24% of Indonesian GDP, Highest Logistical costs in the world
Jakarta, Feb 18, 2012
The Association of Indonesian Employers (Apindo) expressed concern over the high logistical costs in the country which they said had reduced the competitiveness of the country`s products.
"One of the factors that has made the country`s products unable to compete with products from other countries is the logistical cost which is very high especially the cost of transportation," Apindo`s deputy chairman, Anton Supit, said here on Friday.
He said the high logistical cost had made the cost of production high and this condition was caused delays in development and inadequate infrastructure.
"Inadequate infrastructure especially roads has caused the logistical costs to soar," he said, adding that the cost of distribution at home was also higher than in other countries.
He said the government had to start taking measures to improve the bargaining power of domestic products especially with regard to the planned establishment of the ASEAN Community in 2015.
"Unless the bargaining power of domestic products is raised it will become a serious problem in 2015," he said.
Anton said bargaining power was also determined by the investment climate, the quality of the bureaucracy and the politicians who make the laws, workers and also natural resources.
"With regard to business there are three factors that need to be given attention namely the market, competency and improvement of investment climate through improvement of transportation infrastructure," he said.
He said central and regional government regulations also need to be harmonized. Other issues needing to be settled are land and properties and labor laws.
The Indonesian Chamber of Commerce and Industry said on Tuesday the logistic cost in Indonesia reached 24 percent of the Gross Domestic Product or Rp1,820 trillion a year which is the highest in the world.
"In Malaysia it is only 15 percent," according to member of Kadin`s Institute of Economic Research and Development Studies (LP3EI), Ina Primiana.
She said the cost of shipping containers from one region to another in the country is higher than that from the country abroad.
"Indonesia is an archipelagic country but most of the facilities are on land and do not support linkage between islands or coastal logistics," she said.