Indonesia’s business boom
Jakarta, Indonesia’s capital city and commercial hub, forms the main part of the country’s economy. (Martin Westlake/Getty)
With a one-trillion-dollar economy growing at 6% a year, Indonesia is Southeast Asia's largest market, and is becoming increasingly attractive to road warriors.
The nation’s overseas and domestic business travel market is in good health due to rising investment and a growing middle class. Business events and commercial interest are spilling out of the capital, Jakarta, and into other major Indonesian cities, with Batam, Bintan, Medan and the island of Bali drawing many executives. And following a regulation mandating that oil, gas and natural resources companies invest in the local area, the expanding energy and pharmaceutical sectors are funding business travel and business events throughout country.
“An oil company operating rigs or vessels in one area needs to book all its travel from local suppliers and not use agents based outside the country,” said Adam Knights, group sales director at ATPi, a travel management company.
In addition, the country will host various Asia-Pacific Economic Cooperation conferences this year, such as the CEO Summit, the Trade Finance and Treasury Reform meetings.
Indonesia’s economy is predicted to be larger than Germany’s in terms of projected GDP by 2050, according to consultancy firm PricewaterhouseCoopers. An additional 100,000 guest rooms will need to be built in the next decade just to cope with demand, translating to an estimated 700 to 800 hotels.
The government forecasts that the number of air passengers, both business and leisure, will increase by 12% this year, after growing by 15% to 72 million passengers in 2012. Flying is one of the easiest ways to get around this archipelago nation of more than 17,000 islands, where rail, ferries and roads are still fairly undeveloped.
If Soekarna-Hatta, Indonesia’s main airport in Jakarta, is anything to gauge by, the country is already overwhelmed by air traffic. The airport handles roughly 150,000 passengers a day – more than double its capacity – and is planning a $2 billion expansion to triple its capacity. The much smaller Halim Perdanakusuma Airport in the east of the city will open to commercial flights in September to help ease the strain.
This is just one of more than 20 projects aimed at building and upgrading Indonesian existing airports, many of which will be located in the east of the country, including East Nusa Tenggara and Papua, according to airline operator Angkasa Pura. This under-developed region has less infrastructure and tourism-focused facilities than the islands of Java and Sumatra to the west.
Singapore Airlines is boosting links to the country by launching a daily flight to Surabaya, the country’s second largest city, on 26 July. In addition, the airline is launching its ninth daily service to Jakarta and its fourth daily service to Denpasar, Bali, on the same day. Tiger Airlines is ramping up its services out of Singapore, launching flights to the cities of Yogyakarta starting in July and Bandung in August.