Thursday, 18 December 2014


Next year Indonesia would have to join the Asean Economic [MEA] 2015. Unfortunately Economic Community [MEA] 2015. Unfortunately the condition of infra-structure made it difficult for Indonesia to compete in Asean. Poor infra structure made logistics cost high. Logistics cost in Indonesia constituted only 27% of GDP. Meaning, 27% of national fund was used only for cargo delivery.

High logistics cost in Indonesia was admitted by the Government. The Ministry of Transportation Ignatius Jonan stated on Tuesday [18/11] that national logistics was still inefficient. In Indonesia, the ratio of logistics cost to price of goods was still high compared to that in other countries. The Ministry showed as example Singapore where logistics cost was only 8% of price of goods while in Indonesia it was still around 25% - 30%.

According to Jonan, high logistics cost made selling price of goods in Indonesia too high to be competitive. He said that of the Government’s objective for the next 5 years was to lower logistics cost. Jonan said that to lower logistics cost was not always by expending the armada at sea. The Government must also improve operations including inter mode connectivity and cargo handling system on land.

Similar statement was made by Sugiharto, Expert Staff in Logistics and Multi Media of the Ministry of Transportation who said that National logistics cost was still high so it was not strong enough to jack up competitiveness of Indonesian products in the Free Trade era. He said that many countries in Southeast Asia had been able to enhance efficiency which lowered logistics cost.

In terms competitiveness, Indonesia Index of Logistics Performance was n 59th position among 155 countries. At Asean level, Indonesia’s logistics cost was notably high. Indonesia was not any better than Vietnam, where logistics cost was 25% of GDP. In Thailand logistics xost was 20%, Malaysia 13% and Singapore 8% of GDP. Delivery by overland in Indonesia was more expensive than in Malaysia.

He said that with the same distance of 55 km from Pasir Gudang to Tanjung Pelepas in Malaysia the transportation cost was around USD 450 in 1 – 2 hours while logistics cost for 1 container from Cikarang to Tanjung Priok harbor was USD 600 covering 4 – 8 hour.

Not just overland transport was expensive, sea transportation was just as costly. Shipping of cargo from Padang to Jakarta was Rp. 600 per container, while shipping expenses from Singapore to Tanjung Priok harbor was USD 185 per container. Sugihardjo also rated that anchorage and loading and unloading in harbors was time consuming. In Indonesian harbors [Pelindo] loading and unloading took around 3 days on the average while ideally it should be 2 days.

To cut logistics cost, Sugihardjo said, the best way was to build adequate infra structure. A toll road needed to be build to connect industrial areas and the harbor, and the number of harbors must be increased as well; at least there must be one harbor for very 40 kilometers along the coastline.

Meanwhile Supply Chain Indonesia [SCI] rated that the Government’s plan to increase oil price would have its impact on transportation and logistics cost which further jacked up commodity prices. Chairman of SCTI Setijadi stated that trucking companies would be the most affected by increased oil price.

By SCI analysis, fuel expenses was around 29% to 32% of truck operational cost. Increase of Solar oil price from Rp. 5,500 to Rp. 6,500 per liter would increase operational cost by 12% - 13%. (SS)

Business News - November 21, 2014

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