Indonesia’s Industrial and Logistics Sector Grows Rapidly in Southeast Asia - Photo: Special

JAKARTA (TheInsiderStories) – Indonesia’ industrial and logistics sector grow rapidly in Southeast Asia, driven by strong domestic trends including the e-commerce sector penetration, growth in intra-regional trade and increased logistics efficiency, as the Southeast Lang Jones LaSalle (JLL) reported on Monday (07/15).

The study emphasizes that Indonesia’ rapidly expanding e-commerce market and rapid urbanization growth will be main drivers for logistics sector growth. Indonesia’s rapidly growing e-commerce market will be the largest in Southeast Asia in 2025, with a value of more than US$45 billion.

E-commerce sales are expected to reach five to eight percent of total retail sales by 2025, this figure is up from the current one to three percent, based on research by Google and Temasek Holdings,” said James Taylor, Head of Research JLL Indonesia.

JLL reportedly, by 2020 to 2025, urban population in Southeast Asia is expected to grow by two percent per year, with the fastest growth rate in Vietnam 3.5 percent and Indonesia 3.1 percent. In addition, the current middle income population in Southeast Asia is expected to grow six percent per year over the next five years and Indonesia is expected to contribute around three quarters of that increase.

Furthermore, Indonesia’ logistics performance has increased very rapidly in the last 3 years and is now ranked 46th globally compared to 2016 ranked 63rd, according to the World Bank’s Logistics Performance Index.

Even so, several Indonesian e-commerce companies began to develop their businesses in modern facilities. For example, Lazada, which is one of the largest e-commerce in Indonesia, expanded their build-to-suit facilities to 77,000 square meters from 30,000 square meters.

Taylor rated the warehouse is now becoming increasingly sophisticated thanks to requests from users and investors who continue to look opportunities for development, operational collaboration or acquisition opportunities to enter the market.

“The increase in the quality and efficiency of logistics has also given greater confidence to private companies, Sovereign Wealth Funds, and pension funds to increase their exposure to the logistics sector,” he noted.

Meanwhile, several local and international companies have carried out several rental and purchase transactions. Li and Fung’ logistics company rents 21,000 square meters of property in the PT Kawasan Industri Jababeka Tbk (IDX: KIJA), while Daiwa House has an operational partnership with a local company (BEFA) has speculatively built and leased 50,000 square meters of Grade A warehouse space in MM2100 Industrial Estate, Bekasi.

“This report highlights the industrial sector in key markets throughout Southeast Asia. With the largest economy and the most populous country in the region, Indonesia is an important key and investor interest in logistics has increased exponentially over the past few years,” he said.

Written by Willy Matrona, Email: theinsiderstories@gmail.com