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PT SMI Insight 2017 – Q1

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PT SMI Insight 2017 – Q1 PT SMI Insight 2017 – Q1 Overview of Urban Transport in Indonesia Phenomenon of Rising Urbanization in Indonesia and Across the World Cities play a vital role in generating economic growth and Urban Population Growth Rate (1990-2015) (%) prosperity. According to McKinsey’s report on Urban World Russian Federation 1% (2011), half of the world’s population lives in cities and United Kingdom 6% generating more than 80% of global GDP today. This fact France 8% United States 9% corresponds to the phenomenon of urbanization which Korea, Rep. 11% becomes the main issue and creates more challenges in Mexico 11% Colombia 12% future development of cities. Brazil 16% South Africa 25% Urbanization occurs as countries switch sectoral India 27% composition away from agriculture to industry (Henderson, Malaysia 50% Vietnam 70% 2003). Thus, release labor from agriculture to migrate to Thailand 72% Indonesia cities. This migration spurs the urban population growth in 74% China 115% megacities and nationwide. Among 15 countries depicted 0% 20% 40% 60% 80% 100% 120% on the chart, Indonesia placed second after China, increasing by 74% between 1990 and 2015 in urbanization Source: Urban Population, World Development Indicator (WDI), World Bank 2015 levelsdgdr. Indonesia is becoming one of the world’s fastest-growing country in urbanization, like any other emerging markets perform in this regards, such as China, Thailand, Malaysia, India, South Africa, Brazil, Colombia, Mexico, Rep. of Korea and Russian Federation. It is predicted that the urbanization level in Indonesia will increase sharply between 2010 and 2035, from 49,8% to 66,6%. DKI Jakarta topped the chart as the most urbanized province in Indonesia, followed by Riau Islands, West Java, DI Yogyakarta and Banten. Indonesia's Urbanization Level 2010-2035 (%) 100,00% 66.60% DKI Jakarta 56.70% 60.00% 63.40% 49.80% 53.30% Kepulauan Riau Jawa Barat 50,00% DI Yogyakarta Banten 0,00% Indonesia 2010 2015 2020 2025 2030 2035 Sumber: Urban Population, World Development Indicator (WDI), World Bank (2015) Indonesia Population Projection 2010-2035, BPS (2013) SMI Insight 2017 PT. Sarana Multi Infrastruktur (Persero) I www.ptsmi.co.id 1 Relationship between Urbanization and This rapid urbanization phenomenon has occurred in Economic Development tandem with economic growth, rising incomes and poverty 100% reduction. As shown in the right graph, empirical evidence 90% showing a cross-sectional performance of 187 countries 80% (low, medium and high income countries), clearly shows 70% that urbanization and economic development go hand-in- 60% hand. 50% Although most of the countries are spatially concentrated 40% on the left part of the graph, which indicates those 30% countries have not fully leveraged the economic benefits of Urbanization Level 20% urbanization, yet the positive correlation between 10% urbanization and income level is inevitable. While some 0% countries could not perform well under the urbanization 0 50 100 trend, some others are able to manage the rural to urban GDP per Capita (Thousands of US$) transition successfully and rapidly growing their Source: World Development Indicator (WDI), World Bank 2015 economies, to increase incomes and to raise standard of Economic Structure of Asian Emerging Markets in living. 1965 & 2014 (%) Effect of Urbanization to GDP Growth (%) 100% 13% 15% 31% 28% 10% 80% 42% 44% 44% 48% 46%46% 51% 58% 7% 8% 10% 60% 13% 35% 4% 40% 22% 31% 27% 43% 5% 43% 42% 56% 31% 40% 20% 37% 32% 27% 29% to GDP GDP to Growth(%) 0% 13% 9% 12% 11% 9% 0% Contributionof Urbanization 19652014 19652014 19652014 19652014 19652014 Agriculture Industry Services Source: Indonesia’s Urban Story, World Bank (2016) Source: Indonesia’s Urban Story, World Bank (2016) Further, the returns of rapid urbanization to economic economy. As the economy of a country develops, the growth of a country has divergence effect one country to economy shifts from agricultural sector to manufacturing another. For example, every 1% of urbanization, Indonesia and services sectors. Indonesia, for example, relied 56% achieved only 2% of GDP growth. In contrast, the gain for of its economy in agricultural sector in 1965, which made other countries is as higher as 7% for Thailand, while Indonesia as one of the top agricultural producing Vietnam, China and India gained 8%, 10% and 13% countries in the world. In comparison, the economy has respectively (World Bank, 2016). Other countries have shifted to manufacturing sector (43%) and services sector gained higher economic growth through formal (44%) in 2014. employment and better labor productivity that result from As the world experience the industrial revolution, more and urbanization. more industries are developed. The manufacturing is not Such differentiation on the impact of urbanization to the only sector that is growing rapidly, the services sectors nation’s economy is something that has to be dealt with also play an important role in global economy. Both the structure of the economy itself. It is uncontested that sectors, which tend to be based in urban locations, has rapid urbanization and the effect to economic growth is driven the rate of urbanization. Thus, more people are highly correlated with structural change in a nation’s coming to cities to search for jobs and a better life. sdsdgsegasgfsdsgdsgsd SMI Insight 2017 PT. Sarana Multi Infrastruktur (Persero) I www.ptsmi.co.id 2 The Cost of Urbanization Despite the benefit of economic growth and raising incomes, urbanization could raise number of issues if it is not taken care properly. High population density, inadequate infrastructure, lack of affordable housing, air pollution, waste problems, flooding, slum creation, crime, and poverty, are a number of problems that might have arisen in the cities due to intensive urban growth. On top of that, traffic congestion is the most troublesome of all. Traffic and Flow of Commuters in Jakarta As in the case of Jakarta, the largest megapolitan in Southeast Asia, the overall population has grown 122% Source: Photo by Peter Hershey (www.unsplash.com) between 1971 and 2015 (BPS, 2012). However this trend did not continue as the population has fallen apart of about 12.000.000 853,386 people in the last 5 years before the 2nd 11.000.000 millennium ended. The decrease of Jakarta’s population in 10.000.000 1995-2000 was caused by the suburbanization. 9.000.000 8.000.000 7.000.000 The periphery of Jakarta, known as Bodetabek (Bogor- 6.000.000 Depok-Tangerang-Bekasi), has experienced a significant 5.000.000 increase in population and is heavily dependent on the Population of DKI Jakarta DKI of Population 4.000.000 central city where the government, corporate offices, 3.000.000 commercial and entertainment business are located. With 2000 1980 1990 1995 2010 2015 2020 2025 2030 2035 1971 a total of 3,566,178 of commuters from Bodetabek to DKI Year Jakarta and vice versa, Jakarta has become the busiest Source: Penduduk Indonesia menurut Provinsi (BPS, 2012) city in Indonesia. In the daytime, total population in Jakarta Proyeksi Penduduk Indonesia 2010-2035 (Bappenas, BPS, UNFPA, 2013) has increased around 1,126,310 of people compared to its population in the nighttime (BPS, 2015). The daily commuters sgsuse different types of transportation mode everyday to the city. Thus, overcrowding the routes, leading to slow and inefficient flow. Commuters Non-Commuters Population Place of Residence Total % Total % Total % DKI Jakarta 1,303,441 14.09% 7,945,172 85.91% 9,248,613 100.00% Bodetabek 2,262,737 11.97% 16,635,882 88.03% 18,898,619 100.00% Jabodetabek 3,566,178 12.67% 24,581,054 87.33% 28,147,232 100.00% Location of Commuter's Activities Place of Residence Outside Total DKI Jakarta Bodetabek Jabodetabek DKI Jakarta 1,047,455 249,872 6,114 1,303,441 Bodetabek 1,382,296 817,890 62,551 2,262,737 Jabodetabek 2,429,751 1,067,762 68,665 3,566,178 Source: Commuters in DKI Jakarta in 2014 (BPS, 2015) SMI Insight 2017 PT. Sarana Multi Infrastruktur (Persero) I www.ptsmi.co.id 3 Type of Commuters based on Main Activity Various of activities are performed by the Jakartans Training & Courses Training & Courses and people who live in Bodetabek area. They commute 0.25% 0.04% Attending everyday to work, school, or training & course places. School; Attending The dynamism of the urban has created the vibrant School; 14.47% atmosphere in the megapolitan city. 20.68% Type of Commuters based on Transportation Mode DKI Jakarta Bodetabek Others; 0.38% Working Working 85.47% 79.28% Motorcycle; Public 57.55% Transport; Private Vehicle; Source: Commuters in DKI Jakarta in 2014 (BPS, 2015) 27.84% 70.05% Car; 12.51% Around 70.05% of Jabodetabek commuters are going to Non-Motorized their places of activity by private vehicles: motorcycle Transport (NMT); (57.55%) and car (12.51%), while only 27.84% of them are 1.73% using public transport, NMT (1.73%) and others (0.38%). It Source: Commuters in DKI Jakarta in 2014 (BPS, 2015) turnedgergt out that the supply of public transport failed to fulfill the market demand. Moreover, the lack of convenient public transport system, has also driven people to collectively opt for private vehicles over public transport. Rising Number of Motorized Total Number of Motor Vehicles in Indonesia (1990-2015) Vehicles Ownership 140.000.000 120.000.000 The rising number of 100.000.000 motorized vehicles ownership 80.000.000 in megacities in Indonesia is 60.000.000 steady and progressive. This 40.000.000 is partly due to the overall 20.000.000 growth of the Indonesian - economy, which has 2002 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 increased the number of 2000 middle-income population.
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