B

usinesses are urging the Indonesian government to take measures to reduce logistics costs in a bid to increase the country'€™s competitiveness ahead of the ASEAN Economic Community (AEC) in 2015.

Indonesian Logistics Association (ALI) executive board member Nofrisel said the government needed to reduce Indonesia'€™s logistics costs to around 19 to 22 percent of gross domestic product (GDP) in 2014, from the current figure of around 24 to 27 percent.

The high logistics costs, he said, resulted mainly from value-added tax logistics firms paying for fuel and loading and unloading services.

'€œOur logistics costs are among the highest in Asia. We have to be on par with other Asian countries'€™ average logistics costs that stand at around 19 to 22 percent,'€ he told reporters on Monday.

He added that although European countries offered a better benchmark for logistics costs with an average of 9 to 14 percent of GDP of the respective countries, Indonesia was not ready to match this level.

'€œIndonesia will make a great achievement if it is able to equalize its logistics costs with its Asian peers,'€ he said.

When that happened, he said, Indonesia would become more competitive in the AEC and have a level playing field.

Nofrisel also said poor infrastructure at ports, for example, had caused lengthy dwelling times and thus affected logistics firms financially.

He said the government could refer to Presidential Decree No. 26/2012 on the blueprint of national logistics system development to help improve its logistics industry, especially in terms of infrastructure and human resources.

'€œHowever, the decree won'€™t do any good if it is not implemented properly,'€ he said.

Indonesian Chamber of Commerce and Industry (Kadin) logistics committee head M. Akbar Djohan said high logistics costs increased the prices of Indonesian products, thereby lowering the country'€™s competitiveness in the regional market.

'€œAside from that, if we can reduce our logistics costs, we can allocate more budget to improving product manufacturing, which then will result in higher output quantity and quality and will also improve our competitiveness in the regional market,'€ he said.

Kadin treasurer and deputy chairman for logistics Carmelita Hartoto said Indonesia still faced various hurdles to reducing logistics costs.

'€œFor example, the government imposes value-added tax on fuel for domestic shipping firms and unloading services through Government Regulation No. 26/2001. The tax will add to logistics costs,'€ she said, adding that other Asian countries did not have a similar policy.

She said she had asked the government to revise the government regulation and provide tax incentives for the logistics sector to reduce costs during a recent meeting between Kadin representatives and government officials. (ogi)