The increasing freight rate in sea transportation will indirectly increase investment in Indonesia as the skyrocketing freight will change the global trade model and route, potentially giving benefits to Indonesia products, said Ministry of Investment (Investment Coordinating Board).
The high freight rate is projected to continue until 2022 and even until 2023. This is due to the disruption of trade and economic activities due to the Covid-19 pandemic. This is also expected to have an impact on changing trade patterns in the world.
Expert Staff to the Ministry of Investment (BKPM) for Economy Indra Darmawan said that next year’s investment target will increase from the Rp 900 trillion (2021) to Rp 1,200 trillion next year (2022).
This optimism is based on economic growth in Indonesia which is estimated to grow 4.5% to 5.5% next year, or higher than the projected global economic growth which will decline from 5% to 4% level.
Indra said the optimism for Indonesia’s economic growth is also expected because it receives blessings from high commodity prices. According to Indra, this has something to do with the condition of the shipping industry because freight will not go down until next year.
“So tariffs (freight) for the transportation of goods across countries globally is estimated to remain high, until there are some analysts who estimate that throughout 2022 it will even drag on until 2023,” he explained in a virtual discussion held by E2S with the topic “Linking Investment and Business Prospect of Integrated Marine Logistics in Indonesia”, Tuesday (28/12).
The increase in transportation costs is due to the disruption of trade and economic activities that are still occurring in various parts of the world due to the pandemic. Indra highlighted that if the new variant of Omicron has an impact, it will certainly suppress mobility and the world economy, which will lead to higher logistics cost.
With this uncertainty, Indra said, there will be changes in trade patterns so shipping business actors must anticipate them. “How the activities or situations that we see together this year can still be anticipated next year,” he said.
According to Indra, the increase in logistics prices has forced several countries to change their trading patterns, such as looking for closer markets or looking for alternative sources of raw materials that are closer and smoother.
“Hopefully, Indonesia will get benefits from these opportunities, thus increasing investment within the country,” he said.