The Indonesian government has disclosed plans to spend US$6 billion to modernize the national port system as the country posted its slowest GDP growth in five years in the third quarter.
President Joko Widodo’s administration intends to invest in the expansion of five key ports to cut down high logistics costs that are among the leading factors cited for the slowdown in foreign investment and trade activity.
The five major gateways, located in North Sumatra, Jakarta, East Java, South Sulawesi, and Papua, will be expanded to accommodate larger vessels, while smaller ports will be provided with feeder lines.
The Indonesian President is focusing on maritime and transport infrastructure development to revive Southeast Asia’s top economy. Latest state statistics show the country grew 5.01% year-on-year in the three months ended September, down from 5.12% in the previous quarter. This is the nation’s slowest pace in five years, as demand for the country’s key commodities exports continues to weaken.
To fund the port development program, the government will work on a more efficient tax collection system and cutting down the huge fuel subsidies that are eating up a large portion of the country’s budget.
Widodo, who was inaugurated in October, vows to push economic growth to 7% over the next two years through massive infrastructure network upgrades as well as red tape and logistics cost reductions.
