WATER WORLD

Indonesia 2018 | TRANSPORT & INFRASTRUCTURE | REVIEW

Indonesia's geography presents significant opportunities and key challenges in the transport sector, as public and private companies seek to improve infrastructure across the archipelago.

New road infrastructure and runway expansions to Jakarta's Soekarno–Hatta International Airport (SHIA) will drive transportation sector activity in 2018. Looking further ahead, the government has pressed for a decision on how to tackle the widespread sinking of the nation's capital. On average, Jakarta is dropping by 10cm-15cm every year, but some areas of the city have seen as much as a 25cm drop, often far below sea level.

RIGHT FLIGHT

Advancements in the air transportation segment have made Indonesia attractive for investment and increased passenger numbers. Air transportation continues to be the primary choice for domestic travel between districts, cities, and islands. As well, a new visa-on-arrival policy has boosted the number of travelers arriving by air, and accordingly has spurred airport expansions at a faster pace.
PT Angkasa Pura II (Persero) is at the forefront of a third runway initiative at SHIA, and is currently in the land acquisition stage of the project. In order to build the landing strip, which will boast dimensions of 3,000x60sqm, Persero is looking to secure 216ha of land. As of end 2017, the company had acquired approximately 20% of the required land. The project is targeted to be completed by the middle of 2018, enabling the country's largest airport to serve 114 flights per hour. However, the new runway is not the only addition to the airport's capacity. “We are currently preparing supporting infrastructure to improve the capacity of runways 1 and 2 so that we are able to serve more flights—from 72 flights per hour to 86 flights per hour. This development includes 12 projects on our side with an investment worth IDR625 billion,” Muhammad Awaluddin, President Director of Persero, told TBY.

Airports in Indonesia are benefitting from the new Limited Concession Scheme (LCS), whereby the private sector is offered concessions to further develop and operate existing airports for 15-20 years. In an interview, Raj Kannan, Founder & CEO of Tusk Advisory, explained to TBY, “For this privilege, the private sector will pay the government upfront concession fees that can be used to build other infrastructure and also compensate the existing state-owned enterprise that is managing the current airport.” Kannan believes that the government could receive over USD3 billion for SHIA, which would be managed through a special infrastructure fund.

ROAD WORKS

The Ministry of National Development Planning (BAPPENAS) and the Indonesia Toll Road Authority (BPJT) are acting as key motivators for private-sector involvement. While in 2014 Indonesia boasted approximately 1,500km of toll roads, BPJT has collaborated with private companies such as Kopel Infrastructure to develop nearly 2,500km of toll roads through 2019, a figure that nearly doubles the total amount of toll road construction and implementation in the 30 years prior.

SINK STOPPER

To enhance flood prevention and urban development, Jakarta is developing the National Capital Integrated Coastal Development (NCICD), or Giant Sea Wall. The proposed wall would provide relief for the next 10-15 years. Criticism for the short-term nature of the project has led to alternative proposals and fostered discussion among government and private entities.
Victor Coenen, Director of PT Witteveen+Bos Indonesia, told TBY, “There are now two more options on the table: a medium-sized sea wall that will protect the city for 30-40 years if the sinking is not stopped, or a large sea wall that can protect it for 100 years with or without stopping the sinking.” The medium-sized wall would cost an estimated USD6 billion, while the large one would need an investment of USD10 billion. However, the densely built capital city lacks space for drainage canals and storage basins.