Developing Indonesia Logistics Infrastructure for Indonesia’s Better Future

Indonesia is one of the countries with hardest national logistics system. Indonesia has lots of islands with
their own difficulties. Thus, Indonesia’s logisticians have really big challenges to optimized logistic
performances and costs in Indonesia. Governmental policies, political issues, infrastructures in those areas are
some factor that could affect logistics performances and costs.

Now, what is logistics? Based on Council of Logistics Management, logistics is the process of planning,
implementing, and controlling the efficient, effective flow and storage of goods, services, and related
information from point of origin to point of consumption for the purpose of conforming to customer
requirements. Logistics activities including procurement, warehousing, inventory, transportation, and
production. The goal of doing logistics is to move right products in a right quantity and condition, to the right
place, in the right time, to the right customer, and with the right price.

Indonesia government and business actors in logistics sector have already discussed about the design of
National Logistics System based on time, whether it’s short-term, mid-term, or long-term interests. Logistics
system is composed by facilities integrated with transportation services. This system has an important role to
synchronize the development of economics sector by providing better flow of goods, reducing high costs,
building national competitiveness, protecting the environment, creating public welfare.

There are 5 stakeholders in National Logistics System. Those 5 stakeholders are consumers, logistical
actors, logistics service providers, logistical supporter, and government. Consumers are people who need the
goods/services, determine the type and quantity of the products, from who, and where to buy and where should
the products sent. Logistical actors could be either producer or distributor, they are the one who sell their
products to customers. Logistics service providers are institution or company who provide logistics services
from producers to consumers. Logistical supporter are institution or company who give the effective and
efficient solution of logistical problems. The role of government in National Logistics System is being a
regulator that create policies, facilitator who provide and build logistics infrastructure needed to support
logistics activities.

Until now, the performance of National Logistics System is not optimum yet. It is because the cost of
national logistics is still expensive, around 27% from GDP and the service level is still low. There are at least
seven logistical problems that should be fixed, those are commodities, infrastructure, logistical actors and
logistics service providers, human resources, technology of information and communication, regulation and
institutional. To solve those problems, government has made a blue print of national logistics system in
Indonesia. The ways government solves national logistics system problems in Indonesia are by increasing the
infrastructure, the reform of laws and regulations to create good business environment to reduce logistics costs,
increasing quality of human resources in logistics, strengthening the competitiveness of domestic service
providers, further application of information and communication technology, creating institutional framework,
focus on strategic and export commodities.

These days, logistics costs are so expensive due to the raise of cargo tariff from airlines. The tariffs of toll
roads are also increasing. The Indonesian Truck Entrepreneurs Association expects Trans Java Toll tariff will be
decrease by 20%, because this really affect the logistics costs for trucks. Nowadays, Trans Java Toll tariff for
larger vehicles are almost Rp1.000.000. We all hope that toll tariff will be reduced because it is not the only
costs for distributions, there are also some costs like fuel and driver fees.

As for the sea routes, government decided to build maritime highways, because Indonesia has lots of
possible maritime routes. Maritime highways are not the toll road built above the sea. It is called maritime
highways because it connects one port to another port without any obstacle. One of the problem in maritime
highways is that the return capacity of maritime highway ships for some regions are empty or only filled around
20% to 30% capacity. Transportation Minister Budi said that in the future, livestock products can be shipped in
a frozen state to anticipate empty maritime highway capacity during the return trip. For now, most of the
citizens have already got the benefits of maritime highways because it really reduces logistics and distribution
costs. The system and infrastructure of maritime highway should be developed so that it could send products
faster and cheaper than before there is maritime highway.

View months ago, the President of Indonesia stated that capital city of Indonesia will be moved from
Jakarta to South Kalimantan. My assumption is because Kalimantan is the center of Indonesia, so maybe it will
be easier to distribute products from South Kalimantan to all over Indonesia districts, supported by great
logistics infrastructure to distribute and move products from point of origins to point of consumption. In this
case, the point of consumption is the construction area.

As a new Indonesia’s capital city, logistics infrastructure in Kalimantan is not as good as Jakarta’s yet. It
still needs lots of changes and improvements to support the logistics activities later, especially South
Kalimantan will be the next capital city of Indonesia, replacing Jakarta.

Several problems that logisticians might face while building logistics infrastructure is how to send the
products safely, fast, and in a low cost. Logisticians also have to find the best route and time to transport the
goods to make an effective and efficient time and cost of logistics activities. To build the infrastructure,
government needs more space so that none of the important activities are missed and the flow is still on the
track. The access either from or to the destination should also be checked by logisticians, so that we know
what’s the best route, how to make it effective and efficient enough, and also to improve the given infrastructure
to a better infrastructure, adjusting with what’s needed in the new capital city of Indonesia.

We all hope that the movement of capital city from Jakarta to South Kalimantan can give good effects for
public welfare and also reduce the cost of distribution and transportation, especially for foodstuffs. By
developing and improving logistics infrastructure, there will be less unemployment and more public welfare.
References:

Deha, Daniel. 2019. Indonesia Integrates National Logistics System to Reduce Economic Barriers. Jakarta. The
Insider Stories. https://theinsiderstories.com/indonesia-govt-integrates-national-logistics-system-to-reduce-
economic-barriers/

March 8, 2017. Mengetahui Masalah Sistem Logistik Nasional dan Bagaimana Cara Pembenahannya.
https://goukm.id/sistem-logistik-nasional-silognas/

September 4, 2019. Maritime highway: Keeping the spirit and hope of people in eastern Indonesia.
https://www.pwc.com/id/en/media-centre/infrastructure-news/september-2019/keeping-spirit-hope-eastern-
indonesia.html