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Jakarta Post

Logistics task force: Solution or more problems?

  • Siswanto Rusdi

    The Jakarta Post

Jakarta   /   Fri, February 20, 2015   /  07:47 am

Seaborne logistics in Indonesia is interesting yet problematic. It is interesting because it offers the players abundant cargo for hauling, reaching more than 800 million tons per annum.

But, on the other hand, the sector confronts them with a high logistical costs. The World Bank in a 2013 report said that Indonesia'€™s logistical costs were as high as 24.6 percent of national gross domestic product (GDP), higher than that of Singapore, Malaysia and even Vietnam.

For that, President Joko '€œJokowi'€ Widodo has set up a logistics task force consisting of seven ministries with a mandate to reduce the costs by 19 percent.

His predecessor, president Susilo Bambang Yudhoyono, was also concerned with the problem and adopted a similar course of action. He ordered then deputy finance minister Mahendra Siregar to cut lengthy dwelling times at Tanjung Priok, the country'€™s biggest and busiest port.

Long before these two presidents, former president Soeharto had been engaged in similar efforts. The so-called father of development issued a number of presidential instructions (Inpres) to streamline procedures at the ports, of which the most popular one was Inpres No. 4/1985.

Each president'€™s administration produced different results from their policies. The public did not have any progress reports from the task force chaired by Mahendra Siregar until he left his office, for instance.

The regulation that had been produced by Soeharto prompted massive smuggling through the ports nationwide.

What about the newest task force which is coordinated by Coordinating Economic Minister Sofyan Djalil? Of course, it'€™s too early to judge. Let'€™s see what happens. There are intrinsic drawbacks that could affect the performance of the task force.

First, the legal basis for it is relatively weak, only in the form of Presidential Decree (Keppres). On the other hand, the parties it is supposed to coordinate have higher legality, i.e. based on law or government regulation.

The asymmetrical relation will hamper the task force if the interests of the logistics stakeholders '€” be it the shippers, shipping liners, terminal operators, etc. '€” are disturbed and they want to settle the matter in court.

There is a good example of this: the Upstream Oil and Gas Executive Agency (BP Migas) was dismantled because its legal stand was not proper and people kept demanding its closure because of its misalignment.

Second, the existence of a task force tends to bypass or, in certain cases, eliminate the authority of an agency that is supposed to handle a specific sector.

Pursuant to Law No. 17/2008 on shipping, the government establishes the Port Authority (PA) at the nation'€™s big commercial ports, namely Belawan in North Sumatra, Tanjung Priok in Jakarta, Tanjung Perak in Surabaya, East Java, and Makassar in South Sulawesi. The port performance supervision, therefore, falls under the remits of the PA.

By law, it is the highest government institution at the ports, but it is badly underfunded, undermanned and their heads are the sort of safety players who lack of initiative.

With handicaps such as these it is quite logical to accept the presence of a task force. I agree on these points, but it should be limited to a definite timeframe.

Third, the task force is composed of a bunch of top brass officials, in the case of Sofyan'€™s team, they are the director generals from the Transportation Ministry, the Public Works and Public Housing Ministry, the State-Owned Enterprises Ministry, the Finance Ministry, the Maritime Affairs and Fisheries Ministry, the Agriculture Ministry and the Manpower Ministry.

They discuss everything related to logistics and may end up producing with several actions to be executed. The execution of such actions, however, does not rest on their shoulders. It goes to the ranks that unfortunately do not take part in the discussion.

The worst thing is that those senior officers habitually are too busy to inform their staff regarding the adopted actions.

What we will have in the field is a lot of quarrels between businesspeople and operational staff of a government agency over, for example, free VAT items.

There is still time to correct whatever deviation possibly arises from the establishment of Sofyan'€™s task force. While they are fighting high logistical costs, we need to consider amending Law No. 17/2008 with a special focus on the Port Authority.

Eight years since its inauguration, the institution does almost nothing even though it has authority to do many things. It is under the shadow of the state-owned port operator PT Pelabuhan Indonesia (Pelindo), which it is supposed to monitor. The company needs assistance to it to keep operational.

We need to ask whether the PA should be empowered by giving it more power or if it should be dismissed and its authority transferred to Pelindo, which is actually the PA de facto.

With a powerful PA '€” in terms of funding, assets and human resources '€” at a particular port we surely do not require a task force to reduce the logistical costs. One thing about a task force is that it blurs the line of responsibility.

Any task force set up by the government does not want to take responsibility, especially when the situation goes wrong. The responsibility remains at the hands of an agency under its coordination.

But that agency thinks the task force is taking control their responsibilities.

So, nobody will be blamed because no one is responsible.


The writer is the director of The National Maritime Institute (NAMARIN). The views expressed are his own.

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