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.
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Mass organizations have been identified as an obstacle to the investment climate in the country, as many of them often engage in thuggery, demanding illegal levies in return for security rackets. While some of the groups have proven to violate the law, it looks difficult for the law enforcers to act against them, simply because of their connection to, and hence support from, political elites, if not the military or the police top brass.
The notoriety of the mass organizations has raised fresh concerns. The deputy speaker of the People’s Consultative Assembly from the National Mandate Party (PAN), Eddy Soeparno, said recently that the construction of a plant belonging to Chinese electric vehicle manufacturer BYD in Subang, West Java, had been disrupted by acts of thuggery committed by individuals from unidentified mass organizations.
The mass organizations are not only demanding "protection" fees, but are also showing disrespect for the law enforcement agencies. This is evident in the incident in Cimanggis, Depok, West Java, on April 18, in which members of the mass organization GRIB Jaya set fire to three operational cars of the local police, who were about to arrest an individual linked to the group for alleged vandalism.
The police eventually arrested seven people, six of them members of GRIB Jaya, in connection with the arson. In response to the incident, West Java Governor Dedi Mulyadi expressed his support for the police, saying acts of thuggery should be fought for the sake of public security and ease of doing business. Earlier in March, the West Java government had formed a task force mandated to eradicate acts of thuggery in the province.
Dedi’s statement irked the chairman of GRIB Jaya, Rosario ‘’Hercules’’ de Marshall, saying he could mobilize 50,000 of his members to storm Gedung Sate, the office of the West Java governor, in Bandung. Hercules, who has been known for his close ties with Prabowo for decades, asked Dedi to embrace mass organizations, instead of treating them as enemies.
Hercules also claimed that his followers contributed to Dedi’s victory in the regional election in November last year without expecting rewards, considering that he was nominated by Prabowo’s Gerindra Party.
Both Dedi and GRIB have apparently reconciled, with the secretary general of the mass organization, Zulfikar, referring to the West Java governor as a friend, whose programs should be supported by the group.
But concerns about mass organizations as a constant threat to investment remain. Investment and Downstream Minister/National Investment Board (BKPM) head Rosan Roeslani said he has asked National Police chief Gen. Listyo Sigit Prabowo to maintain security at the BYD assembling plant and other industrial zones.
Indonesian Military (TNI) Commander Gen. Agus Subiyanto also said the armed forces are open to “educating” mass organization members in order for them to refrain from acts of thuggery.
Home Minister Tito Karnavian, who is a former police chief, has opened up the possibility of revising Law No. 17/2013 on mass organizations. Tito said the revision was pressing to strengthen oversight mechanisms of the groups.
Mass organizations represent the implementation of freedom of association and assembly, which the Constitution promotes. However, the freedom cannot justify actions such as intimidation, extortion or violence, which characterize certain mass organizations that operate like mafia gangs.
Chairman of Commission II of the House of Representatives, Rifqinizami Karsayuda, however, believes revision of the law is not urgent. The NasDem politician argues that the law already grants the government, both at the central and regional levels, the authority to evaluate and even dissolve troubling mass organizations. The government of former president Joko “Jokowi” Widodo, for example, dissolved the Hizbut Tahrir Indonesia (HTI) in 2017 and the Islam Defender Front (FPI) in 2020 for failing to conform to the state ideology Pancasila.
Mass organizations, to the extent of their law-breaking acts, have been a classic issue in Indonesia, given their significance in raising the popularity and electability of certain figures in particular areas.
The rise of mass organizations has posed a challenge for the law enforcement agencies, as in the case of the act of thuggery against a big investment like BYD. Unless the police are able to enforce the law against them, Indonesia will lose its appeal as a safe place to do business among investors.
After all, the state shall not give up to thuggery.
