Indonesia must reduce logistical costs, says new minister

Indonesia must reduce logistical costs, says new minister

Jakarta: Reducing Indonesia’s high logistics costs is one of the main goals of the country’s new Transportation Minister, Ignasius Jonan.

Jonan aims to bring costs down by increasing the number of vessels and developing intermodal transport over the next five years, he told press yesterday.

Logistics costs account for around 25% of Indonesia’s GDP, and have impaired the competitiveness of local products in both the domestic and international markets.

Indonesia came in 53rd this year among the 166 countries surveyed in the World Bank’s latest Logistics Performance Index (LPI), released in March. Nearby Malaysia and Singapore came in 25th and 5th respectively.

Zaldy Masita, chairman of the Indonesian Logistics Association (ALI), told local press that to be successful, Jonan needs to tackle challenges such as one-sided increases in port fares or charges made without any consultation with the Transportation Ministry.

State-owned port operator Pelindo II recently decided to add another charge without the consent of the government, Zaldy said. The terminal will charge an additional RP 75,000 ($6.10) for every import and export container at Tanjung Priok Port in North Jakarta, starting from November.

Jonan's remit includes regulating fares charged in all transportation sectors, at seaports, airports and train stations.

Ignasius Jonan is the former president director of Indonesia’s state-owned train operator PT KAI. [30/10/14]