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Linking the archipelago nation by land and by sea

Article - November 12, 2014

From Sabang in the northwest to Jayapura on the island of Papua, Indonesia aims to boost connectivity across its expansive territory of over 17,000 islands

MORE THAN $3 BILLION HAS BEEN ALLOCATED IN 2014 TO IMPROVING THE NATION’S ROAD CAPACITY

Connecting Indonesia’s 17,000 islands poses a unique challenge but one that the government of the archipelago nation is taking seriously to help continue its economic growth.

Well-developed transport infrastructure plays a key role in growth and Indonesia’s geographic location means an intermodal transport infrastructure is essential, especially through land and sea. The government’s National Connectivity Framework aims to improve intra-island and inter-island transport links and turn the nation into a gateway to South East Asia and the Pacific.

The government has acted to accelerate the island nation’s transport system by bringing in new laws to facilitate investment while also investing over $35 billion in projects over the next three years.

“Transport plays an essential role in supporting economic growth,” says Evert Ernest Mangindaan, Minister of Transportation. “The availability and efficiency of transportation services are vital in supporting the production and distribution imperative for economic growth.”

One of the steps taken to strengthen economic growth is the creation, through the state’s Master Plan for Acceleration and Expansion of Indonesia’s Economic Development (MP3EI), of six ‘economic corridors’ – in Sumatera, Java, Kalimantan, Sulawesi, Bali-Nusa Tenggara, and Papua-Maluku – that Mr. Mangindaan says will “alleviate various issues with territorial expansion”.

According to Luky Eko Wuryanto, Deputy Minister for Infrastructure and Regional Development Coordination, the MP3EI is “designed to shift the focus towards the regional areas and create new economic centers based on their potential and unique competitive advantages.”

“This is how we identified the six economic corridors to expand and modernize economic centers outside of Java,” he comments.

“This intra- and inter-island connectivity is intended to improve regional and global connectivity. Additionally, these economic corridors are expected to connect Indonesia with regional economic centers within the Asean region and the world, in an effort to improve national competitiveness,” adds Transportation Minister Mr. Mangindaan, with Mr. Wuryanto pointing out: “We must be mindful of our archipelago-wide perspective.”

Given Indonesia’s island nature, sea transport and improvement of the country’s ports are key to driving the economy through imports and exports. A National Ports Master Plan, outlining the planned development of ports by 2030, includes focus on attracting investment, improving competition and developing human resources. The new port at Tanjung Priok, improvements at the

Port of Belawan, and the construction of Makassar New Port, are signs of early success but fresh investment is being sought to continue strides forward.

This year, the Ministry of Public Works has allocated more than $3 billion to improve Indonesia’s road capacity. Projects such as the Jakarta MRT, Monorail and the Transjakarta Busway have also been implemented to improve transport infrastructure and alleviate congestion in key areas.

The ambitious volume of both land and sea transport and infrastructure projects means there are a number of opportunities for foreign investors to become involved.

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