Logistics costs to be reduced in support of food self-sufficiency
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.
Investor Daily - Dukung swasembada pangan, biaya logistik ditekan
30 October 2024
By Heru Febrianto and Ichsan Amin
Jakarta, ID – The State-owned Enterprises Ministry and the Transportation Ministry are working together to lower logistics costs in the transportation sector. This effort aims to support the food self-sufficiency programme initiated by Indonesian President Prabowo Subianto.
State-owned Enterprises Minister Erick Thohir emphasises that ongoing coordination with various related parties is crucial to reducing logistics costs in the transportation sector, which will support the key programmes of food self-sufficiency, energy independence, and downstreaming that are championed by
President Prabowo Subianto. Erich Thohir highlighted this commitment during his visit to Transportation Minister Dudy Purwagandhi at the Transportation Ministry in Jakarta on Tuesday (29/10).
“Currently, Indonesia has managed to reduce logistics costs by approximately 13%-14%. However, these costs remain high compared to other countries. In line with President Prabowo's directive to support self-sufficiency in food and energy as well as downstreaming, I am continuing my coordination with the
Transportation Minister to further reduce these costs,” Erick said after meeting the Transportation Minister in Jakarta on Tuesday (29/10/2024).
Erick also mentioned that, with the advancements of state-owned enterprises (SOEs) in the transportation sector—such as InJourney Airports, the merger of PT Pelabuhan Indonesia (Pelindo), PT Kereta Api Indonesia (KAI), and PT Jasa Marga Tbk—his team is optimistic about gradually reducing logistics costs.
“We also aim to enhance the integration of transportation modes and their supporting infrastructure. This will improve services and boost the number of visits from both local and international tourists,” he continued.
Additionally, as the holiday season at the end of 2024 approaches, Erick mentioned that the SOE Ministry and the Transportation Ministry have established best practices to anticipate a surge in tourism during the Christmas and New Year holidays.
“This means we have already implemented our best practices and now only need to make minor adjustments in terms of cleanliness, efficiency, and orderliness to prevent congestion. This is what we must anticipate. As for infrastructure, I believe it is now ready and more organised, allowing people to enjoy their holidays smoothly and comfortably,” he explained.
Erick also explained that the SOE Ministry and the Transportation Ministry are committed to continuously improving services for the public by addressing wasteful practices and corruption within the transportation sector.
“Each of us has our own duties and functions to reduce wasteful practices, enhance efficiency, and combat corruption, all with the aim of optimising services for the public and users of transportation services,” he added.
During the occasion, Transportation Minister Dudy Purwagandhi remarked that this visit by the SOE Minister to the Transportation Ministry was the first of its kind.
He stated that the meeting was a tangible effort to achieve synergy between the ministries and support government programmes, in line with what has been affirmed by Prabowo Subianto.
“Hopefully, meetings like this can continue, ensuring that there are no barriers between ministries in providing services to the public and achieving the goals and programmes initiated by the President,” he stated.
Shipping Law revision passed
On a separate occasion, House of Representatives (DPR) Commission V Chair Lasarus stated that, to support the efficiency of logistics distribution, the legislative body has passed a revision to the Shipping Law, specifically the Third Amendment to Law No. 17 of 2008 on Shipping.
“We recently passed a revision to the Shipping Law, which we expect will enhance our logistics and shipping sectors. The law also outlines the cabotage principle for ships flying the Indonesian flag and defines the roles of sea and coast guard institutions,” he stated.
The revised Shipping Law includes agreements to strengthen regulations that empower community shipping transportation and regulate public shipping obligations. It also reinforces the cabotage principle through the organisation of joint ventures in maritime transportation, the provision of services related to these joint ventures, and the implementation of financing and tax measures to support maritime transportation and the shipping industry.
Additionally, the law revision will involve both service providers and service users in determining the tariffs for port services set by port business entities. It also addresses the governance of registering joint venture ships, the management of navigation and operation of tugboats, the simplification of bureaucratic processes in the port sector, and the enhancement of the shipping surveillance function.
“The revision of the Shipping Law addresses all these aspects, including ways to reduce logistics costs in the shipping sector. We expect that it will contribute to achieving food self-sufficiency,” Lasarus added.
Cut bureaucracies
Meanwhile, Raja Oloan Saut Gurning, a maritime expert from Institut Teknologi Sepuluh Nopember, stated that bureaucratic issues remain a hindrance due to the complexity of permit processes at ports.
“The bureaucratic challenges are not limited to the system itself but also involve permits and policies, where each regulation differs from one another. The port sector involves 16 different ministries and institutions. Having a single leader could make it more flexible and efficient,” he said to Investor Daily.
For example, Saut mentioned that containers once piled up due to a change in regulations. He emphasised that any changes in regulations must be accompanied by extensive dissemination efforts to avoid repeating such incidents.
“Regardless of the number of regulations, their implementation ultimately depends on the officers in the field. This means that dissemination efforts are essential. All stakeholders in the port sector must focus on this aspect,” he stated.
Meanwhile, regarding port digitalisation, he noted that the National Logistics Ecosystem (NLE) and port digitalisation will streamline and enhance services.
“We do not deny that system digitalisation will bring time efficiency. However, we must learn from the container pileup incident that policy or regulation changes must be accompanied by proper dissemination efforts. This will help address similar issues in the future,” he added.
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