Government reforms logistics service to support local businesses

The national logistics costs accounted for 24.6% of Indonesia’s gross domestic product in 2014. Meanwhile, logistics costs made up to 40% of the retail price of goods in Indonesia, a setback to domestic businesses.

Considering the facts above, which were published in Kompas on Thursday (April 27, 2017) in an article titled “Dwell time in port set at 2 days”, the government has recently issued an economic policy package focusing on the development of national logistics business.

The 15th Economic Policy Package was announced by Cabinet Secretary PramonoAnungWibowo,along with Economic Coordinating Minister DarminNasution, and Transportation Minister Budi KaryaSumadi, at the President’s Office, Presidential Palace Complex, Jakarta, on Thursday (June 15, 2017), as cited from in “Logistics system improvement becomes first step in reform to reduce costs”article.

“Improvement has been done, but the government feels that it is not enough as there are still other sectors that can be improved,” Pramono said at that time.

To implement the economic policy package, the government simplifies and revises several regulations.

The simplification includes merging three presidential regulations (Perpres) into one presidential regulation on Indonesia National Single Window.

Through this package, Darmin added, the logistics industries are expected to switch from using foreign logistics services to domestic ones.

Domestic vs Foreign LogisticsBusiness

Indonesia itself now has the Indonesia National Single Window Portal Management (PP INSW), whose task is managing customs, permits, and other documents related to export-import and logistics activities through electronic means, reflecting a one-door policy.

INSW itself has already been discussed in the previous policy package, namely Policy Package XI.Aside from INSW, another important key to the logistic process’ efficiency in Indonesia is dwell time, or the time that is spent to unload goods from the port.

“By the end of this year, we are assignedto reduceit (dwell time) to two days. We are positive that this target will be achieved. The key lies in the Policy Package XI on single-risk management and the INSW, which will rationalize export-import policy,” Economic Coordinating Ministry’s Deputy for Trade and Industrial Coordination,Edy Putra Irawady said as cited from Kompas (April 27, 2017).

Regarding the dwell time, the latest average dwell time in Indonesia was 2.9 days, lower than Malaysia’s (2 days) and Singapore (0.5 days to 1.5 days). This issue affects the national logistics cost.

According to Edy, one of the factors that prolong process at port is the export-import administrative works. Therefore, through a single-risk management method, the risk of export-import pertaining to15 agencies will no longer be the responsibility of the port. Furthermore, PP INSW will also rationalize 134 regulations related to export-import process.

“For instance, permit processing will take shorter time because the process is done electronically,”Edy said.

This logistics service reform is hoped to encourage business owners to use domestic logistics services, since the government support has made them competitive to foreign logistic services.

Furthermore, there are several Indonesian experienced logistics services such as SELOG from Serasi Autoraya (SERA), whichoffers guaranteesonsafety, punctuality, and zero defect.

As part of Astra Group, SELOG has long been providing logistics service through various transportation modes in Indonesia, for heavy tools or other cargo. For international shipping, SERA collaborates with Jardine Shipping Service (JSS), the largest shipping agent in Asia.