Low Taxi Penetration, Increasing Urban Population and Construction of Several New Airports to Aid in Indonesia Car Rental Market Growth: Ken Research

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Indonesia is still characterized by a low taxi penetration ratio at only 1.4 taxicabs per 1,000 people as compared to other South East Asian countries such as Malaysia and Singapore, these figures are much higher at 3.1 and 5.2, respectively. The Greater Jakarta area which has the highest taxi penetration rate in the country is not saturated yet and during certain times of the day it can be very difficult to get a taxi. Outside of Jakarta, the lack of taxis poses an even greater challenge.

In 2015, the Ministry of Transport released an updated plan on infrastructure development in Indonesia, outlining locations of new airports. After lacking government funding for years, in addition to land-related disputes hindering the expansion and upgrading of airports, the government announced plans to finance the construction of 165 airports in various cities across the archipelago. Furthermore, 103 existing airports will undergo renovation in the years to come with 29 being outfitted to handle international arrivals.

Indonesia contains not only a large population (over 250 million people) but also a population that has become increasingly urbanized, giving rise to higher taxi services demand in the urban regions. Approximately, 140 million Indonesians lived in the country’s urban areas as of 2016. Moreover, foreign tourist arrivals into Indonesia have grown considerably over the past years and the government targets to welcome 20 million foreign tourists by 2019 (from nearly 11.5 million in 2016). The government of Indonesia exempted visa requirements for 169 countries during 2015 to boost inflow of tourists. The number of international tourist arrivals is expected to grow at an impressive CAGR of 7.5% during the next five years. This is going to result in significant rise in demand for car rental services in the country in the near term.

The car rental market in Indonesia is highly fragmented with over 5,000 taxi service firms actively operating across the country and a vast majority of them extended their services in the urban environments of Indonesia.

The report titled “Indonesia Car Rental Market Outlook to 2021 – Rising Tourism and Growing Middle Class Population to Foster Future Growth” by Ken Research suggested the car rental market is anticipated to grow at a CAGR of 8.4% during the period 2016-2021. The cab aggregator market which is currently dominated by three players is expected to witness price war and will result in marginal slowdown of the overall market, in terms of overall revenue.

Source: https://www.kenresearch.com/automotive-transportation-and-warehousing/automotive-and-automotive-components/indonesia-car-rental-market/136319-100.html

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