Indonesia’s economy may expand closer to 6 percent next year if the government can address problems related to sea transportation and ports, prominent economist Faisal Basri said.
Faisal, who spoke in a seminar on politic and economic outlook held by Antara news agency, Thursday, said inefficiencies in sea transportaion and ports contributed to high logistic costs. Spending on logistics accounts for 30 percent of the country’s Rp 5,400 trillion (US$572 billion) gross domestic product (GDP).
“Not only sea [infrastructure] but also land. Our logistic costs are 30 percent of the GDP. China’s are 20 percent, Thailand’s are 10 percent. We spend too much on transportation costs,” he said.
Faisal said a significant improvement could be made by simply making the services given under the National Single Window (NSW) available 24 hours a day. He said businesses could spend US$30,000 per day renting ships while waiting for cargoes to be unloaded.
First introduced in December in 2007, the NSW system is designed to shorten the time needed to verify the identity of importers to a maximum of 7.5 hours, or one working day. Without the scheme, importers previously had to wait several days for such clearance.
The system is currently mandatory for imports through Tanjung Priok Port, Surabaya’s Tanjung Perak Port in East Java and Tanjung Emas Port in Central Java’s Semarang, as well as the Soekarno-Hatta International Airport in Jakarta.
Coordinating Minister for the Economy Hatta Radjasa said Wednesday the fifth phase of NSW would be launched in January 2010. It will ensure all management of imports and exports are integrated in one portal.
Faisal estimated Indonesia’s economy could grow at between 5.4 percent and 5.9 percent next year.
“If there’s a little improvement it can reach 5.9 percent. The government’s target [of 5.5 percent] in 2010 is too little. Just watch other countries leap ahead,” he said.
“So a growth of 6 percent is feasible,” he said, adding that exports would increase and private consumption would remain high. Private consumption usually contributes 60 percent of the economy, based on official statistics.
Faisal also said the government should improve manufacturing industry to create a healthy economic environment. “There’s no way the economy can grow healthy if manufacturing industry doesn’t grow.”
An expanding manufacturing industry will provide more jobs for Indonesia’s 104.87 million labor force.
In August the open (formal) unemployment rate stood at 7.87 percent of total labor force, according to the Central Statistics Agency (BPS).
Almost 70 percent of Indonesia’s workforce survive in the informal sector, which doesn’t provide insurance or job certainty, BPS said.
The government says that the strengthening and growth of manufacturing industry is therefore one of its main priorities in its development plans for the next five years.