The Indonesian Chamber of Commerce and Industry (Kadin) is urging the incoming government to take swift action to reduce tariffs at ports and to revitalize transportation facilities, in order to improve the competitiveness of local products overseas.
Kadin’s deputy head for logistics affairs, Carmelita Hartoto, said that a cut in logistics costs, which are currently among the highest in Asia, is crucial to enable Indonesian goods to compete when the ASEAN single market is implemented in 2015.
“With lower tariffs at our ports, the price of domestic goods will be more competitive,” Carmelita said on Thursday, as quoted by kompas.com.
She said that shipping costs had actually declined over the past nine years as shipping companies had begun to operate larger ships, which enabled them to increase efficiency. However, the high fees at ports, poor facilities and illegal fees kept overall logistics costs high, said Carmelita, who is also the chairperson of the Indonesian National Shipowners Association (INSA).
ASEAN, which groups Indonesia, Brunei Darussalam, Cambodia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, will begin its common market agreement in 2015. The single market accord will guarantee a free flow of goods and services among the member countries.
Carmelita said that the new government should cut logistics costs to ensure that Indonesia can benefit from the ASEAN common market.
According to data from INSA, the cost of moving shipping containers on the Jakarta-Belawan route is currently Rp 4 million (US$342.6) to Rp 4.5 million per twenty-foot equivalent unit (TEU), compared to the 2007 figure of Rp 7 million to 8 million per TEU. Other routes, such as Jakarta to Sorong, West Papua, once reached Rp 20 million per TEU, before its current price of Rp 8 million to Rp 10 million.
Of those costs, 50 percent is used to pay the high port tariffs.
Indonesia’s logistics costs are far higher than those of other countries. Data from the Industry Ministry showed that the country’s logistics costs were 23.6 percent of Gross Domestic Product (GDP), higher than fellow traders Japan (10.6 percent), South Korea (16.3 percent) and the US (9.9 percent).
Furthermore, the country’s competitiveness in terms of infrastructure and logistics was ranked 82nd out of 148 countries in the 2013-2014 Global Competitiveness Index data released by the World Economic Forum.
Meanwhile, Kadin’s other deputy head, Chris Kanter, said the high cost of logistics and weak transport infrastructure is putting the country’s competitiveness in terms of attracting investment at risk.
“Imagine how much investment we could pull if we provided adequate infrastructure and lowered the cost of logistics,” Chris said, as quoted by tempo.co. He added that government policies, which are not integrated with the needs of the logistics industry, are a major part of the problem.
The archipelagic country’s weak logistics infrastructure, particularly in the marine sector, has become a matter of concern for the Indonesian Ombudsman. Findings from the public service watchdog showed five cases of misadministration regarding dwelling times at four major national ports, namely Tanjung Priok in Jakarta, Tanjung Perak in Surabaya, Belawan Port near Medan and Soekarno-Hatta Port in Makassar.
Instances of misadministration at the ports included continuous delays, procedural irregularities, worker incompetence, abuse of authority by managing officials and illegal or unnecessary levies. (dyl, The Jakarta Post)