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
Surging global oil prices and tightening domestic fuel supplies have thrust Indonesia’s long-running electrification agenda back into the spotlight. Policymakers are increasingly portraying the shift, especially in the motorcycle sector, as the most practical and immediate way to curb fuel consumption. As part of this, the government is raising targets for its electric motorcycle conversion program, aiming to gradually electrify more than 120 million gasoline-powered motorcycles nationwide.
Energy and Mineral Resources Minister Bahlil Lahadalia explains that the government plans to significantly accelerate the fuel-to-electric motorcycle conversion program, also known as the retrofit program, to approximately 6 million units per year, a sharp increase from the current annual target of about 200,000 units. The expansion, he noted, is supported by advances in conversion technology that make large-scale implementation more feasible.
To support the accelerated rollout, the government has established a dedicated energy transition task force to coordinate implementation across ministries and agencies. The task force is expected to speed up the conversion of Indonesia’s conventional motorcycle fleet, which is estimated at around 120 million units.
The urgency behind this policy shift is underscored by the severity of the current fuel situation. Global oil prices have surged above US$100 per barrel, driven by the United States-Israeli war with Iran. This has prompted the government to consider demand-side measures to contain consumption and ease supply pressures.
Electrifying motorcycles, which remain the dominant mode of transport in Indonesia, is one of the key measures under consideration. At the same time, the government is also exploring more aggressive steps, including the possible reintroduction of nationwide work from home (WFH) arrangements to temporarily reduce fuel demand.
The oil shock has also revived scrutiny of earlier initiatives such as the Agrinas program, which aimed to import trucks and other vehicles to support the rollout of Red and White Cooperatives (KMP) across regions. Conceived prior to the recent spike in oil prices, the KMP program was designed to strengthen logistics and distribution networks at the grassroots level, with plans involving large-scale procurement of vehicles to support cooperative activities nationwide. In the current context of elevated fuel costs, however, the program’s reliance on conventional vehicles raises new questions about its economic and energy efficiency.
The situation also casts uncertainty over other automotive ambitions, including the long-discussed national car (Mobnas) initiative. While the project has been framed as part of Indonesia’s industrial and technological advancement, its direction remains unclear, particularly as the government has yet to specify whether the vehicle will be developed as an electric model in line with its broader energy transition goals or continue to rely on conventional internal combustion engine technology.
The last substantive update on the initiative dates back to last year, when state-owned defense manufacturer PT Pindad was tasked with leading the design and development of the national car. Beyond that mandate, however, little detail has emerged regarding the project’s technical specifications, production timeline or potential partners.
