INDONESIAN Logistics Association (ALI) is predicting that the sector will grow 10 to 12 per cent on the back of high domestic consumption and the government's efforts to boost infrastructure development, reports the Jakarta Post.
ALI vice chairman Mahendra Rianto expressed confidence that after growing 18.8 per cent in 2015 the sector could still give a double-digit growth performance this year.
"The raw material import and export of finished goods has decreased, but domestic consumption is still there," said Mr Rianto.
Last year, the market size of the domestic logistics industry stood at IDR2.15 quadrillion (US$163.4 billion), a double-digit increase from the estimated IDR1.81 quadrillion in the previous year, based on a study conducted by Texas market researchers Frost and Sullivan.
Total exports dropped by 14.62 per cent to US$150.25 billion last year, but imports plunged at an even faster rate of 19.9 per cent to $142.7 billion, helping the country book a 2015 trade surplus of $7.51 billion.
But Mr Mahendra said that the domestic consumption of 250 million Indonesian citizens would still boost the logistics industry this year.
The association also cited improving infrastructure development as a factor that would aid growth.
"When the government focuses on developing infrastructure, there comes opportunity for more utilisation of our assets," he said.
The study from Frost and Sullivan also forecasts the total freight volume to grow by 4.9 per cent to 1.18 billion tons this year.
Sea freight, which accounts for 97 per cent of total freight traffic in Indonesia, is also expected to grow 4.9 per cent this year. The improvement of terminal infrastructure, port capacity and equipment are cited as the drivers for the growth.
President Joko "Jokowi' Widodo's administration has pledged to improve the country's connectivity through the maritime highway programme, which includes the development of 24 commercial seaports across the country, as well as 1,481 non-commercial seaports.
Indonesia's biggest port, Tanjung Priok in Jakarta, is also expected to have its capacity increased by 4.5 million total equivalent units (TEUs) with the opening of its New Priok port this year.
Meanwhile, air cargo, which makes up a much smaller proportion compared to sea freight, is also expected to continue its rapid growth over the past five years.
Source : HKSG.