Astra Land taps rising demand for modern warehousing in Jakarta

Singapore

ASTRA Land Indonesia (ALI), a joint venture (JV) between Indonesia-listed Astra International and Singapore-listed Hongkong Land, is looking to tap growing demand for modern warehousing in the country, mainly in Jakarta and its surrounding cities.

"There is still sufficient room for growth because domestic logistics outsourcing can still be optimised compared to other countries in South-east Asia," Boy Kelana Soebroto, head of corporate communication at Astra International, told The Business Times.

Astra International and Hongkong Land each control 50 per cent of ALI.

The penetration level per capita of Indonesia's logistic warehousing sector is still not optimal, Soebroto said, specifically when it comes to comprehensive and efficient logistics solutions.

ALI recently set up a JV with Logos Southeast Asia, a unit of Hong Kong-listed ESR Cayman, to manage and develop modern logistics warehousing in Indonesia.

Logos and ALI each own a 50 per cent stake in the JV company.

This JV marks the first time Astra International is setting foot in the modern warehousing logistics space.

As a first step, the JV will focus on setting up a warehouse in Jakarta and the surrounding area of Jabodetabek. Going forward, it will also look for opportunities in other regions in Indonesia.

Demand for warehouse space in Indonesia has been boosted by the e-commerce sector. By the end of 2021, there were 16.4 million small and medium-sized enterprises (SMEs) connected to digital platforms, said Minister of Cooperative and SMEs Teten Masduki - more than double the number at the start of the Covid-19 pandemic.

Indonesia's e-commerce transaction volume has increased 23 per cent from early 2020 to mid-2021, and gross merchandise value is projected to reach US$83 billion by 2025 from an estimated US$32 billion in 2020.

Other sectors - including manufacturing, fast-moving consumer goods, and third-party logistics - are also adding to demand, Soebroto said.

Astra International has cited data from Mordor Intelligence stating that Indonesia's shipping and logistics market size will expand from US$81.3 billion in 2020 to US$138 billion in 2026.