logistics solutions tailored to diverse product categories and specific target markets.
(Photo: Unsplash)
Start your entrepreneurial success with MBE
MBE is expanding around the globe. Click below to get more information about our opportunities.
