GOVERNMENT FORMED TASK FORCE TO MINIMIZE LOGISTICS COST

The Government planned to set up a task force to smoothen flow of goods at harbor including permit issuance procedure by the Customs, so business uncertainty caused by high logistics could be overcome. The Coordinating Minister of Economy Sofyan Djalil disclosed the matter in an economic meeting led by President Joko Widodo on Tuesday (10/2).

Logistics cost in Indonesia, especially in import of goods, according to Minister Sofyan was full of uncertainty and such caused business to be inefficient and prices of goods hard to go down. “If an importer imports goods the most important is delivery to be just in time. The same was when a company planned to build an office it should be just in time. So there is no need for inventory. Indonesia as everything is uncertain dues to long goods handling at harbor, transportation etc. so nothing is predictable” Sofyan said.

In Indonesia Sofyan said if someone wished to import goods he needed inventory cost because permit application procedures was lengthy, and might take 30 to 40 days while in Malaysia or Singapore only 7 to 14 days. “All this must be improved,” Sofyan said while saying that the step was necessary because the Government wished to increase efficiency at harbors considering that logistics cost was notably high, about 20% of Indonesia’s GDP.

The Task Force which was led by the Coordinating Minister of Economy under the supervision of Vice President Jusuf Kalla consisted of the Ministry of Transportation, the Ministry of BUMN, the Ministry of Finance, the Ministry of Agriculture, the Ministry of Public Works and the Ministry of Maritime and Fishery. “Soon we would report to the President time after time so all the root of inefficiency, especially due to bureaucracy could be settled at one because the problem with our harbors is that the utility is low. Therefore, building of new harbors needs to be reconsidered.” Sofyan said. 

The Government would still build harbors but only what was really necessary. “It’s not the physical harbors which are important but how to increase efficiency.” Sofyan said.

Furthermore Sofyan said that efficiency betterment at harbors could be by way of improved infrastructure and bureaucracy. Among them the process of Customs clearing would be made faster and so was dwelling time and loading and unloading process. A One Stop Service needed to be implemented in harbors so the process of loading and unloading could be spurred on.

The Government set target: in 2 months’ time bureaucracy stagnation in harbors could be overcome. “The target is to reduced logistics cost. If logistics cost could be reduced from 24% to 19% it would mean saving of hundreds of trillions of Rupiah for the industry, and the nation could score better economic growth” Sofyan said. (SS)

Business News - February 13, 2015