Logistics Sector May Rise By 15%

Logistics Sector May Rise By 15%

JAKARTA— Indonesia Logistics Association (ALI) estimates national logistics service industry will reap US$170 billion or equals to IDR1,951 trillion in 2014, supported by the rise in goods distribution related to general election.

Head of ALI, Zaldy Mashita, said the prediction shows its growth trend is still at two-digit percentage. “National logistics is predicted to grow until 15% with business value reaching US$170 billion,” he told Bisnis on Sunday (11/10).

The estimation, he argued, is higher than this year’s prediction which will reach US$150 billion or equals to US$1,722 trillion. The high prediction in 2014, he said, is supported by the development plan of network and supply chain of logistics companies running in Indonesia.

Yet, Zaldy explained the development of infrastructure not significantly carried out by the government will still result in high national logistics expense next year. “Besides, the implementation of national logistics system not running appropriately will hinder the growth of the industry next year, let alone the enormous number of regulation and the overlapping ones,” he said.

He argued port improvement should also be carried out soon by the government to support shifting of truck from Northern Java coast to the sea through short sea shipping.

Zaldy assumes the transfer of load from truck to sea transportation can decrease transportation cost up to 20% and the maximum additional time is one day. He suggests the shifting should prevail for 40 feet container gradually from Jakarta to Surabaya and vice versa.

“The government must soon implement this. Moreover, it promises to carry out in late 2012, but until now it has yet to take place. This is for the efficiency of our logistics,” he said.

Competitiveness

Indonesian Chamber of Commerce and Trade states the government must soon solve severe problem of national logistics which hinders competitiveness. In addition, the Chamber underlines two things to anticipate ahead of Asean Economic Community (MEA) 2015.

The first is the importance of collaboration between private logistics services to maintain domestic market. The second is business players and association must promote transformation of logistics paradigm and that private players must be the backbone of national logistics sector.

Head of Chamber, Suryo Bambang Sulisto emphasizes the main obstacle in improving Indonesia’s competitiveness is the backward state of infrastructure development hence transportation and logistics cost expensive.

“Now it is difficult to build highway and railway to meet the need. 80% of the existing facilities is monopolized to transport passenger, while logistics is put aside,” he said.

Chairman of Supply Chain Indonesia Setijadi previously asked the government to prioritize on regulation revision other than infrastructure development in improving national logistics competitiveness.

Currently, the performance of national logistics is still hindered by lots of overlapping regulations at stakeholder level. “There needs to be simplification of regulation since there are lots of regulations in either central or regional level since it creates inefficiency and weakens our competitiveness,” he added.

He put an example the rules on maximum goods carriage which does not have any reference from the central government, hence provincial administrations have their own limit. This creates illegal levies on inter-province distribution and permit bureaucracy since each region has its own regulation.

Besides, he continued, regulation enforcement is still weak. In fact, all this can create logistics efficiency and healthy business competition.

Indonesia ranked in 59th place out of 155 surveyed countries in Logistic Performance Index (LPI) in 2012.

Source: http://business.bisnis.com/