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

June 10, 2026

President Prabowo Subianto officially dismissed National Nutrition Agency (BGN) head Dadan Hindayana and his two deputies through a surprise announcement by the State Secretariat early last week, marking one of the most abrupt leadership changes of his administration. The move was soon followed by the Attorney General's Office (AGO) naming all three officials as corruption suspects in the program.

Dadan was replaced by former deputy Nanik Sudaryati Deyang. Meanwhile, deputy heads Lt. Gen. (ret.) Lodewyk Pusung and Insp. Gen. (ret.) Sony Sonjaya were replaced by Development Finance Comptroller (BPKP) deputy head Agustina Arumsari and Maj. Gen. Trenggono, vice president director of state-owned food company PT Agrinas Pangan Nusantara.

The removal of Dadan and his deputies represents one of the most significant personnel changes since the agency was established. Neither the Palace nor BGN initially provided a detailed explanation for the leadership transition. Shortly after the announcement, however, AGO investigators searched BGN's offices before arresting the three former leaders.

According to the AGO, the three suspects allegedly manipulated the verification process on the BGN partner portal to ensure that foundations selected as partners for the Nutrition Fulfillment Service Units (SPPG) were linked to BGN officials or employees. These foundations reportedly received incentives worth billions of rupiah daily and were allegedly affiliated with, and in some cases owned by, the suspects.

Yet the allegations of financial irregularities represent only one of the challenges facing the government's free meals program. Since its launch in January last year, the initiative has encountered a range of operational and structural problems stretching across the entire supply chain, from land acquisition and facility licensing to procurement, workforce development and food safety oversight.

Labor has emerged as a particularly sensitive issue. While the program is often framed as a food distribution initiative, its core objective is to improve nutritional outcomes among schoolchildren and other beneficiaries. Achieving that goal requires more than simply preparing and delivering meals; it demands personnel capable of managing food safety protocols, handling storage and logistics and ensuring that nutritional standards are consistently met.

Critics have argued that the rapid nationwide rollout of the program has at times outpaced the availability of trained workers and nutrition specialists needed to support such an ambitious undertaking. The consequences have been most visible in a series of food poisoning incidents that have occurred throughout the program's implementation.

The issue is closely tied to the program's quota-driven implementation model. Success has frequently been measured by the number of meals distributed each day, creating strong incentives for officials and operators to maximize output.  Critics contend that such targets, while effective at accelerating expansion, can inadvertently encourage shortcuts in compliance procedures when administrative processes are perceived as obstacles to meeting delivery goals.

Whether the leadership change will be sufficient to address these problems remains an open question. While Dadan's removal may signal the government's willingness to respond to allegations of misconduct and growing public criticism, many of the challenges facing the free meals program are structural.

The alleged irregularities identified by the AGO did not emerge in a vacuum. They occurred within a program that has been under constant pressure to expand rapidly, establish new kitchens, increase meal production and broaden beneficiary coverage across the archipelago. Such conditions can strain oversight mechanisms, particularly when administrative capacity struggles to keep pace with the program's growth.

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