Client : Rantai Expo
\nPublication : August 2
\nApproval : July 29<\/p>\n
Notes multimodal transport refers to modes of public transport<\/p>\n
Taking advantage of a bigger market<\/p>\n
By Sudibyo M. Wiradji<\/p>\n
Countries grouped in the Association of Southeast Asian
\nNations (ASEAN) are expected to see tougher competition in the
\ntransportation and logistics industries, now that the ASEAN Free
\nTrade Area (AFTA) is in place.<\/p>\n
As experts have put it, transportation and logistics are \"the
\nkeys to the very lifeblood of international trade and industry\".<\/p>\n
The challenge facing ASEAN is for each ASEAN country to
\nimprove the quality of its infrastructure, technology,
\ntransportation and logistics services, so they meet global
\nstandards.<\/p>\n
ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia,
\nMyanmar, the Philippines, Singapore, Thailand and Viet Nam.<\/p>\n
With tariff reductions of between zero and 5 percent on all
\nASEAN-based manufacturing products being announced in early 2002,
\nAFTA will bring major changes in trade and business in the
\nregion.<\/p>\n
According to a source, trade between the ASEAN countries as a
\nresult of AFTA reached about US$95.2 billion in 2000, compared to
\n$44.2 billion in 1993, representing an average annual increase of
\n11.6 percent. \"This means that transportation and logistics-
\nrelated businesses will see good prospects,\" an expert said.<\/p>\n
Chris Kanter, the head of the transportation division at the
\nIndonesian Chamber of Commerce and Industry (Kadin), said that
\nwith the larger market within ASEAN, transportation and logistics
\nservices would become more lucrative than ever.<\/p>\n
Citing an example in the context of Indonesia, he said that 10
\nlarge-scale companies in the transportation and logistics
\nbusinesses had a turnover of about $25 million per annum.<\/p>\n
\"This lucrative business can also provide job opportunities,\"
\nhe added.<\/p>\n
Chris said that when it comes to transportation and logistics
\nservices in the global market, Indonesia had more potential as a
\nprovider of logistics services rather than a provider of means of
\ntransportation.<\/p>\n
\"At this moment, it might be too costly to provide a plane or
\ncontainer ship for transporting goods,\" he said.<\/p>\n
Currently, the Indonesian Forwarder Association (IFA) has
\nabout 2,700 members, but only 20 of them are already prepared to
\ncompete in the global market, according to Chris, who is also the
\nchairman of the IFA.<\/p>\n
While highlighting the incredible opportunities AFTA presents
\nASEAN countries, experts have expressed concern about the
\nremaining constraints that are hampering efforts to boost the
\ncompetitiveness of the region's transportation and logistics
\ncompanies.<\/p>\n
Under the ASEAN free trade scheme, any company from ASEAN
\nengaged in providing transportation and logistics services will
\nface no significant barriers in operating in any country within
\nthe region.<\/p>\n
\"This is also a positive side for Indonesia because Indonesian
\ncompanies engaged in the business can expand their networking,\"
\nChris said.<\/p>\n
In the context of Indonesia, however, there is a growing fear
\nthat the absence of clear-cut regulations on multimodal
\ntransportation will lead to the entry of multinational
\ntransportation companies with no added value for Indonesia.<\/p>\n
The regulations on multimodal transportation, should deal
\nwith, for example, what conditions foreign companies (engaged in
\nthe transportation and logistics business) should have to abide
\nby when operating in Indonesia, Chris said.<\/p>\n
\"The unclear regulatory regime surrounding multimodal will
\nmake Indonesia legally weak when confronted with transportation
\nand logistics disputes,\" he said.<\/p>\n
Other ASEAN countries, like Singapore, Malaysia, Thailand and
\nthe Philippines, have moved forward with their multimodal
\nregulations.<\/p>\n
\"Singapore, with an advanced transportation and logistics
\nindustry, has a strict ruling on multimodal transport,\" he noted.<\/p>\n
Chris suggested that draft of ASEAN Framework Agreement on
\nMultimodal Transport, now under discussion at the State
\nSecretariat, be issued prior to its ratification at the ASEAN
\nMeeting of Ministers of Transportation in September.<\/p>\n
\"When the multimodal regulation is issued after the
\nratification, there will be no chance for the country to revise
\nit because Indonesia will no longer be allowed to issue a
\nregulation that is against the ratified agreement,\" he said.<\/p>\n
The Indonesian Transportation Society (MTI) Head, Heru
\nDewanto, emphasized that strengthening the business sector would
\nbe less meaningful if the country did not have a clear vision and
\na strong policy for its transportation infrastructure.<\/p>\n
With major changes AFTA will bring in Indonesian trade and
\nbusiness, the provincial and national transport infrastructure
\nand systems, should be compatible with regional and global
\nnetworks.<\/p>\n
\"This compatibility requires speed and punctuality that can
\nonly be fulfilled by an efficient and modern transportation and
\nlogistics industry, supported by appropriate technology and
\nprofessional management,\" said Heru.<\/p>\n
When linked to AFTA, Indonesian transportation is a paradox.
\n\"On one hand, transportation and information technology are
\nmaking the world shrink and borderless. On the other hand,
\nIndonesian transportation is making Indonesia expand in terms of
\ntime,\" Heru said.<\/p>\n
Executives of international express delivery companies that
\noperate in Indonesia have a different view regarding the possible
\nimplications of AFTA on the transportation and logistics sectors.<\/p>\n
\"The implementation of AFTA will make little difference. All
\nit will do is the cut in the amount of duty paid on imports from
\nAFTA countries and, hopefully, simplify the clearance
\nprocedures,\" DHL technical adviser Alan Cassels said.<\/p>\n
\"With our sister company, DPWN, Danzas AEI, we are able to
\ncover the complete portfolio of distribution services from
\nenvelopes to sea containers,\" he said.<\/p>\n
AFTA will not have any dramatic effects until member countries
\njoin together and \"truly start to act as one huge domestic
\nmarket, with no customs functions slowing down trade between each
\nmember. If that happens then the changes would be big. But two of
\nIndonesia's largest export and import destinations\/origins are
\nthe U.S. and Japan -- both outside AFTA,\" he stressed.<\/p>\n
Meanwhile, FedEx's managing director for Singapore and
\nIndonesia, Clifton Chua, said: \"AFTA will urge or force domestic
\nbusiness players to be more competitive in the larger, regional
\nmarket place. This expansion into new markets by exporters and
\nsmall and medium enterprises parallels the logistics network that
\nFedEx has developed to get customers' products to the rest of the
\nworld ahead of their competition,\" he said.<\/p>\n
To anticipate a possible increase in demand for shipment and
\nlogistics services when AFTA is fully enforced, FedEx just
\nannounced the expansion of its Subic Bay facility.<\/p>\n
\"The new 140,000-square-foot facility has effectively doubled
\nthe size of the sorting capability at the hub, and will also
\ninclude the addition of enhanced automation for even faster
\ndocument sorting,\" he said.<\/p>\n
\"FedEx believes that Asia continues to be a magnet for export
\nactivity and a manufacturing center, and when you consider that
\nat least half of the world's trade flow will come from Asia over
\nthe next 10 years, I believe there are exciting opportunities for
\nFedEx in Indonesia and ASEAN, particularly in entering AFTA,\"
\nChua said.<\/p>\n
As foreign executives have put it, to boost Indonesia's
\ncompetitiveness in the transportation and logistics industries,
\nsome improvements have to be made. These include upgrading the
\ncountry's road infrastructure, developing a fully integrated
\nelectronic customs link for all types of imports, regardless of
\nweight or value, ending restrictive monopolies or duopolies, and
\nensuring greater honesty and integrity in business in general.<\/p>",
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