The Indonesian Logistics Association (ALI) has expressed its optimism that the industry would reach double-digit growth this year on the back of the government’s new regulation on bonded logistics centers (PLBs), as well as rising demand from online marketplaces.

ALI chairman Zaldy Ilham Masita projected the industry would grow between 10 to 12 percent next year thanks to increasing demand resulting from the operations of more PLBs.

The Finance Ministry issued in late March Finance Ministerial Regulation No. 28/2018, which effectively expands the types of goods that can be stored in PLBs, including staple goods and goods from online marketplaces, among others. “The [operation] PLBs have significant impact, for example commodities such as cotton and spare parts for the oil and gas industry are now entering PLBs. This will fuel further growth in the Indonesian logistics [industry] as, apart from taking in volume from the domestic industry, we will welcome additional volume from ASEAN [countries],” he said in Jakarta on Thursday.

Zaldy went on to urge the government to improve the conditions of Indonesian airports and seaports in order to welcome potential additional goods from ASEAN countries to the PLBs.

“The government should pay attention to quickly increase the capacity of our [logistics] infrastructure amid an inflow of goods from ASEAN [nations] into our country,” he said.

He also said robust growth in Indonesia’s flourishing e-commerce industry would also give a leg up to the country’s logistics industry. He further noted that the types of goods sold through e-commerce platforms have now diversified to include staple foods such as rice and cooking oil.

“Grocery items will not enter [the logistics system] if logistics costs are high, as it has relatively lower value compared to clothing, for example,” he said.

The association previously stated that it expects 1 billion packages from e-commerce platforms to be delivered this year, up considerably from 700 million packages last year.

Zaldy’s projection for the industry’s growth this year was more upbeat compared to a report released by consulting firm Frost and Sullivan, which projected the country’s logistics industry will see a 7.1 percent Compound Annual Growth Rate (CAGR) by 2022.

Frost and Sullivan’s global vice president of transportation and logistics practice, Gopal R., noted that there were several factors which would boost the logistics industry, such as growth in consumer spending, which leads to increased disposable income, as well as growth in the e-commerce market.

He said the industry had more room to grow, particularly by bringing more efficiency by cutting red tape as well as incorporating the use of technology.

“In terms of cutting down bottleneck, [we need] to ensure that the process or trade facilitation process is simplified with the use of technology, and at the same time, eliminate unnecessary processes, which can actually help build efficiency in the logistics system,” he said.

He also said Indonesia was well positioned in the regional ASEAN market mainly thanks to its relatively large consumer market and its large production base.

“Compared to other markets in [Southeast Asia], Indonesia has a better prospect primarily because of it’s a population base as a consumer base and the extent of globalization and the production market, Indonesia is not just a consumption market but also a production market,” he said.

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