GOVERNMENT STRIVE TO REDUCE LOGISTICS COST

Reformation of the national logistics system called for sound action since the need was pressing, moreover to consider that many concept had been proposed. The Government had procured some fund till 2014 to reform the national logistics whether it was land, sea or air transportation or railway. However, the Government’s role alone was not enough to accelerate reformation of the logistics system. The role of BUMN and private companies were called for to participate in the reformation of the national logistics system.

The inferior national logistics system reduced competitiveness of national economy. Reformation of the national logistics system to the extend of reaching all parts of Indonesia would integrate national economy. Indonesia’s domestic connectivity system needed improvement to keep national economy from being divided. The Government was ready to receive inputs or recommendations to reform the national logistics system. The Government already hard workplan for 2014, all to be executed jointly with the private sector.

The deputy chief of Industry and Trading Division, Coordinating Minister of Economy Edi Putra Irawadi stated in Jakarta on Friday [25/10] that through Presidential Regulation no 26/2012 on the blueprint of National Logistics system, the Government planned to enhance efficiency of logistics cost which tend to cause high cost in Jakarta was today 27% of GDP and that was high enough. Previously the Government planned to reduce logistic cost radically to 14.9% of GDP in 2015. “We set target to lower logistics cost to 3% of GDP” Edi said.

The Government also planned to enhance time efficiency by reducing 10% wasted time caused by uncertainty in supply chain management by 2015. For that matter the Government would set up Indonesia Logistics [inalog] as one-stop service system in the logistics system. While building infra structure on land, the Government would also enhance infra structure for sea and air logistics. Today the use of sea and air transportation was only around 2% and yet Indonesia is an archipelago where islands were separated by sea. Edy warned that if industrial liberalization were applied in Asean foreign logistics company would be allowed to enter Indonesia. Unless well anticipated, local logistics operators would be edged aside by stronger foreign companies.

Edi rated that reformation of logistics system needed to be accelerated to strengthen competitiveness of the national logistics industry in anticipate of the AEC Asean 2015. He said that today logistics cost in Indonesia was by far higher than that in other countries, especially the developed nations. National logistics cost was posted at 23.6% while in the USA it was only 10%, Japan 10.6%, and South Korea 16.3%. High logistic cost forced businesspeople to spend higher cost for distribution which had its impact on selling price.

He called out to all businessplayers to scheme to up workplan with the Government in developing national logistics which was efficient and effective. He said that to compete, Indonesia’s logistics cost must be reduced by at least 10%-15%. Being an archipelago country, Indonesia faced complicated problem in building efficient logistics compared to other Asean states like Malaysia or Singapore. “We wish to reduce logistic cost, minimize logistics time and simplify logistic rule and logistics-to-GDP ratio,” Edi said. 

Business News - October 30, 2013