Indonesia community, the logistics-related business stakeholders in particular, are suggested to take the issue of drop in logistics performance index (LPI) as released by the World Bank as a reference to do improvement, instead of arguing it as a problem, Chairman of Indonesia Logistics and Forwarders’ Association ALFI/ILFA Yukki Nugrahawan Hanafi has suggested.
Moreover, said Yukki, this LPI is only a matter of ‘perception’, based on the results of a survey using a certain method. So there is no need to worry too much, amid the currently improving economic growth in Indonesia.
The most important thing at the moment is, apart from remaining committed to improvements in the logistics sector, Indonesia must also focus on maintaining economic growth in order to realize the Golden Indonesia program in the coming 2045.
“The government is currently on the track in spurring national economic growth. So we don’t need to worry too much about the World Bank’s LPI perception,” said Yukki.
He said the Government’s concentration on national economic growth can at least be seen in a number of key indicators, including high economy growth in Q2, good people’s purchasing power, government spending, low inflation (under 5%), achievement in investment target both foreign direct investment (FDI) and domestic investment (PMDN) rate.
“Additionally, the government’s downstream industry program has also yielded results, encouraging investment, which in turn has resulted in economic growth not only in Java but also outside Java,” he said.
Yukki noted that as the largest archipelagic country in the world, Indonesia cannot be compared with other countries in terms of its national logistics system, especially if the LPI survey only accommodates a few commodities.
Yukki said, regarding the improvement of the national logistics system, the government has done many things, including regulating traffic and productivity, digitization, transformation of domestic business actors, to encourage investment growth in the sector.
“Once again, let’s not argue or worry about the LPI too much. Because it is possible, there are also many countries that are included in the World Bank’s LPI survey. In fact, their logistics costs are low, but the economic level of these countries is not very good. The point is, we also don’t want cheap logistics costs but no goods,” Yukki, who is also Chairman of FIATA Asia Pacific Region, said.
But, Clarification Needed
Yukki said, even though the World Bank’s report on Indonesia’s LPI was only a perception, ALFI supports the steps taken by the Coordinating Ministry for Maritime Affairs and Investment (Menko Marves) for WB clarification. As reported, Menko Marves would ask World Bank for clarification on the LPI survey it released because it was deemed unfair.
Yukki underlined that ALFI, as an association of business actors in the logistics sector, was not involved in the survey interview by the World Bank, even though in 2015 and 2018 he had been interviewed regarding the LPI.
In 2018 and previous years, ALFI had been sent a questionnaire by a World Bank representative regarding the logistics performance survey.
As the reports have said, the World Bank has released that Indonesia’s logistics performance index (LPI) ranks 63rd out of a total of 139 countries studied with an LPI score of 3.0. This record has decreased by 17 rankings compared to 2018 when Indonesia was in 46th place with an LPI score of 3.15.
LPI’s performance is calculated based on six dimensions, namely customs, infrastructure, international shipments, logistics competence and quality, timelines, and tracking & tracing.
The LPI publication by the World Bank released April 21 2023 is a presentation of data collected from 139 countries in the second half of 2022, or fewer than the 2018 LPI which reached 160 countries. But in 2020, the World Bank did not release the LPI.
Since its launch in 2007, LPI has conducted simple logistics-related assessments by professional sources of how easy it is to export to destination countries in terms of infrastructure quality, quality of logistics service availability, and public sector constraints.