Logistics Costs in Indonesia Remain High: Business Owners Look for Solutions

February 23, 2024, 09.20 PM | Reporter: Rashif Usman

ILUSTRASI. Aerial photo of container loading and unloading activities at Kendari New Port, Kendari, Southeast Sulawesi, Tuesday (20/2/2024). The local Central Statistics Agency (BPS) recorded that the number of exports throughout 2023 reached 2,329 tonnes, an increase of 4.71 percent compared to the previous year which only reached 2,224 tonnes. BETWEEN PHOTOS/Andry Denisah/Spt.

LOGISTICS COSTS - JAKARTA. President Jokowi stated that Indonesia's logistics costs are still slightly higher compared to other countries. He also reminded us that 10 years ago, Indonesia's logistics costs reached 24% of GDP, while other countries were at the 9%-12% level.

“Now our logistics costs have dropped to about 14%. It has decreased, but it is still slightly higher than other countries, this becomes our joint homework,” said Jokowi when inaugurating the Makassar New Port monitored from Youtube Kompas TV, last Thursday (22/2).

In response to this, the Chairperson of the Indonesian National Shipowners Association (INSA) Carmelita Hartoto stated that logistics improvements must be carried out comprehensively and involve multiple sectors.

Because, logistics efficiency requires economic equality and increased trade in regions, such as improving port performance, airports, port service efficiency, and others.

"The government as a regulator must act to oversee the practice of goods and services flow in the field. There should no longer be counterproductive port service sectors, which are unnecessary or made up that will cause high economic costs," Carmelita told Kontan, on Friday (23/2).

She added Indonesia's Logistics Performances Index (LPI) in 2023 was ranked 63 or down from rank 45 in 2018. This ranking shows that Indonesia is still below neighboring countries.

Therefore, she also asked that the new government later can work to the maximum, especially in the transportation and logistics sector. "We also hope that the new government can overcome operational transportation disruptions, and ensure safety and security at sea," she concluded.

On the other hand, Carmelita agreed that Indonesia's logistics sector is different from other countries. Because the logistics sector in Indonesia requires multimodal connectivity or freight transport using at least 2 different modes of transport based on one contract.

In Kontan's research, the 2023 LPI data shows that Indonesia scored a total of 3.0 or ranked 63. This value decreased compared to the 2018 LPI with a score of 3.15 or perched at rank 46. Among ASEAN countries, the highest LPI 2023 rank is Singapore (rank 7), followed by Malaysia (31), Thailand (37), Philippines (47), Vietnam (50), Indonesia (63) and Cambodia (116).

Meanwhile, another Kontan research shows that Indonesia is the country with the highest logistics costs in Asia, which is 24% of GDP in 2019. Then, followed by Vietnam 20%, Thailand 15%, China 14%, Malaysia 13%, Philippines 13%, India 13%, Taiwan 9%, South Korea 9%, Singapore 8% and Japan 8%.