Indonesias 9th Economic Stimulus Package: Logistics Costs

The government of Indonesia unveiled its ninth economic stimulus package on Wednesday (27/01) in an effort to boost the nation's economic growth. The ninth package aims to combat Indonesia's high logistics costs hence improving competitiveness of domestic industries while making Indonesia's investment climate more attractive. It is estimated that Indonesia's logistics costs are equivalent to around 25 percent of the nation's gross domestic product (GDP), among the highest in the ASEAN region.

Some domestic industries in Indonesia complain that logistics costs account for about 40 percent of total operational costs.

Indonesia's 9th economic stimulus package consists of four parts:

(1) to integrate billing and payments for port services conducted by state-owned enterprises into one electronic system (single billing system).

(2) to integrate the Indonesia National Single Window system (which handles export and import documents) with the 'inaportnet' system (which monitors the flow of goods in harbors).

(3) to revise Transportation Ministry Regulation No.3/2014 on the Use of Foreign Currencies for Transportation Payments. By revising this regulation the Indonesian government aims to make the use of the Indonesian rupiah mandatory for payments related to transportation activities.

(4) to remove Communications and Information Ministry Regulation No.9/2015. This move should neutralize the price difference between private commercial postal services and state postal services in Indonesia. The aforementioned regulation states that commercial postal services in Indonesia are required to be more expensive than universal (private) postal services. This regulation was a major advantage to state-owned Pos Indonesia but limited competitiveness and efficiency in the country's postal services sector.

Furthermore, Indonesia's Chief Economics Minister Darmin Nasution said the government will support state-owned electricity distributor Perusahaan Listrik Negara (PLN) to achieve its 35,000 MW power program by injecting capital into the company, quickening licensing procedures and assist when land conflicts occur. By 2019 the government targets to reach an electrification ratio of 97.2 percent (from 87.5 percent currently).


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