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Executive Column: Deutsche Post DHL sees Indonesia as a strong market despite infrastructure bottlenecks
World’s largest courier company Deutsche Post DHL recently celebrated the 40th anniversary of its presence in Indonesia and earmarked ?49.2 million (US$57.3 million) investment to extend its footprint in the country over the next few years. The company says it is strongly committed to supporting the growth of the Asia-Pacific and that Indonesia is a vital part of the region. During his recent visit, Deutsche Post DHL global CEO Frank Appel talked to The Jakarta Post’s Nurfika Osman about company strategy, the current state of the global economy and Indonesia. Below are excerpts from the interview.
Question: The global economy is currently facing tough times with the slowdown in Europe, declining growth in China and the recent US government shutdown. What is your strategy to cope with this situation?
Answer: Yes, you are right. I think what we can do as a company is to focus on our long term strategy, work through that, continue to invest to improve our service quality constantly and that will create opportunities. We are gaining market share because the customers are seeing that we continue to invest and upgrade our services. If you are in a product industry, you need to invest in research and development and product. In our case, we really focus on improving our services because that is what we do and that is the reason we have gained large market share in many places, including in Indonesia.
What about the infrastructure? How does that impact your business?
I think infrastructure is an interesting theme all over the place because infrastructure in many places does not keep pace with growth and Indonesia is not an exception to that. But, in Germany, we talk about developing infrastructure too. So, it is a constant challenge and it has to be the focus of any government — how do you get infrastructure upgraded? This issue can become a bottleneck for trade. If there is not enough capacity in an airport, for example, how can you transport more passengers? How can you bring in more cargo? My understanding is that the Indonesian government is looking to that and it is being discussed intensively. You have this basic concept called the MP3EI [Master Plan for the Acceleration and Expansion of Indonesian Economic Growth] with its six corridors and I think it is a good idea.
How do you see the future of the logistics and mail services business given the condition of the global economy today?
If you go around the world, you can see that the most developed countries in the world have a percentage of GDP spent on logistics that is significantly less than in emerging countries. So, you usually have relatively higher logistics costs in countries like Indonesia than you have in Germany or the US. Therefore, we always advocate that you should try to improve the infrastructure and reduce administrative burden. For small and medium enterprises in Indonesia, if they have to certify their products in 50 different countries, this is a lot of costs, and somebody has to pay for it.
We are working constantly to make our costs simpler and reduce the complexity because complexity is a cost burden. If we could take complexity out from our customers, they would have to pay less for the services and they would still get their products delivered on time. If they have their products on time for a cheaper price, it will be good news for them as well because the end price is lower. This allows the customers to buy more products and that is actually what increases wealth; allow the people to spend more money on buying health care, high-tech products,
cars and so forth.
What is the biggest challenge that the DHL Group faces?
We, of course, are depending on the economy and the economy will remain volatile. But that is not really a challenge, that is something that we have to cope with all the time. I think the biggest challenge for, probably, all businesses around the world is to find the right talent, particularly in Asia. We need to get qualified people and people who speak English because we are a global network service company. If I look at many countries in Asia that is still the challenge and that could be the biggest bottleneck, even more so than infrastructure, for the growth of our
We spend a lot of money internally for constant training around the world because if we can’t find the right people in the market, we hire them and we train them. My colleagues in Indonesia are doing a lot to develop our own people here. If we can create opportunities for our employees, they will be loyal to our company, they will grow with us, and that will make our services better.
With the challenging global economic situation, how do you see the Indonesian market?
I am very optimistic about your country. Your domestic market is your competitive advantage. You’re the fourth largest population in the world. You have abundant natural resources. So you have all the ingredients. You will prosper and have a great future, if you do your homework: open your market more, allow more foreign investment and build infrastructure.
I know that this is difficult to understand. If you are local, you are concerned that if the markets are open, people will take your jobs. Within the short term, it is a challenge, but you find hundreds of cases where if you do it right, get the people on board, you will benefit massively from that. The countries who open up their market are the most successful and create the most attractive job opportunities.
This is a debate I have in every country I go. It is all about competitiveness. If you are not competitive, you can protect your people for a while, but the companies will move to different places and create more attractive jobs somewhere else. If you don’t do that, you will lose in the long run. Even in the developed world, we have the same discussion about how you make your country more competitive because that is the best way to get a fair share in the market.
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