T

he International Air Transport Association (IATA) is criticizing a new regulation on air cargo and supply chain safety issued by the Transportation Ministry, saying it could reduce the competitiveness of Indonesia'€™s air freight.

The association says the new regulation, No. 32/2015, requires additional layers of cargo inspections that will eventually create extra costs.

'€œThere is little confidence in the new policy because of the short deadlines and the few clarifications on how the premises of the regulated agents [the designated security inspectors] will be secured. So, airlines will need to screen all cargo a second time at the airport,'€ the assistant corporate communications director for IATA Asia-Pacific, Albert Tjoeng, told The Jakarta Post on Wednesday.

'€œThis will add costs and handling times and actually reduce the competitiveness of Indonesia'€™s air freight '€” the opposite goal of what Indonesia is trying to achieve when it claims that it aims to remove bottlenecks,'€ he continued.

Tjoeng said the supply chain security system would take at least one year to put into place and the association demanded the country allow this one-year period as a transition period.

'€œDuring this period, directly screening air cargo at '€˜Line 1'€™ at the airport should continue instead of mandating a '€˜Line 2'€™ security check outside the airport,'€ he said.

Transportation Minister Ignasius Jonan recently signed Ministerial Regulation No. 32/2015 on air cargo and supply chain safety, requiring an additional stage of cargo inspections at international airports.

According to the regulation, logistics companies are now required to have their cargoes screened by so-called regulated agents (RAs) in Line 2 (unrestricted) areas at airports before being moved to the secure Line 1 areas.

Since most RA firms lack screening expertise, logistics firms and airlines will have to screen the cargo once again in Line 1 prior to shipment over concerns that security could be compromised during the move from Line 2 to Line 1.

The ministry'€™s director general for air transportation, Suprasetyo, said that the regulation would take effect in May and the ministry would not give additional time for RA firms to move to Line 2.

Jonan also recently signed Ministerial Regulation No. 74/2015 on freight forwarding and logistics companies. The new regulation will require freight forwarders and logistics companies to have a minimum capital of Rp 25 billion (US$1.93 million), up from the current Rp 200 million.

The regulation has drawn criticism from logistics companies, as they fear it will shut down many small and medium-scale logistics companies across the country.

According to the Indonesian Logistics and Forwarders Association (ALFI), there are currently 534,000 people working in logistics companies across the country and most of them will lose their jobs if the new policy is enforced.

Jonan said that the ministry talked to ALFI chairman Yukki Nugrahawan Hanafi on Wednesday and they had agreed that the association would provide a recommendation for companies with assets less than Rp 25 billion.

'€œThis means the association should be held responsible if problems occur to those companies that are unable to comply with the regulation,'€ Jonan told reporters.

Yukki told the Post that he appreciated the minister'€™s fast response and said that the association would no longer file any lawsuit against the regulation.