The Indonesian government has just received a US $ 300 million injection of funds from the World Bank to fix and reform the logistics sector to reduce costs while increasing the reliability of maritime logistics.
JAKARTA (infolog): Chairman of the DPP Indonesia Logistics and Forwarders Association (ILFA) Yukki Nugrahawan Hanafi said the loan is expected to be utilized as prudent as possible by the government so that it has a direct impact on the community.
“Surely this is very positive,ILFA hopes that the use of the funds must be in accordance with what is said by the World Bank, must be targeted, and because this form of loan, the impact should be felt by the community,” Yukki told Bisnis.com on Thursday (5 / 7/2018) quoted as saying.
For business players, Yukki said, the government is expected to manage these funds in a transparent and accessible to the public.
“We of the business actors also want an open government funds are used for what and can be opened to the public,” he explained.
He also hopes that with the capital of the loan the government can realize it well so that logistics costs can also go down to 21% by 2019.
Because, the World Bank study in cooperation with ITB Logistics Study Center in 2013 shows that the average cost of logistics Indonesia during the year 2004-2011 reached 26.64% of gross domestic product (GDP).
ILFA’s research in 2017 also shows the high logistic cost of Indonesia which reached 23.5%. This figure is higher than some countries such as Thailand (13.2%), Malaysia (13%) and Singapore (8.1%).
“The logistics cost for the industry between the regions could be better, especially in the Central Java region is still high compared to other areas in Java, Sumatra, Sulawesi and East Indonesia regions can be continuously improved,” he said.
Previously, the World Bank itself through the Chief Representative in Indonesia and Timor Leste Rodrigo A. Chavez said the loan for Indonesia is the second in the Indonesia Logistics Reform Development Policy Loan (DPL) program, which was approved in November 2016.
He considered the efficient logistics sector as vital for the growth of the manufacturing, agriculture and services sectors. According to him, a better logistics will improve Indonesia’s competitiveness and help reduce poverty by lowering the prices of goods and services in remote areas, especially in eastern Indonesia.
The World Bank considers that inefficient port operations, uncompetitive logistics markets and long trade procedures have hampered Indonesia’s competitiveness. Ports are considered to be an obstacle in the national logistics chain due to limited infrastructure, regulation, and low productivity.
These barriers caused logistic costs for the manufacturing sector in Indonesia to be more expensive than Thailand and Vietnam. In addition, these barriers also contribute to lower logistics performance compared to other countries in southeast Asia. (ac)