Wednesday, 3 July 2013

GOVERNMENT MUST IMPROVE NATIONAL LOGISTICS SYSTEM



Infrastructure problem is the focus of attention of all of us in the recent years in order to respond to national economic activities. Infrastructure is not only the supporter of national economic activities and domestic interconnectivity (within and between islands), but it is also expected to increase connectedness with international world. One once hand, demand for found for infrastructure development which is quite high in the midst of limited fiscal movement space requires a strategic attempt by optimizing investment. Therefore attempt to invite local as well as foreign investors in the form of public-private partnership is a manifestation to optimize momentum without denying national interest.

Deputy General Chairman of Indonesian Chamber of Commerce and Industry (Kadin) for Trade, Distribution and Logistics, Natsir Mansyur, Thursdays (12/27), regretted over Indonesia’s economic growth which is not in line with increase of food production and manufacture so it causes Indonesia to depend on import. He said that Indonesia’s economic growth next year is projected at 6.8%. But, unfortunately, such a high growth could not provide any changes. According to Natsir, improvement can be started from logistics system and adequate infrastructure for industries in the regions.

Concerning infrastructure development, Natsir said that Kadin is serious and will prepare an investment fund of Rp 72 trillion until 2015 if national logistics system and distribution channel infrastructure are improved. Kadin jointly with the related ministries continually arranges meeting to discuss about development of national logistics system. We, business operators, expected the government to immediately improve the national logistics system, Natsir said.

So far, logistics cost stands at 14.08% and it is set to be reduced up to 10% by end of 2014. It is expected that logistics cost by 2025 will be less than 10%. According to him, logistics cost is currently very high and it significantly affects competitiveness of local product. Therefore, the central and regional government must be responsible in reducing logistics cost. The government should accommodate interests of regional government to reduce logistics cost. One of them is infrastructure development which is a problem, to almost all regions.

According to Natsir, the attempt to reduce national logistics cost is important in the framework of downstreaming of industries which are being cultivated. Sumatera, for example, as a region that produces plantation, agricultural commodities and minerals requires adequate infrastructures, whether to boost development acceleration as well as speed of marketing of downstream products. He is in the opinion that if infrastructure is bad, not only logistics cost that will increase, but also development cost.

The business community support government’s attempt to accelerate improvement of logistics system and infrastructures connecting rural areas to economic growth centres. The aim is to reduce Indonesia’s logistics cost which reaches 24% and to improve business climate. He toot an example that 70% of differences in rice price in some regions in Indonesia is due to logistics cost. This is a reflection of bad road infrastructure, crowded seaports, and inter-island transportation system which has not been improved.

By improving connectivity, logistic costs will be cheaper and delivery time will be faster. Additionally, infrastructure and transportation reform will provide a huge economic benefit. This policy will also help to improve social services, create a more conducive business climate, promote private sector participation in infrastructure services, increase technology and innovation, and expand work opportunities. (E)


Business News - January 04,2013

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