TO BE COMPETITIVE, LOGISTICS COST MUST BE MINIMIZED

National business players urged the Govern­ment to lower logistics cost which were rated as too high, and made Indonesian products less competitive than that of other countries. Vice Chairman of KADIN. Investment and Transportation Division, Peter F. Gontha, stated in Jakarta on Friday (14/12/2012) logistics cost in Indonesia was still high compared to other developing nations. Logistics expenses in Indo­nesia was even 100% more expensive than that in Japan.

Peter added that the high national logistics ex­penses was due to interior infrastructure like roads, harbors and other public utilities. This condition was rated as affecting Indonesia’s competitiveness which supposedly guarantee investors activities to run their business. Transportation cost in Indonesia, according to Peter, could even be twice as much as that of neighboring countries. He underscored that logistic expenses was classified as high compared to other countries. Compared to Malaysia, logistics expenses in Indonesia was almost twice as much. “This is a problem, if we really want to be competitive, cost logistics must be brought down” Peter remarked.

Peter showed as an example the logistic cost for a 55 km transprtation in Indonesia was USD 550 white in Malaysia it was only USD 300. For that mat­ter he said, if Indonesia could revitalize the trucks it could help to reduce logitics cost. Peter also men­tioned that logistics cost was not only determined by age of transportation means but also other factors like size of ship and harbor’s condition. He described that to send a container from Jakarta to Singapore it would cost only USD 185, while from Jakarta to Padang the cost was USD 600.

For that matter Peter said, it came as no sur­prise that Indonesia's Logistics Index was way below compared to neighboring countries like Malaysia and Singapore. One of the reasons was that logistics cost in Indonesia was among the most expensive i.e. 24%. This year Indonesia's logistics index was in 75^th position this was way below neighboring countries line Singapore which was in second position.

The same was with transit time of goods, he said, in Indonesia transit time of goods was 5.5 days; this made Indonesia uncompetitive against the USA where transit time of goods was around 1 or 2 days, Rotterdam, Holland 1.1 day and Singapore less than 1 day. For that matter he said he was expect­ing Indonesia’s Logistics Community Service (ILCS) could help to troubleshoot all the problems, Hence, at least the national export-import could be downsized to 15%. “We are looking forward to be like Malaysia in the next 3 - 4 years” Peter said.

The Indonesian Chamber of Commerce (KADIN) set target for logistics cost to be down from 17% to 10% of production cost. However, he admit­ted, to bring down logistics cost by 1% alone was not easy, as there were some aspects like burreau­cracy of technical reasons like ships and trucks. For that matter KADIN planned to reviialze distribution of good logistics and food to meet the target.

Based on data of KADIN today the armada of trucks of the Indonesian Forwarders and Logistics Association (ALFI) of greater jakarta was around 2,272 units, while the armada of trucks of the Organda members of Tanjug priok harbor numbered 8,328 units. There were around 4,448 units of trucks of 15 - 20 years of age pursuant to that matter KADIN recommended revitalization of around 4,000 trucks till 2014.  (SS)

Business News - December 19, 2012