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ood and beverage producers have proposed to the government to establish bonded logistics centers in West Java, where dozens of food and beverage factories are located.

Indonesian Food and Beverage Association (Gapmmi) chairman Adhi S. Lukman said on Tuesday that his association had proposed to the government to set up bonded warehouses for food and beverage businesses in industrial estates of West Java.

'€œ[Industrial estates in] Jababeka and Karawang will be our focus at the moment. Once bonded warehouses are established there, other industrial estates will follow,'€ he said.

He added that compared to other areas, the two industrial estates were well prepared in terms of infrastructure to host stockpiles.

Bounded logistics centers or bounded warehouses, locally abbreviated as PLB, serve to stockpile raw or intermediate goods to secure supplies for various industrial sectors without adding unnecessary logistical costs. Importing directly through the bonded warehouses would be rewarded by special tax treatment.

Adhi said that for the food and beverage industry alone, bonded warehouses could particularly be used to store imported ingredients like sugar, salt, citric acid and milk, as imports of these ingredients were relatively in high volume but only sporadically stored.

He noted that around 70 percent of the aggregate demand for milk and citric acid, as well as 80 to 100 percent of the demand for industrial salt and sugar, was met by imports.

The association has apparently discussed the issue with a number of suppliers and investors who are said to have expressed interest in jumping into the warehousing business.

The Industry Ministry'€™s director general for industrial estate development, Imam Haryono, said his ministry was still discussing the proposal and would review it first. '€œWe'€™ll see about the population there. If it represents [their interest], why not? Previously, there have been proposals to build the PLB near seaports and industrial sites,'€ he added.

According to Tax Office data, as many as 10 companies have filed a number of locations to be used for bonded warehouses.

Among the proposed locations are Karawang (West Java) for the automotive industry, Balikpapan (East Kalimantan) for the oil and gas industry, Bali for small and medium enterprises and Merak (Banten) for the synthetic textile industry. Finance Minister Bambang Brodjonegoro said previously that the bonded warehouses, if established, would help businesses push down their costs.

Indonesia'€™s logistics costs account for 24.6 percent of the country'€™s gross domestic product (GDP), according to the World Bank.

According to the World Bank'€™s ease of doing business ranking, Indonesia moved up from its revised 2015 position of 120th place to 109th in the 2016 report, lagging behind Southeast Asian peers Singapore (ranked first), Malaysia (18th), Thailand (49th) and Vietnam (90th).

'€” Tassia Sipahutar contributed to this story.