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Customs and excise office adopts blockchain to cut logistics costs
The Customs and Excise Directorate General has adopted blockchain technology for information sharing in an effort to reduce shipping costs and eliminate inefficiency resulting from paper-based processes
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The Customs and Excise Directorate General has adopted blockchain technology for information sharing in an effort to reduce shipping costs and eliminate inefficiency resulting from paper-based processes.
The directorate general announced on Tuesday that it was using IBM and Maersk's TradeLense — one of the most popular open supply chain platforms based on blockchain technology that enables real-time end-to-end information sharing and collaboration.
The office’s information and technology director, Agus Sudarmadi, said a digital transformation was needed to bring down logistics costs and ease document processing at the Customs and Excise Directorate General.
“This technology allows us to use single documentation where everyone involved in the supply chain can see the data,” he said during a press conference on digital transformation. “As such, there is less room for foul play and middlemen.”
He went on to say that the technology could also collect large amounts of data about transborder movements, which would facilitate monitoring and policy-making.
Agus noted that logistics account for 25 percent of the total production costs in Indonesia, higher than the average 10 to 15 percent in Malaysia. Making the transportation of goods easier, he said, would make Indonesian products more competitive.
In the World Bank’s 2018 Logistics Performance Index, Indonesia ranked 46th of 160 countries, behind Singapore (ranked 7th) and Thailand (32nd). The nation scored lowest in the region for customs efficiency, such as clearance speed and predictability of formalities.
“If our logistics processing is easier, our ease of doing business rank will go up too,” Agus said, adding that the office was open to future collaboration in digital transformation.
Speaking at the same press conference, IBM Indonesia president director Tan Wijaya said the technology was in the second phase of implementation, with a plan to build a bigger ecosystem of users.
The first phase was to store data on incoming and outgoing Indonesian ships in the directorate general’s system, while the second phase was to make container clearance data from the directorate general available in the TradeLens platform.
“The bigger the ecosystem is, the better,” he said, adding that all logistics players, such as shipping lines, ports, truckers and other government bodies, could become part of the blockchain ecosystem.
According to IBM data, global trade is worth more than US$18 trillion annually, with 80 percent of the goods transported by ship. However, paper-based trade and manual document handling slowed the process down, reducing the potential by up to 15 percent.
Indonesia still has a long list of major challenges to be addressed in the logistics sector.
The deputy assistant for national logistics development of the Coordinating Economic Ministry, Erwin Raza, said in October last year that a lack of standardization was a key factor that hampered the logistics sector. In addition, a lack of government efforts to improve connectivity from industrial areas to seaports, airports and other industrial zones also played a role in such a situation.
He said Indonesia lacked unification and standardization in logistics such as that related to permits, courier services and documentation.
It also lacked standardization in its courier services such as in tariff references, operational standard procedures and packaging. Even for the simplest things such as those related to courier documents and the use of postcode, city code, goods code, Indonesia is yet to have the same standards.
“For example, there are many logistics permits that are under different ministries,” he said during a panel discussion. “Permits for warehouses are under the Trade Ministry, permits for bonded logistics centers are under customs and excise, while courier permits are under the Communications and Information Ministry. Can we just unify those permits with the same standards?”
