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Today's Headlines Transportation
Biodiesel, which is a form of diesel fuel that is derived from plants or animals (in the case of Indonesia it mainly uses fatty acid methyl ether, FAME, which is derived from palm oil), has been on the political agenda of Indonesia since the 1990s when the first (in-depth) research was conducted by a number of state agencies.
Although Indonesia’s May consumer prices rose at their quickest pace in more than a year (which exceeded our expectations), Indonesian inflation remains at a comfortable level (for Indonesian standards).
Indonesian ride-hailing company Go-Jek, one of the nation's unicorns, confirmed its plans to expand into other countries in the Southeast Asian region. Over the next couple of months the company will invest USD $500 million to start delivering its ride-hailing services in Vietnam, Thailand, Singapore and the Philippines. Earlier, Go-Jek had already expressed its intention to expand beyond the borders of Indonesia. This time, however, it has given more details about its plans.
The local and thriving ride-hailing market in Southeast Asia is dominated by local startups. Foreign counterparts fail to gain significant market share. The latest proof is Uber Technologies Inc.'s decision to sell its operations and assets in the Southeast Asian region to Singapore-based technology company (but originally founded in Malaysia) Grab. Through this consolidation-move, Uber will obtain a 27.5 percent stake in the combined entity, while Uber's chief executive officer will join the board of Grab.
Pelita Samudera Shipping, a leading company in Indonesia's offshore transshipment market, will list on the Indonesia Stock Exchange in November 2017. The company, which uses its June 2017 corporate earnings report for this corporate move, will offer a 20 percent stake to the public through this initial public offering (IPO).
Indonesia's private shipping companies have raised tariffs for container freight to the eastern region of Indonesia by 25 percent. Carmelita Hartoto, General Chairwoman of the Indonesian National Shipowner's Association (INSA), said shipping companies hiked these tariffs as the previous tariffs were set too low.
The skytrain, an automated people-mover system (APMS) that serves to transport airline passengers and visitors between the three terminals on Soekarno-Hatta International Airport (located just outside Indonesia's capital city of Jakarta), commenced limited operations on Sunday (17/09). This skytrain will enhance the connectivity between the three terminals at Indonesia's busiest airport.
Use of digital cash in transactions of ride-hailing and logistics services providers Grab and Go-Jek is becoming increasingly important. The management of Grab stated that cashless transactions (using smartphones tied to mobile payment systems) are now contributing more than half of the total value of transactions of Grab. Since the introduction of GrabPay, the value of cashless transactions recorded double-digit growth every month.
Express Transindo Utama, Indonesia's second-largest taxi operator, saw its shares surge on Monday morning (19/12) after the company announced a pilot program for ride-sharing and vehicle financing in Jakarta in cooperation with ride-hailing company Uber. The partnership involves the integration of Uber technology with the operations of the Indonesian listed taxi operator. Hence, Express drivers can take orders from the Uber app, in addition to their normal taxi services.
Budi Karya Sumadi, Indonesian Minister of Transportation, said the preliminary study into the medium-speed Jakarta-Surabaya railway could be completed before the end of 2016. In a bid to enhance connectivity and curtail logistics costs the government of Indonesia encourages the construction of a medium-speed railway linking Indonesia's capital city of Jakarta (on the western part of Java) to the nation's second-largest city of Surabaya in East Java. The preliminary study was started three weeks ago.
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After experiencing a two-month delay due to permitting and concession trouble, the construction of the Jakarta-Bandung fast train should be able to commence soon. Indonesian Transportation Minister Ignasius Jonan confirmed on Wednesday (16/03) that his ministry agreed to grant a 50-year concession period to the Chinese-Indonesian consortium named Kereta Cepat Indonesia Cina (KCIC). The granting of this concession means that KCIC should be able to secure the necessary construction and business permits soon. The USD $5.1 billion Jakarta-Bandung railway (in West Java) is one of the mega-infrastructure projects of Indonesia.
Indonesian drivers of taxis, buses and bajaj (three-wheeled scooters) gathered on Monday (14/03) on several locations - in front of the State Palace, City Hall, and the Ministry of Communication and Information - in Central Jakarta to demonstrate against the presence of online transportation applications such as Uber Taxi, GrabCar and Go-Jek. Protestors claim that these mobile apps are operating illegally in the country (as these services are not regulated by law) and cause a decline in income for long-time established transportation services, including taxi services, bus services and the more traditional transportation services such as bajaj and ojek (motor taxi).
Inflation in Indonesia is expected to accelerate to 6.80 percent year-on-year (y/y) in April 2015, from 6.38 percent y/y in the previous month, according to the central bank of Indonesia (Bank Indonesia). As global oil prices have somewhat recovered from their recent lows, they add inflationary pressures in Indonesia (higher transportation costs). On a month-on-month (m/m) basis, Indonesian inflation is expected to be around 0.35 percent in April. This figure would be in sharp contrast to ‘normal’ April inflation.
The total number of foreign tourist arrivals to Indonesia in 2014 was 9.44 million, up 7.19 percent from the preceding year, meaning that the government target of welcoming 9.3 million foreign tourists last year was achieved. As usual, most foreign tourists entered Indonesia through the Ngurah Rai International Airport in Bali, the most famous tourist destination in the world’s largest archipelago. During the whole year of 2014 a total of 3.71 million foreigners spent some time on Bali.
The Indonesian government changed the funding scheme for the construction of the Soekarno-Hatta International Airport Railway project (which will connect Soekarno Hatta International Airport, located nearby Jakarta, and Halim Airport in Jakarta). Previously, it was planned that this project, valued at IDR 26 trillion (USD $2.1 billion), would be offered through a public-private partnership (PPP) construction in which the Indonesian government would finance 55 percent of the costs. Now, however, the project is offered fully to the private sector.
The prequalification tender for the construction of the Soekarno-Hatta International Airport Railway project has been postponed until late October 2014 (from August) as agreements with several stakeholders still need to be finalized. For example, the government is yet to underwrite part of the required investment. Indonesia’s Ministry of Transportation proposes to underwrite IDR 13.5 trillion (USD $2.3 billion) - approximately 49 percent of total required investment for this railway project.
The Indonesian Transportation Ministry will tender the Soekarno-Hatta International Airport train project in August 2014. The project, which will connect one of the world’s busiest airports to the capital city of Jakarta, is offered in the shape of a public-private partnership (PPP) with the Indonesian government. The total of investment required to develop the railway, which will be built partly underground, is estimated at IDR 26 trillion (USD $2.2 billion). The project aims to improve connectivity to the airport.
Garuda Indonesia, the country's top-class airline, is planning to conduct a rights issue in the first quarter of 2014. Through this corporate action, which has already been approved by the shareholders, the state-controlled company aims to raise IDR 2 trillion (USD $162.6 million). For 2014, the airline plans to allocate IDR 4 trillion in capital expenditure (capex) for business expansion. About half of this amount should originate from funds generated through the rights issue.
The regional government of Surabaya, Indonesia's second-largest city after the capital city of Jakarta, is planning to tender two separate infrastructure projects - open to both foreign and domestic investors - at the start of December 2013. The two projects involve the construction of the city's monorail, valued at IDR 6.42 trillion (USD $558.3 million), and the construction of a tramline, valued at IDR 2.41 trillion (USD $209.6 million). When finished, the two projects are expected to reduce traffic congestion in Surabaya, East Java's economic center.
Usage of biodiesel for transportation in Indonesia is expected to reach 7.2 million kiloliter by 2015, a sharp increase from 600,000 kiloliter in the first nine months of 2013. State-owned Pertamina is expected to supply the extra 6.6 million kiloliter of biodiesel. The reason why the Indonesian government is eager to develop palm-based biofuel for transportation purposes is to reduce the country's reliance on the import of expensive diesel fuel. Imports of fuels and gas are the foremost reason that Indonesia is coping with a wide current account deficit.
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