Indonesia’s competitiveness is suffering because, despite improvements, its logistics performance still lags behind its Southeast Asian neighbors, a World Bank survey has revealed.
Indonesia came in 53rd this year among 166 countries surveyed in the bank’s latest Logistics Performance Index (LPI) released on Wednesday Jakarta time.
The ranking was an increase from 59th in the previous index two years ago.
By comparison, Vietnam, Thailand, Malaysia and Singapore were ranked 48th, 35th, 25th and fifth, respectively, in the survey, which was conducted between October and December last year and involved about 1,000 respondents in international logistics firms in 143 countries.
Components in the survey included customs; transportation infrastructure; ease of arranging shipments; quality of logistics services; tracking and tracing; and timeliness.
The World Bank said trade powerhouses in developing countries like Indonesia saw seamless and sustainable logistics as an engine of growth and of integration into global value chains.
Although Indonesia had set up a connectivity program, the concept remained intuitive and often loosely defined, it said.
Indonesian Logistics Association (ALI) chairman Zaldy Masita said it was easy for neighboring countries in the region to outrank Indonesia as it had failed to improve in the logistics sector.
“[Therefore] it remains a challenge for us ahead of the  ASEAN Economic Community,” he said on Wednesday.
Zaldy has previously said several key policies on infrastructure were likely to further harm the logistics sector rather than develop it.
For example, he said the US$2.5 billion Kalibaru Port project in Tanjung Priok, North Jakarta, would further increase road congestion, leading to higher logistics costs, because the project was not matched by improvements in land transportation infrastructure.
“We will see doubled outflows once Kalibaru Port is operational. Meanwhile, roads are already heavily congested with the current flow of goods from Tanjung Priok,” Zaldy said, adding that the government’s plan to construct a railway from Bekasi, east of Jakarta, to Tanjung Priok remained unrealized.
According to Zaldy, logistics services are at their best when based on railway transportation, which currently accounts for less than 1 percent of the country’s total transportation share.
He said that the country’s logistics sector could look forward in the near future to the Trans-Java double-track railway system connecting the capital city to Surabaya, East Java.
The railway is scheduled to begin operations next month.
“The double-track railway system will help reduce logistics costs by 20 percent, but it should be supported by proper loading and unloading facilities at stations,” Zaldy said.
Separately, Transportation Ministry director general for sea transportation Bobby Mamahit said it would take time for the industry to fully reap the fruits of the government’s infrastructure projects.
“We are still developing ports including those in Tanjung Priok, Kalibaru, Belawan [North Sumatra] and Makassar [South Sulawesi],” he said.
“I believe that by the end of 2015 we can significantly improve our logistics performance, and compete with other ASEAN countries when those ports and their supporting infrastructure are ready.”
Business consulting firm Frost & Sullivan analysts say that Indonesia’s logistics industry is expected to grow by 14.7 percent to Rp 1,82 quadrillion ($160 billion) in transactions this year on the back of growth in the services sector and a surge in consumer spending.
Frost & Sullivan vice president for transportation and logistics in the Asia-Pacific Gopal R. said on Tuesday that growth in gross domestic product (GDP) and purchasing power were among the key indicators of increased trade volume and value, which would favor freight distribution in the country.
He said that the capacity for the transportation of freight by road in Indonesia was only constrained by road congestion near ports.
source . Jakarta Post