Jonan urged to reduce logistics costs

Newly appointed Transportation Minister Ignasius Jonan should make serious efforts to lower Indonesia’s logistics costs, which are disproportionately high and have stifled the growth of logistics operations in the country, the Indonesian Logistics Association (ALI) has said.

ALI chairperson Zaldy Masita said high logistics costs remained a major problem the government needed to immediately deal with as logistics costs accounted for around 25 percent to the country’s gross domestic product (GDP), while they should stand at less than 15 percent.

“It is very important for the government to be able to reduce logistics costs,” said Zaldy as quoted by Antara in Jakarta on Sunday.

He added that due to such inefficiencies Indonesia currently ranked 59th out of 160 countries listed on the World Bank’s Logistics Performance Index. The data showed that Indonesia’s logistical services remained uncompetitive compared to other countries in the region, such as Singapore which ranked fifth on the index, and required more improvements, especially in the lead-up to the ASEAN Economic Community in 2015.

Zaldy said it was hoped that Jonan could further develop both passenger and freight services.

“Pak Jonan had a good track record when he served as president director of state-owned rail operator PT Kereta Api Indonesia (KAI); however, he has not yet been successful in developing logistics services for freight,” said Zaldy.

He said that there would likely be negative responses from the logistics business sector unless Jonan could make railway-based logistics services much cheaper.

Zaldy also urged Jonan to create a conducive climate for private parties to invest in logistics infrastructure and to return seaport and airport regulatory roles to the private sector.

“During this time, the management of seaports and airports has been monopolized by the state-owned enterprises and transportation ministries, giving no chance for private parties to play regulatory roles in the sector,” said Zaldy, adding that domestic logistics costs remained high although they were managed by state-owned enterprises.

President Joko “Jokowi” Widodo named Jonan as transportation minister of the Cabinet for the period of 2014-2019 in a meeting at the Merdeka Palace in Jakarta on Sunday evening, replacing his predecessor EE Mangindaan. (dyl/ebf)

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