The Indonesian government has since September 2015 issued 13 economic policy packages which have improved the country`s investment climate through simplifying regulations which so far impeded investment.
The economic policy packages have been able to improve not only the investment climate but also increase the competitive edge of the Indonesian economy by encouraging regional and national economic development as well.
The forming of new bonded logistics centers (PLBs) might be the most successful in the implementation among the series of economic policy packages, according to Coordinating Minister for Economic Affairs Darmin Nasution.
Therefore, the government is preparing a special economic policy on a logistics distribution system, especially to expedite the implementation of the blueprint on the logistics supply system of the country.
So far, the government has issued 13 economic policy packages over the past year, marked with massive deregulation, simplifying licensing procedure and cancelling thousands of regional regulation. “PLB has succeeded in cutting logistics cost and improving efficiency in domestic trade,” Darmin said addressing a Jakarta International Logistic Summit and Expo (JILSE) in Jakarta on Wednesday (October 19).
Logistical costs in Indonesia are among the highest in the world making the countrys economy less competitive. “PLB has had a significant effect on improving economic efficiency, both in exports and imports,” Darmin said.
Therefore, PLB units should be established not only in Java and Sumatra but all over the country especially in eastern parts of the country, he said.
“PLB units have begun to spread in the regions and it is only a matter of time before other regions have units. It would help boost export and imports. There are tens already investing there and they are not small investors though not very big either, but enough to surprise me,” he said.
The PLB facilitates logistics as the process of provision of imported goods would be faster and more efficient, Darmin said. On Wednesday (October 19), the government launched 17 new units built by private companies, bringing the total units in the country to 28.
The units are used in various sectors including oil and gas, mining, maintenance, repair and overhaul, automotive and pharmaceutical industries. A PLB constitutes a multifunction logistic warehouse to pile up imported or local goods with a tax facility.
The facility is in the form of postponement of payment of import duty and exemption of value added tax (VAT) and or luxury sales tax (PPnBM), and flexibility in other operations.
The establishment of a PLB, which constitutes part of the implementation of the second economic policy package, is expected to result in lower logistic costs and improve the competitiveness of the countrys economy.
The logistics policy package, which is expected to be issued this year, covers, among other things, the revision of the transportation ministrys non-tax state revenue (PNBP) system, which is considered to be a burden on the national transportation sector.
“We actually have set a target to unify regulations on logistics, bureaucracy and procedures in 2015, but considering the increasingly tough competition in ASEAN, we have to make a breakthrough to accelerate our blueprint,” Deputy for Commercial and Industrial Affairs of the Coordinating Ministry of Economic Affairs, Edy Putra Irawadi, said on the sidelines of the Jakarta International Logistics Summit and Expo (JILSE) Wednesday.
Based on the World Banks Logistics Performance Index (LPI), which is used to measure the success of the logistics system at home, he found that performance in infrastructure, service, and customs and excise were the worst, Edy said.
Indonesia is viewed to be weak in the multi-mode transportation and slow on infrastructure projects. Logistics service players merely serve as agents.
“Customs and excise could not perform well because of the lack of an electronic system. Of the 137 ports in Indonesia, only 21 have a new electronic system. We could not build electronic systems for all the ports in Indonesia, because of an inadequate telecommunications infrastructure,” he said.
The policy package is expected to handle the various problems based on the instructions of President Joko Widodo (Jokowi).
Meanwhile, Finance Minister Sri Mulyani Indrawati expressed the hope that the presence of the PLB which was launched in March 2016, would make Indonesia a logistics hub in the Asia Pacific region.
“PLB is expected to make Indonesia a logistics hub in the Asia Pacific region. Thus, Indonesia will enjoy efficiency in logistics costs and gain in the distribution of goods in the region,” she said at the JILSE event.
Sri Mulyani explained that by becoming a logistics hub in the Asia Pacific region, Indonesia will no longer need to rely on Singapore and Malaysia, which already have logistics network connectivity in the region.
“The Asia Pacific region is currently a healthy region in the global economic environment. The presence of the PLB can further boost the region as a new trade logistics zone,” she said.
The construction of the PLB is essential to reduce the length of stay in ports, which helps in cutting down the high economic cost and creating equity, she also pointed out.
“With the PLB, there is no accumulation of goods at the port, which has been the main reason for high economic costs,” she said.