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.
View moreTransportation
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
Defense Minister Sjafrie Sjamsoeddin has confirmed that Chinese J-10 fighter jets are set to soar across Indonesia's airspace, ending months of speculation. While this procurement follows Indonesia's recent acquisitions of Rafale jets from France and fighter aircraft from Turkey, the Beijing deal has drawn particular attention for its speed and opaque timing.
Since President Prabowo Subianto took office last October, defense procurement has accelerated dramatically. The government has signed a deal for 42 Rafale aircraft worth an estimated US$8.1 billion and another for 48 Turkish combat planes, valued at around US$9.6 billion. Both agreements were widely covered as symbolic of renewed efforts to modernize the military's air fleet and strengthen bilateral defense ties with strategic allies.
Under the Prabowo administration, the country also looks set to revive its partnership with South Korea in developing KF-21 Boramae, a 4.5-generation fighter jet. The two sides have signed a revised Project Agreement on Joint Development for the country's continued participation in the KF-21 program, just days after Indonesia agreed to purchase KAAN jets from Turkey.
By contrast, the announcement on the procurement of China's J-10, reportedly for 42 aircraft, appeared without warning. Unlike the highly publicized French and Turkish deals, the Chinese agreement caught observers off guard, prompting questions about its strategic rationale and Indonesia's broader foreign policy direction. The obscure process signals a potential swing toward Beijing.
Indonesia's foreign policy underwent a significant shift immediately after the inauguration of Prabowo, who has made over 16 overseas trips and visited 24 countries in the first year of his presidency. His administration has loudly promoted its "free and active" foreign policy, refusing to enter any geopolitical bloc and welcoming any nation interested in striking a deal with Indonesia.
Under this same rationale, Prabowo pushed Indonesia to join BRICS, an intergovernmental organization that aims to counter the Western-dominated geopolitical order. This controversial move immediately raised questions: Is Indonesia moving freely and actively, or is the policy merely personal ambition disguised as national interest?
Known for his realpolitik views and Army background, Prabowo has emphasized strengthening military capacity to anticipate future threats in an uncertain international climate. This is reflected in his administration's defense budget of Rp 245.2 trillion (US$15 billion) this year and a projected Rp 335.2 trillion for 2026.
Prabowo's military-focused agenda, which began during his tenure as defense minister under his predecessor Joko "Jokowi" Widodo, has led him to strike deals with both Western and Eastern countries to purchase equipment to rejuvenate and modernize the Indonesian Military (TNI).
As defense minister, Prabowo largely favored deals with Western countries, signing major procurement contracts with France's Dassault Aviation (Rafale fighter jets and Scorpene submarines), the United States' Boeing (F-15EX fighter jets), Europe's Airbus (A400M transport aircraft), Italy's Fincantieri (FREMM-class frigates) and the United Kingdom's SMP (SRV-F Mk.3 rescue submersibles).
While these deals signaled Prabowo's preference for Western manufacturers, his recent pivot toward non-Western arms makers marks a sharp strategic departure.
Now, 42 Chinese J-10 jets are set to arm the Indonesian Air Force. Prabowo's defense procurement strategy targeting equipment from BRICS countries has piqued the interest of analysts, who view the move as part of Indonesia's shift to the East.
While this theory rings true, the greater concern is the logistical and technical challenges arising from this multisource procurement strategy. Purchasing defense equipment from too many different countries will add layers of complexity for the airmen tasked with operating and maintaining Indonesia's new, varied fleet.
Regardless of Indonesia's new defense engagements with China and Turkey, relations between Jakarta and Washington remain cordial, as evidenced by Prabowo's participation among world leaders at the Gaza Peace Summit in Egypt, which was convened by US President Donald Trump.
Though the two leaders have yet to hold a formal bilateral meeting, they appear to have a personal rapport. A hot mic incident during the Gaza summit captured a controversial exchange: Prabowo was overheard asking the US leader to put him in touch with one of his sons to discuss the advancement of the Trump family's business ventures in Indonesia.
Whatever the rationale behind the request, the incident underscored the friendly dynamic between the two leaders, hinting that Indonesia-US relations remain warm, even as Prabowo fields partners eastward.
