Transportation Ministry supports business acceleration through creative funding
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Kemenhub dukung percepatan berusaha lewat pendanaan kreatif
8 August 2024
By Ichsan Amin
Jakarta, ID – The Transportation Ministry is supporting investment acceleration through creative funding by implementing the public-private partnership (PPP) scheme.
Transportation Ministry Secretary General Novie Riyanto stated that efforts to accelerate business activities included facilitating the permit process for business players, thereby improving the investment climate in Indonesia.
“The Ministry of Transportation is committed to accelerating business activities within the country while maintaining a focus on key risks such as transportation safety,” Secretary General Novie said at the Performance Evaluation for Accelerating Business Implementation event for 2024 in Jakarta on Wednesday (7/8/2024).
These efforts are expected to improve the investment climate in the transportation sector, create more jobs, and enhance Indonesia's global competitiveness.
Secretary General Novie stated that several measures have been taken to streamline the permit process within the Transportation Ministry. One key initiative is the integration of permits for each work unit through the Online Single Submission (OSS) system.
“Additional efforts include deregulating permits and bureaucracy, utilising integrated information technology, and continuously developing professional human resources.,” he revealed.
According to data from Statistics Indonesia (BPS) for 2023, the country's economy grew by 5.05% per quarter. In comparison, the transportation and warehousing sector experienced a growth of 13.96% per quarter, contributing 5.89% to the gross domestic product (GDP).
This accomplishment makes the transportation and warehousing sector the sixth largest contributor to Indonesia's GDP. Additionally, data from BPS indicates that in the second quarter of 2024, employment in the transportation sector grew by 9.56%, marking the second highest growth rate within the economic structure.
In the first quarter of 2024, employment in the transportation sector grew by 9.12% over the first half of the year and by 7.05% per quarter. The transportation and warehousing sector's growth is the second largest, following the accommodation and food and beverage (F&B) sector, which saw a growth of 10.17%.
Secretary General Novie emphasised that the transportation sector serves as the backbone of the country. He highlighted that in 2023, the Transportation Ministry issued a total of 3,640 permits, marking a 28% increase from the previous year. Additionally, estimated commitments reached Rp9 trillion, representing a 52% growth from the previous year.
Secretary General Novie further explained that to reduce reliance on the State Budget (APBN) and improve the national investment climate, the Transportation Ministry is actively employing creative financing methods for infrastructure development in the transportation sector, including the implementation of the PPP scheme.
“Several PPP projects that have been successfully carried out by the Transportation Ministry include Patimban Port, Anggrek Port, Makassar-Parepare railway, Dhoho Airport, and Bekasi Proving Ground,” he revealed.
Legal mandate
Special Staff for Promotion of National Entrepreneurs of the Investment Ministry Pradana Indrapura said that the acceleration of business activities was a legal mandate.
The mandate is outlined in Investment Minister/BKPM Head Regulation Number 2/2022 and Investment Minister/BKPM Head Decree Number 134/2023 on Assessment on the Performance of One-Stop Integrated Service and Performance of Business Implementation Acceleration of Regional Government as well as Performance of Business Implementation Acceleration of State Ministries/Institution.
Pradana emphasised that accelerating business activities was crucial, as investment is the second-largest contributor to Indonesia's GDP. He also noted that the new government aimed to achieve an economic growth rate of 8%.
“If this is set, investment contribution must also be boosted. It will be demanded to be faster and higher. This is what is important for all of us,” he stated.
Pradana also mentioned that the Transportation Ministry had the highest PPB among all ministries and institutions in 2023. He expressed hope that today's meeting would be particularly beneficial in improving public services.
Pradana explained that streamlined permit processes allow businesses to maximise their efforts in recruiting and employing workers, ultimately boosting domestic tax revenue. "Hopefully, this will significantly improve our economy," he added.
Wide open
Meanwhile, Djoko Setijowarno, a transportation expert from Unika Soegijapranata in Semarang, emphasised that entrepreneurial opportunities in the transportation and logistics sector should be widely available. He noted that this sector was interconnected with many aspects of the public.
“These opportunities should be widely accessible, as the transportation and logistics sector impacts not only the economic aspect but also social, cultural, and health aspects,” Djoko told Investor Daily.
On the other hand, the government must fully support ease of doing business in the transportation and logistics sector. He noted that this sector was not yet robust enough to withstand various crises.
“In other more developed countries, the transportation sector receives full support and subsidies from the government. The government must prioritise transportation because it addresses the mobility of goods and passengers, which is crucial given our country's character as an archipelago with vast land areas,” he stated.
He added that, economically, this sector significantly contributed to stabilising inflation and controlling price increases for goods, especially in remote regions.
“This sector must receive full support from all stakeholders, including both central and regional governments. In outermost, frontier, underdeveloped, and border (3TP) regions, cargo delivery can be efficiently carried out by sea, land, and even air,” he added.
