Supporting maritime highway, ship procurement proposed to be included in PSN

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 tol laut, pengadaan kapal diusulkan masuk PSN

10 October 2024

By Ichsan Amin and Heru Febrianto

Jakarta, ID – Businesses in Indonesia's logistics and port sectors are advocating for ship procurement and purchase to be added to the list of national strategic projects (PSNs). This initiative aims to bolster the maritime highway programme.

Akbar Djohan, Chairperson of the Indonesian Logistics and Forwarders Association (ILFA), stated that the association has submitted a proposal to the Coordinating Ministry for Economic Affairs to include ship procurement as a PSN. The proposal was well-received, as logistics transportation through the maritime highway programme is considered an integral part of infrastructure.

"Last month, we spoke with the Deputy of the Coordinating Ministry for Economic Affairs. The issue with the maritime highway lies in the synergy between state-owned enterprises (SOEs) and the private sector. The private sector faces limitations in ship procurement and purchase, which is a significant concern," Akbar said during a discussion titled 'Nusantara Network: Indonesia’s Neverending Struggle for a Robust National Logistics Ecosystem' at BNI Investor Daily Summit 2024, held at Jakarta Convention Centre (JCC) Senayan in Jakarta on Wednesday (9/10/2024).

According to him, if ship procurement and purchase are recognised as a PSN, it could increase the number of ships in remote areas, particularly in eastern Indonesia. He is also optimistic that securing financing for ship purchases will become easier.

“The issue with the maritime highway is the limitation of the private sector in procuring ships for the programme. We have submitted a proposal that has been positively received by the Coordinating Ministry for Economic Affairs, as well as the incoming government,” he stated.

On this occasion, Akbar stated that Indonesia must strengthen its regional logistics economy sector to open new, non-conventional trade routes.

“We must recognise the potential of a new economic epicentre in the Asia-Pacific region, particularly within Southeast Asian countries,” he added.

He continued that by strengthening the regional logistics economy sector, new non-conventional trade routes will be established. Currently, trade in Indonesia is more focused on the United States of America (USA) and Europe, which impacts the national logistics sector.

Akbar also acknowledged that the logistics ecosystem in Indonesia is not competitive enough. Therefore, regulations in the sector must be more supportive to create policies that are more pro-business.

“As a result, the competitiveness of players in the domestic manufacturing industry can grow and develop,” he added.

Akbar also highlighted Indonesia's significant contribution among ASEAN countries, particularly in terms of population and economic potential.

“Our domestic economic potential is quite substantial. In ASEAN, we make the largest contribution in terms of population and economic strength. Moreover, other developed countries like China, South Korea, and Japan are interested in entering the Indonesian market,” he explained.

National Logistics Agency

The logistics businesses association is encouraging the establishment of a National Logistics Agency (BLN) under the administration of Prabowo Subianto to synergise logistics and ports. This agency will be a new breakthrough to organise the national logistics ecosystem governance.

“A significant step is required to resolve the issues in our logistics sector. One of the solutions is the establishment of a National Logistics Agency (BLN),” Akbar stated.

Based on data from the Ministry of National Development Planning (PPN)/National Development Planning Agency (Bappenas), Akbar noted that the economic cycle from the logistics sector reached Rp400 trillion, contributing significantly to the country. He believes that a BLN could be an innovative step to attract more investment both domestically and internationally, as well as optimise income from the logistics sector.

Akbar stated that a BLN could serve as a catalyst to revive the currently stagnant manufacturing industry sector and prevent deindustrialisation.

"A strategic initiative to create a new agency will act as a commander to orchestrate the efforts of the 16 ministries and institutions. This is essential because logistics encompasses the entire supply chain, from upstream to downstream," stated Akbar, who is also the Commercial Director of PT Krakatau Steel Tbk.

A BLN is believed to create an integrated national logistics ecosystem. This would have a significant impact on organising the national logistics sector, which has previously been seen as fragmented.

“This is the right moment for Indonesia to establish a National Logistics Agency that is independent and based on laws, which will create harmony and integration among regulations across different ministries,” he stated.

He mentioned that a regulation introduced in the middle of last year caused 17,304 containers to be stuck at Tanjung Priok Port and 9,111 containers at Tanjung Perak Port.

“These kinds of issues will continue to occur if there is no specialised agency to regulate and take responsibility for handling these problems,” he added.

Meanwhile, PT Pelabuhan Indonesia President Director Arif Suhartono remarked that the issue of logistics costs has only been viewed from one perspective. According to him, logistics costs must be considered thoroughly and comprehensively.

“For example, dwelling time impacts imports. When people place their cargo at the port, there is a subsequent stage that must be completed, which we call the clearance process.

This entire process must be navigated. At Pelindo, we continue to accelerate our part to speed up the stevedoring process until the cargo is transported,” he revealed.

He explained that dwelling time at Tanjung Priok Port only takes 100 minutes. “The port's contribution is only 25 minutes when the goods in the container are taken out. It then takes another 75 minutes for the goods to be transported. This is what we are continuously improving through various innovations and technology implementations,” Arif stated.

He mentioned that certainty is crucial in port management as it relates to logistics. He added that, over the last three years, the reduction in logistics costs has shown a positive trend. “This is because we continuously emphasise that cargo at ports is the responsibility of Pelindo. We are enhancing our management through innovations and technologies to maintain a high standard at each port unit,” he added.

Next Article: Calculating the multiplier effect of IKN Nusantara

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