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Indonesia Shipping Report Q3 2011
Business Monitor International, June 2011, Pages: 86
The Indonesia Shipping Report provides industry professionals and strategists, corporate analysts, shipping associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Indonesia's shipping industry.
BMI believes the economic fundamentals are looking good for Indonesia, boding well for the country's shipping sector in particular. New port developments, such as the construction work on the island of Madura, in the pipeline underline our bullish view of the shipping sector. Meanwhile, private consumption and investment growth will continue to power the economy in 2011 as Indonesia embarks on what we project to be a decade of robust economic growth averaging around 6.4% per year.
We believe the factors driving Indonesian shipping and port sector will be increasing investment in the Intra-Asia route, as international companies search for new markets while consumer demand in the US and Europe remains sluggish following the after-effects of the global downturn, and private consumption, which will be boosted by growing consumer confidence and declining unemployment rates.
Headline Industry Data
- 2011 Tanjung Priok total tonnage forecast is +5.50%, average growth of 5.23% over our forecast period.
- 2011 Palembang total tonnage forecast is +5.57%, average growth of 5.57% over our forecast period.
- 2011 Tanjung Priok container forecast is +2.57%, average growth of 7.71% over our forecast period.
- 2011 Palembang container forecast is +5.74%, average growth of 6.15% over our forecast period.
Key Industry Trends
New Ports In The Pipeline - The island of Madura is set to be the site of a new international port with the central aim of reducing congestion at the port of Tanjung Perak. Construction at the new US$1.1bn port is set to commence at some point this year, deputy works minister Hermanto Dardak explained in January 2011.
Indonesia Calls For Dry-Bulk Facility To Boost Malaysian Trade - Efforts are being made to strengthen trade between Malaysia and Indonesia through the planned establishment of a dry-bulk facility in Malaysia's Sabah province. BMI believes this could prove a boon for the region's ports sector, and provide potential for Sabah to elevate itself from Malaysia's poorest state.
Risks To Outlook
On the downside, a risk to our outlook presents itself in the possibility that the country's ports will not be able to handle the increasing levels of traffic on the intra-Asia route if sufficient investments are not made, but this does seem to be being addressed - see new international port on the island of Madura. Indonesia's main ports suffer from congestion and low efficiency levels, raising the fear that lines could avoid the port, calling at more competitive neighbouring facilities.
The main upside risk to our outlook presents itself in the form of growing domestic consumer demand on the back of declining unemployment rates, which bodes well for container imports. Our macroeconomic outlook for the country is also very solid. Indonesia's real GDP expanded by 6.9% year-on-year (y-o-y) in Q410, the fastest pace since 2004, led by robust growth in both private consumption and gross fixed capital formation (GFCF). Notably, this strong growth was markedly above consensus (6.3% median estimate) and caps a stellar 2010 with overall growth of 6.1%. We are bullish on the Indonesian economy in 2011 and 2012, forecasting real GDP to reach 5.9%.
Private consumption remains the main driver of the economy, growing by 4.4% y-o-y in Q410 and contributing 2.6 percentage points (pp) to headline growth. At this point, we project private consumption growth to remain flat at 4.6% in 2011 before accelerating to 5.0% in 2012. Our bullish consumer outlook bodes very well for any future container terminal projects in Indonesia.
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