T H E E C O N O M I C I M PAC T O F I N D O N E S I A ' S

INFRASTRUCTURE DELIVERY

19 March 2018
© Tusk Advisory Pte Ltd – 2018
PRIVATE & CONFIDENTIAL
Infrastructure – Pre Jokowi Administration, the Nation was behind in
almost every indices – thus infra was priority for RPJMN 2015-19
Travel Time (hrs/100km) Modal Share (%) Road Ratio (%)

Hong Kong 25 11 63 0
Tokyo 22%
Malaysia 1,1

China 1,2 London 21%

Taipei 14 46 20 19

Thailand 1,35 Singapore 12%

Vietnam 2 Jakarta 2,3 62,2 12,9 22,6
Jakarta 6.26%
Indonesia 2,6 Rail Private Transport Non-Rail Public Transport Others

• Poor quality of roads • Lack of investment in urban public transport • Land acquisition problems in capital
• Limited toll road connectivity • Predominant use of private cars for commuting • Limited resources of DKI to build elevated roads
• High logistics costs • High loss of productivity caused by congestion • High social issues due to displacement

Ratio of Double Track (%) Dwelling Time (days) Air Transport Indicators SHIA
Connectivity index : 652
Airport Density Ranking (World) : 17
Japan 41,1% Tanjung Priok 7 (number per ha)
Thailand 5 5 Ranking (Asia Pacific) : 1
China 38,8% 4
Malaysia (Port… 4 Quality of Air 3
India 28,4% 2 Passenger-kilometers
UK, Los Angeles… 4 Transport
1 (million person-km)
Australia, NZ Infrastructure (WEF…
Malaysia 18,0% 3 0
Malaysia
France 3 Thailand
Thailand 13,4% Vietnam
Hong Kong 2 Available airline seat Philippines
Indonesia 7,7% Cargo (tons-km)
Singapore 1,1 km/week Indonesia

• Limited space within railway ROW • Long dwelling time add to logistics costs • Double digit growth in air travel post deregulation, 2004
• Historic buildout problems • Congestions due to poor connectivity • Over 55 million pax/pa but terminals in need of upgrade
• High costs of grade separations • Throughput increase will add more pressure • Lack of dedicated rail connection
• CI the highest in Asia Pacific, thus high valuation

Source: Tusk Advisory Analysis, based on 2-years background study For RPJMN 2015-2019 Page 1
As of December 2017 - 62 projects been completed and 244 projects are
under construction at a total construction value of US$100 billion…

SUMATERA KALIMANTAN SULAWESI

29 projects | US$11,996 Million 12 projects | US$6,825 Million 18 projects | US$15,966 Million

COMPLETED UNDER CONSTRUCTION COMPLETED UNDER CONSTRUCTION COMPLETED UNDER CONSTRUCTION

16 projects
4 projects 25 projects 1 project 11 projects 2 projects
US$15,808 Million
US$237 Million US$11,759 Million US$107 Million US$6,718 Million US$158 Million
NATIONAL
2 projects | US$652 Million

UNDER CONSTRUCTION
2 projects
US$652 Million

Road 47 Dam & Sea Wall 36 Airport 36 Seaport 14 Energy 4 SZ Planning 19 Water Sup. & Irrigation 8 Tech 1

In addition, the electricity programme has completed 43 projects, and has 97 projects under construction, with a value of US$21,7 Billion

JAVA
70 projects | US$36,162 Million
MALUKU AND PAPUA
BALI DAN NUSA TENGGARA 5 projects | US$8,925 Million
COMPLETED UNDER CONSTRUCTION 10 projects | US$532 Million
9 projects 61 projects
US$2,801 Million US$33,361 Million
COMPLETED UNDER CONSTRUCTION
COMPLETED UNDER CONSTRUCTION 1 project 4 projects
2 projects 8 projects US$113 Million US$8,812 Million
US$89 Million US$443 Million

Source: Tusk Advisory Analysis, based on KPPIP data Page 2

Assuming the US$100 billion under construction projects are completed
on schedule, GDP growth in 2023 will be above 7%...

Total value of
Priority and US$342 As of US$100 Projects are under-
construction or
strategic infra Dec Billion
programme
Billion 2017
completed

If the above With the

7.2% by 2023 GDP Growth US$100 Billion

projects are
completed on time -
completion of the
50% of the balance
of the programme
9.3% by 2030 GDP Growth

2019/2020

Based on
Estimated Long-term Impact of the Government’s Infrastructure Investment (current and future)
economic
on Indonesia’s Growth Rate
regression of
10% 9,5% 9,4%
9,2% 9,3% 32
8,8%
Estimated Growth Rate %

9% 8,4% developing
8,1%
8%
and
7,5% 7,4%
6,9%
7,2% 7,3%
7,2% 7,1% emerging
7,6% 6,9%
7% 6,5% market
6,1%
6%
5,8% 5,8% countries
5,4% 5,3%
5,7%
5,7% 5,6% 5,5%
5,2% 5,1%
5,0% 4,9% and groups
5% 4,8%
of countries
4% between
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 1990 – 2016
Source: Tusk Advisory Estimates, 2018 Page 3
 …and with 50% of the balance completed by 2023, the GINI index and
Poverty rate by 2030 will substantially drop to…

Estimated Impact of the Government’s Infrastructure Investment

(current and future) on Indonesian Inequality and Poverty

GINI Index down by Poverty rate down to

2points
Under Construction or
by 2030
With 50% of 35
8% by 2030
31.4%
Completed Remainder 30 27%
(US$103.44 billion) (US$222.91 billion)
0,0 25 21.8%
20
-0,5 15
10.9%
9.5%
10 7.7%
-1,0
5
0
-1,5 International Poverty Line: National Poverty Line:
US$3.20/ day* US$0.92/ day**
2016 - without impact of infra programme
-2,0
With Completed and Under-Construction Projects’ impact achieved by 2023
-2,5 With Half of the Remaining Programme’s impact achieved by 2030

The Poverty rate reduction depends on the assumed poverty line - If International benchmark of $3.20/day is used, the
poverty rate will drop to 21.8%. If national benchmark of $0.92/day is used, the poverty rate will drop to 8%

Source: Tusk Advisory Estimate, 2018 Page 4

Authors
Ir. RAJ KANNAN
Managing Director
P.Grad Dip - Strategy & Innovation -
University of Oxford
IME - Kennedy School, Harvard
Raj is the founder and managing director of Tusk
Advisory. He is a chartered engineer and holds a
post graduate diploma in Strategy and Innovations
from Oxford and has completed the executive
program in infrastructure (IME) at Harvard. He has
been involved in major infrastructure transactions,
led fiscal, institutional and regulatory policy reforms,
and has managed infrastructure projects delivery for
over 28 years, 13 of which were in Indonesia.
ADITYA LUHUT SIBARANI
Project Manager
Bachelor of Engineering - ITB
Luhut is a project manager of Tusk
Advisory and has been involved in key
infrastructure projects in Indonesia,
including MRT Jakarta project, LRT and
BRT Medan and the Trans Sumatera Toll
Road. He has also led a number of
research projects for the company. Luhut
is a graduate of the Bandung Institute of
Technology.
Dr. NICHOLAS MORRIS
Director
PhD - University of NSW
M.Phil & M.Arts - University of Oxford
Nicholas is a director of Tusk Advisory. He’s
been involved in economic policy
developments for most of his 40-year career,
and has worked in Indonesia over 17 years.
Nicholas graduated from Oxford, and was the
founder of London Economics and the CEO of
an economics think tank in Australia. He is
also an adjunct professor at the University of
New South Wales, Australia
ASTRID HANDARI
Engagement Manager
MSc. Strategic Marketing & Consulting -
University of Birmingham
B. Man - ITB
Astrid is an engagement manager of Tusk
Advisory. She has been involved in projects
such as Trans Sumatera Toll Road, Jakarta
Sewerage System and drinking water supply
system (SPAM) in various cities across
Indonesia. Astrid holds a Masters degree in
Strategic Marketing and Consulting from
University of Birmingham. Page 5
SINGAPORE
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INDONESIA
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