Boston, MA -- (SBWIRE) -- 02/16/2013 -- BMI View: Indonesia Remains An Outperformer

We have modified our outlook for the Indonesian economy in 2012 and 2013. We have raised our growth estimate for 2012 on the strength of better-than-expected data, but reduced the forecast for 2013 because we see hints of overheating, so expect a more restrictive monetary policy. We now see growth of 6.0% in 2012, easing back to 5.6% in 2013. It has to be noted however that in relative terms Indonesia remains a regional outperformer, so even taking into account these adjustments, the macroeconomy is supportive of the ports and shipping industry.

The growth outlook for Indonesia's freight sector is encouraging, particularly because there are signs that one of its key problems, an infrastructure investment deficit, is beginning to be tackled. Capacity problems remain an issue, but new investment projects in ports, airports, road, and rail are being launched. The last quarter has seen a cluster of announcements on this front, including inward investment from Japan and Russian interest in railway development.

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Headline Industry Data

- Air freight volumes are forecast to grow by 6.7% in 2013, with average annual growth of 6.8% during our forecast period to 2017.
- Rail freight volumes are estimated to rise by 6.2% in 2013, with average growth of 7.1% during our forecast period.
- Tanjung Priok total tonnage growth forecast for 2013 is 5.2% to 51.660mn tonnes, with average growth of 5.5% expected over our forecast period to 2017.
- Tonnage at the Port of Palembang is set to grow by 3.3% in 2013 to reach 11.445mn tonnes; average growth to 2017 will come in at 4.0% per annum.
- We expect the total value of Indonesian trade to grow by 7.0% in real terms in 2013, compared to an estimated 6.4% in 2012.

Key Industry Trends

Japanese Help For Transport Infrastructure Plan

Indonesia and Japan have agreed the outlines of a master transport plan for the Indonesian capital and hinterland - involving upto 45 road, railway, airport and other strategic projects and IDR410trn (US$43bn) worth of investment. The projects are to be completed by 2020, with work on the top 18 priority projects due to start in 2013. The priority projects will include the construction of Jakarta's Mass Rapid Transit system and Cilamaya International Airport, the expansion of Soekarno-Hatta International Airport, the creation of a new academic research cluster and the development of the city's sewage system. Approximately 55% of the total investment needed to make the masterplan materialise would come from private investors, said Coordinating Economic Minister Hatta Rajasa, who represented Indonesia at a planning meeting in Tokyo.

Russians Plan Railway And Mining Investment

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