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Reducing logistical costs a priority: Transport minister
Newly appointed Transportation Minister Ignasius Jonan has pledged to reduce the countryâs high logistics costs that have hurt the competitiveness of local products both in the domestic and international markets
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ewly appointed Transportation Minister Ignasius Jonan has pledged to reduce the country's high logistics costs that have hurt the competitiveness of local products both in the domestic and international markets.
The goal was expected to be achieved by increasing the number of vessels, but also by developing intermodal transportation, Jonan said on Wednesday.
'Based on the instruction from the President, one of our goals within the next five years is to reduce logistics costs,' said Singapore-born Jonan, 51, the former president director of state-owned train operator PT KAI.
According to the World Bank's latest Logistics Performance Index (LPI) released in March, Indonesia came in 53rd this year among the 166 countries surveyed, compared with Vietnam (48th), Thailand (35th), Malaysia (25th) and Singapore (5th).
'Our logistics costs are very high, which accounts for around 25 percent of the country's gross domestic product,' Jonan said during the opening of the Indonesia Transport, Supply Chain and Logistics (ITSCL) exhibition on Wednesday.
Reducing logistics costs, however, would not be an easy task for the new minister, considering it also involved the cross-transportation sectors of air, sea and land, Indonesian Logistics Association (ALI) chairman Zaldy Masita said.
'The minister should be able to regulate fares charged in all transportation sectors, not only at seaports, but also airports, as well as train stations, in a bid to reduce the logistics costs,' Zaldy told The Jakarta Post over the phone.
To do this, Jonan will face challenges that include one-sided increases in port fares, or charges without any consultation with the Transportation Ministry.
'One of the examples is Pelindo II decided to add another charge without the consent of the government. In the future, the minister should be able to better manage seaports and all other sectors linked to the logistics chain,' Zaldy said.
State-owned port operator Pelindo II has just recently announced that it would charge an additional Rp 75,000 (US$6.10) for every import and export container at Tanjung Priok Port in North Jakarta, starting November.
Jonan had a good track record in developing passenger services when he served as president director of KAI, but had not yet proven himself successful in developing freight services, according to Zaldy. 'The logistics costs of using the railway are still higher than using trucks,' he said.
- Jokowi instructs Jonan to reduce logistics costs within five-year term
- To be achieved by adding vessels and developing intermodal transport
- RI ranks 53rd in World Bank's logistics index
- RI logistics cost 25% of GDP
The previous government already had a 2010-2025 National Logistics Blueprint ongoing, but the new administration was likely make changes due to Joko 'Jokowi' Widodo's focus on maritime affairs, including the development of a sea highway.
Jonan had previously said that no detailed instruction had been given to immediately execute the 'sea toll highway' initiative, which was marked as one of the new government's top priority programs.
'The sea highway program needs to be further studied. The instruction given is still general, that sea transportation should be developed, and it involves all stakeholders,' Jonan said.
'We, in the government, should act as a catalyst so that the development brings more benefit to the public,' he said.
