Government agency nomenclature: Special body for logistics must be established

This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

Bisnis Indonesia: Nomenklatur lembaga pemerintahan: Badan khusus logistik harus dibentuk

22 October 2019

By: Rinaldi M. Azka

Bisnis, Jakarta – Businesses ask the government to immediately establish a special body or an authority that is responsible for the logistics sector, as the current momentum is relevant to the government agency nomenclature change.

Central Executive Board Chairman of the Indonesian Logistics and Forwarders Association Yukki Nugrahawan Hanafi said that Indonesia had yet to possess a special body or a ministry that was independently accountable and has the capability to integrate related agencies or ministries in the logistics sector.

“Hence, [the authority] must be specifically established under the President’s supervision which involves various elements of the public, namely academics as well as practice of managing the state’s logistics,” he explained to Bisnis on Monday (21/10).

He explained that this step was important to improve the competitiveness of Indonesia’s logistics that was sluggish compared to other Asean countries. In 2018, competitiveness of national logistics was still lower than Vietnam.

Yukki explained that logistics was a crucial part that covered planning, distribution, information, maintenance, and removal of goods and other resources of a company from upstream to downstream.

Logistics plans for the provision of goods that must be available at the warehouse before it is shipped to the buyers. Besides that, logistics functions to maintain the goods to always be in a decent and ready-to-use condition. Logistics is one of the forefronts of a business.

“Usually, the logistics system of a country shows the country’s economic competitiveness. Hence, the role of logistics management is crucial in a country,” he said.

He continued that the government had issued a regulation for the acceleration of the logistics sector, which was Presidential Regulation Number 74 of 2017.

The regulation is about the Road Map of the National Electronic Trading System (Road Map of E-Commerce) Year 2017 – 2019. Then, there is also Presidential Regulation Number 26 of 2012 on the Blue Print for National Logistics System Development.

The blue print is a logistics development guideline for stakeholders, and it also coordinates National Logistics System development.

The Blue Print for National Logistics System Development functions as a guideline for ministers, non-ministry agency heads, governors, regents, and mayors to arrange policies and related working plans.

“Policies of central and regional [governments] must be in line and provide certainty to each other to facilitate and accelerate businesses, especially [businesses] related to logistics competitiveness,” he stated.

Still Expensive

He explained that logistics cost in Indonesia was still expensive, which was 23.7% of the gross domestic product (GDP), and logistics cost was also 40% of the price of retail goods.

“Indonesia is experiencing a momentum that forces it to boost its national industry competitiveness, including logistics and supply chain industries,” he explained.

He hopes that production and construction can produce highly competitive products and good supply chain so that logistics cost can be lowered to be under 20%.

Logistics cost in Malaysia and Thailand is under 15%. Hence, regulators, private companies, and industry players must work hard. Moreover, it is already 2020, when the Industry 4.0 era will start.

Head of Indonesian Logistics Association (ALI) Zaldi Ilham Masita told Bisnis that he reckoned economic transformation, including the start of Industry 4.0, would not go well if it was not supported by excellent and efficient logistics performance.

He emphasised that there were two important points for logistics from President Jokowi’s speech on Sunday (20/10), namely the continuity of infrastructure construction and the transformation of economy.

According to him, the inability of ministers to realise the president’s vision and mission innovatively will produce a half-baked program. He revealed that there were several programs that were far from the expectations of the logistics sector, namely the maritime highway, the Trans-Java toll road, and the abundance of ODOL (over-dimension and over-loaded) trucks.

In his opinion, maritime highway has a great prospect, but its implementation is the same with the implementation of pioneering ships program during the Soeharto administration, thus its result is also far from expectation. Meanwhile, Trans-Java toll road is not optimal for goods transportation.
 

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