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21 October 2016

New Logistics Centers May Help Cut Huge Costs

The government expects to help reduce high operational costs borne by the country’s businesses and improve competitiveness by launching new bonded logistics centers.

The Finance Ministry’s Directorate General of Customs and Excise launched on Wednesday 17 new bonded logistics centers (PLBs) across the country built by private companies as part of efforts to reduce high logistics costs that thwart economic growth due to lack of better infrastructure.

The new centers bring the total number of PLBs in the country to 28. 

The launch was conducted during the opening of the Jakarta International Logistics Summit and Expo (JILSE) on Wednesday, part of a series of events in the Indonesia Transport Supply Chain and Logistics 2016, which will take place from Oct. 19 to 21.

Customs and excise director general Heru Pambudi said the new logistics centers had reached regions outside Java and offered warehouses more types of commodities, as President Joko “Jokowi” Widodo expected more equal distribution of raw materials and capital goods.

“Coverage now reaches Aceh, Kalimantan and other regions outside Java. They have also started to serve more commodities, such as oil and gas,” he added.

The directorate general is expecting around nine to 10 other companies to soon join in on building logistic centers as there were currently 124 firms consulting their ideas to the authority on building logistics centers.

By the end of this year, he said more than 10 companies were expected to build new logistics centers as the government expected such bonded warehouses could exist in all regions and industrial areas.

As for customers, he said four big suppliers were ready to shift their goods to domestic logistic centers from overseas warehouses, such as Japanese energy company Idemitsu Kosan, Swedish industrial firm Atlas Corpo, US-owned agribusiness firm Cargill and New Zealand dairy giant Fonterra.

Heavy equipment player Trakindo Utama has gradually moved its imported goods to bonded logistics centers in Jakarta and Kalimantan from Singapore as such an option helped the firm save money on rent and manpower.

The bonded logistics centers, introduced by the government in March as part of its economic stimulus packages, are also expected to serve as alternatives to ports for storing shipped goods.

A bonded logistic center can store imported and exported goods exempt from duties for up to three years. In the past, firms parked imported goods in neighboring countries such as Singapore and Malaysia to avoid duties at Indonesian ports.

Although Indonesia is envisioned to be a major logistic hub in the Asia Pacific, it still lags behind its Southeast Asian neighbors in the World Bank’s 2016 Logistic Performance Index. The region’s largest economy ranked 63rd, below some of its neighbors in ASEAN, such as Singapore ( 5th ), Malaysia ( 32nd ) and Thailand ( 45th ).

“Indonesia continues to score low in terms of infrastructure, customs as well as commercial rules for exports and imports,” Finance Minister Sri Mulyani Indrawati said, pledging to continue to work on cutting logistics costs and bureaucratic red tape.

Separately, Indonesian Logistics Association (ALI) chairman Zaldy Masita said PLBs would be among solutions to help grow the logistics business and reduce its costs, but expected the government to actively boost awareness on the program toward companies with high exposure in imported raw materials.

“The government should also reduce costs in seaports so that companies can pay less for imports and exports,” he said.

Indonesian Logistics and Forwarders Association (ALFI) chairman Yukki Hanafi voiced a similar opinion, saying that the government should improve regulations and reviews on PLBs, including those related to minimum area, theme and zoning.


Source: http://www.thejakartapost.com/news/2016/10/20/new-logistics-centers-may-help-cut-huge-costs.html