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Matthews Asia Snapshot

Postcard from ASEAN

Week of December 09, 2016

(Photo courtesy of Maybank Kimeng)

If you spend any time at all in Jakarta—one of the world’s few major cities to lack a rapid-transportation system—you will experience its notoriously gridlocked streets. On any given weekday, there are over 10 million vehicles that creep along Jakarta’s roads and highways, which account for an inadequately small percentage of the capital city’s overall land area.
Gridlock also plagues other parts of Southeast Asia, and can have a significant negative economic impact. For example, in the Philippines, President Rodrigo Duterte has asked Congress for emergency powers to deal with its traffic situation. One study estimates that if the government does not intervene quickly to remedy gridlock, it could result in economic losses of over US$100 million a day. As of a few years ago, Kuala Lumpur was estimated to be losing US$1.3 billion in productivity each day due to traffic.

Fortunately, there are many measures under way to improve infrastructure and transportation. Under Indonesian President Jokowi’s term, infrastructure development both in the city and throughout the island has accelerated, with special attention paid to easing the capital’s traffic congestion woes. A key facilitator was the passage of the land expropriation bill in 2015, and this together with support of Mayor Ahok, Jokowi’s successor as mayor of Jakarta, is beginning to accelerate activity.
The government is currently constructing various toll roads throughout its capital, and the Jakarta Mass Rapid Transit project, in particular, is progressing well even though the government has pushed back the targeted operational date to 2019 (from 2018). Another train station and line connecting downtown Jakarta to the Jakarta International Airport (Soekarno-Hatta) is expected to be finished within months. New sustainable transportation efforts are also underway in parts of Southeast Asia, including some car-free initiatives and Bangkok’s recent move to prioritize the creation of bicycle lanes.

Sriyan Pietersz
Investment Strategist, ASEAN
Matthews Asia

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