Indonesia’s transportation and logistics activities are still less competitive. Logistics cost reaches more than 23.5% of GDP (Gross Domestic Products), according Indonesia Logistics and Forwarders’ Association (ALFI/ILFA).
Compared to neighbouring countries, including the ones in ASEAN countries, Indonesia’s logistics cost to GDP is the highest, higher than Vietnam (15%), Thailand (13,2%), Malaysia (13%), and Singapore (8,1%).
Globally, though there was an increase in Logistics Performance Index (LPI) that released by the World Bank from 63rd (2017) to 46th (2018), but in ASEAN scope, it was down to fifth, from fourth, after those countries mentioned above.
In responding this, President Joko Widodo has just issued new regulation as guideline to tackle the problems behind this logistics’ poor competitiveness – the Presidential Decree Inpres No 5/2020 on National Logistic Ecosystem (NLE).
Many, especially the related business players, have positively accepted this regulation, including ALFI. Yukki Nugrahawan Hanafi, ALFI Chairman, explained that ALFI has actively supported this NLE initiation from the beginning, expecting it to be a problem solver for any future logistics challenges and constrains.
Furthermore, Yukki noted, Indonesia would soon face other challenges from ASEAN connectivity. ASEAN has a master plan for Asean Connectivity 2025 (MPAC 2025), which envisions the region as an integrated community. MPAC 2025 encompasses three dimensions — physical (physical infrastructure), institutional (regulatory framework) and people-to-people (education, tourism, exchange of knowhow etc.).
Sustainable infrastructure, digital innovation, seamless logistics, regulatory excellence and people mobility are the five strategic areas chosen for a “seamlessly and comprehensively connected and integrated ASEAN community.
In addition, quoting the results of some surveys, Yukki said the Indonesia would join the world’s 7th biggest economy country by 2030. The NLE program, he said, is completely needed for this vision.
NLE is a system collaboration harmonizing any export import procedures thus creating an efficiency. NLE is also about streamlining the flow of goods and flow of documents since the cargoes arrive at the sea port/airports until they are delivered to the warehouses.
“These physical and digital connectivity are initial bases. All documents can be processed digitally, both of international and domestics activities. So, NLE is not an institution, it is a system,” Yukki said in a press release on Friday, September 25.
He gave some examples of NLE service, including online delivery order (online DO) and container clearance (SP2). “NLE remains an achievement of collaboration between government’s institutions or bodies with business players. This proves that collaboration is much better than competition. Hence, ALFI totally supports this NLE, both its concept and implementation,” he said.
Appreciation to Govt Institutions Commitment
Yukki explained that ALFI absolutely appreciates to all government’s institutions and bodies that are committed to implement this NLE in line with the guidelines of the Inpres 5/2020.
Earlier, on a virtual press conference on NLE, Ministry of Transportation had explicitly stated to totally support the implementation of this Inpres.
Minister of Transportation Budi Karya Sumadi explained that the Ministry would accelerate to build connectivity among the areas nationwide and build accessibility through integration of transportation infrastructures of sea ports, airports, railway station, land transportation with some distribution centers.
Ministry of Trade has also explicated its support for this NLE implementation. Trade Minister Agus Suparmanto said that adoption of this NLE will totally support the Indonesia’s trade and economy competitiveness and will support a better investment climate. NLE he said will support a smooth export/import activity.
Finance Minister Sri Mulyani notes that the problem of logistics is a key issue in building Indonesia’s economy competitiveness. She expects a tighter collaboration among institutions and business players to implement this Inpres.
She said that said the government is completely serious to improve the national logistics performance in a bid to build a better investment climate. The government, she further said, had set up some strategic steps for the NLE implementation. “Simplification of government permits in logistics sector is an example. Government has cut any repetition or duplication process,” she said.
“This NLE system will support all logistics processes to be integrated,” she said.
Sri Mulyani said that NLE is a part of logistics reform in a bid to support improvement in Indonesia’s economy competitiveness.
Echoing the views, Coordinating Minister of Maritime Affairs and Investment Luhut B. Pandjaitan explained that this NLE program is a part of government efforts to recover the national economy.
“The implementation of this NLE is so crucial. Hence, all stakeholders should build collaboration. Monitoring the implementation of this NLE should run simultaneously,” Luhut said.