The World Bank’s Board of Executive Directors approved a new loan to Indonesia of USD 300 million or Rp 4.8 trillion. The loan is aimed at supporting governments to reduce costs while increasing the reliability of maritime logistics.
JAKARTA (infolog): World Bank Chief Representative in Indonesia and Timor-Leste Rodrigo A. Chaves said a better logistics system would improve competitiveness and help reduce poverty as it could reduce the prices of goods and services in remote areas, especially in eastern Indonesia.
“Efficient maritime logistics is important for higher growth in the manufacturing, agriculture and services sectors,” Rodrigo said, quoted by Antara, Sunday (1/7) quoted by Merdeka.com as saying.
The main focus of the project is to strengthen port governance and operations, foster a competitive business environment for fiber logistics service providers to make the trading process more efficient and transparent.
At present, inefficient port operations, uncompetitive logistics service markets and long trade procedures have hampered Indonesia’s competitiveness.
In addition, ports are also often considered to be an obstacle in the Indonesian logistics chain due to limited infrastructure, minimal regulation and low productivity.
These obstacles contribute to higher logistics costs for Indonesia’s manufacturing sector than Thailand and Vietnam. The barriers also make Indonesia’s logistics performance lower than the countries in the region, as measured in the World Bank’s Logistics Performance Index.
Senior World Bank Economist Massimiliano Cali explained the project could help Indonesia, which is currently the largest archipelagic country to have a long and fragmented logistics chain.
“This project will help address some of the key barriers in supply chain point areas,” Cali said.
This loan is part of the Second Indonesia Logistics Reform Development Policy Loan (DPL) made under the reforms achieved through the first DPL Logistics approved in November 2016, to overcome barriers in the movement of goods within and outside the Indonesian border. (ac)