Sector
Transportation
With a population exceeding 280 million people, Indonesia relies heavily on a robust transportation network encompassing sea, air, and land routes to connect its vast island chain and facilitate economic activity effectively. This reliance has made the transportation sector a leading sector in the country.
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Transportation
With a population exceeding 280 million people, Indonesia relies heavily on a robust transportation network encompassing sea, air, and land routes to connect its vast island chain and facilitate economic activity effectively. This reliance has made the transportation sector a leading sector in the country.
In 2022, the sector contributed Rp 983 trillion to the national gross domestic product (GDP) at current prices. Notably, regions where transportation is a leading sector include Aceh, West Sumatra, Bengkulu, Lampung, West Java, the Special Region of Yogyakarta, and Central Kalimantan. Additionally, North Kalimantan, Gorontalo, North Sulawesi, Maluku, East Nusa Tenggara, and Bangka-Belitung consider the transportation sector as a leading sector.
The sector has also experienced a significant boost in recent years, with the transportation and warehousing subsector achieving a staggering GDP growth of 15.93 percent year-on-year (YoY) in the first quarter of 2023.
During the COVID-19 pandemic, Indonesia’s auto industry was severely affected, leading to a decline in both vehicle sales and production. Despite this decline, the transportation sector as a whole continued to attract foreign direct investments (FDI). In 2023, foreign companies poured roughly US$2 billion into the country’s vehicle and other transportation subsectors, highlighting the continued potential that investors see in this sector.
In terms of land transportation, infrastructure projects supporting rail transport such as the Light Rail Transit (LRT), started operations in mid-August 2023. Additionally, the development of Phase 2 of the Mass Rapid Transit (MRT) Jakarta, which includes new routes, is currently underway, with 6 kilometers already completed out of a total of 13.3 kilometers. Moreover, railway transportation saw a year-on-year increase of 69.37 percent in the number of passengers nationwide.
Sea transportation is also an important subsector of the transportation industry, primarily due to the trade sector’s heavy dependence on this mode of transportation. It is highly favored for its perceived economic efficiency in transporting goods. Although sea transport may not be the main method of transportation for many individuals, the number of passengers using sea transport in 2023 increased by 13.30 percent compared to the previous year.
Furthermore, air travel in Indonesia continues to rise with the increase in economic activity. The number of passengers using domestic air transportation increased by 32.69 percent year-on-year. Additionally, Soekarno Hatta International Airport has surpassed Singapore’s Changi Airport to become Southeast Asia's busiest airport in April 2024. According to reports, the airport's flight seat capacity has also reached 3.34 million, the highest among airports in the Southeast Asia region.
Latest News
President Prabowo Subianto may be projecting himself globally and at home as a leader who is tough on corruption, not just in words but also in actions, with several high-profile corruption cases in his first year in office. But the business community is not impressed, and has even given the thumbs down to his overall anti-graft campaign.
This could have serious repercussions on Indonesia as an investment destination, especially compared with some of it Southeast Asian neighbors.
Indonesia’s 2025 Corruption Perception Index (CPI) showed a significant decline, with the score dropping to 34 out 100, down from 37 in 2024. Indonesia ranked 109th out of 180 countries surveyed, down 10 places. It is behind Singapore, Malaysia, Timor-Leste and Vietnam but scored better than Thailand, the Philippines and Cambodia.
The CPI asks mostly business executives but also country experts and analysts about their assessment on various aspects of public sector corruption including bribery, kickbacks, embezzlement of public funds, effectiveness of anti-corruption efforts and transparency and accountability of government.
Experts cite narrowing public space, weakening enforcement and the erosion of judicial independence as key factors for Indonesia’s decline.
The 2025 CPI report, published by Transparency International this month, is in sharp contrast to a survey by Indikator Politik that says Prabowo continues to enjoy a high approval rating of 80 percent, thanks mainly to his social programs, including his signature program of providing free lunch to millions of school children nationwide.
Prabowo has repeatedly vowed to get tough on corruptors, getting to the roots of the problem and pledging he would hunt them down all the way to Antarctica.
In his speech at the World Economic Forum in Davos, Switzerland, last month, he said he would not make compromises with corruptors, citing as examples the recent crackdown on companies for illegal logging blamed for the massive flood disaster in Sumatra before the end of the year.
The year 2025 also saw some high-profile corruption cases, including one against Riza Khalid, a long-time contractor/supplier to state oil and gas company Pertamina, who is a fugitive, but his son Muhammad Kerry Adiranto is currently facing an 18-year jail term.
The Corruption Eradication Commission (KPK) and the Attorney General Office have also claimed to have saved the country trillions of rupiah from the corruption cases they handled.
As if this was not enough, in a speech on Indonesia’s economic outlook in Jakarta last week, the president hinted at the need to resort to an iron hand in dealing with corruptions. Responding to accusations that he had turned his back on democracy, the former Army general said: "But if you ask the people, maybe you also need a little authoritarianism [...] to fight those corruptors."
His predecessor Joko “Jokowi” Widodo weighed in on the anti-corruption drive this week suggesting that KPK should be governed by the old law when it had more power and independent. An irony, given that the change in the law happened in 2019 under his watch.
Even more irony because the Indonesian Democratic Party of Struggle (PDI-P) supported Jokowi’s proposal to go back to the old KPK law. Although they now have parted ways, PDI-P was the main party in Jokowi’s coalition government that enabled the change in the law in the House of Representatives.
The change meant that since 2019, KPK reports to the president. It also lost some of the powers to support its work, including conducting wiretapping on corruption suspects, and it also changed the status of their staffers into civil servants.
It’s no coincidence that Indonesia’s CPI turned for the worse following the change. Indonesia scored the highest then at 40, and ranked 85 out of 180 countries surveyed.
The KPK had been on the frontline in the anti-graft campaigns during Jokowi’s first term in office in 2014-2019. In his second term in 2019-2024, he turned the agency, governed by the new law, into a powerful political tool to serve his interests, going after many of his political nemesis. All five current commissioners are his, rather than Prabowo’s, appointees.
Prabowo’s office has said the government is not entertaining the idea of going back to the old KPK law.
