New Problem Threatens Indonesian Manufacturing, What Is the Cure?
The national industry is still facing uncertainty due to geopolitical turmoil that has caused prices of a number of commodities to fluctuate. However, the most pressing problem for industry players has now shifted to logistics costs and certainty.
Amid these conditions, industry players must contend with increasingly expensive freight costs. The impact is not only felt by domestic producers but is also beginning to be felt on imported goods entering the Indonesian market.
“But for some commodities, the current phenomenon is that the obstacle is not raw materials and prices, but logistics,” said Secretary General of Inaplas Fajar Budiono to CNBC Indonesia on Friday (28/6/26).
High freight costs make shipping goods more expensive. This condition also means imported supply is no longer as cheap as before, including products originating from China.
“Logistics, so now the freight is all expensive, so imported goods are also starting to decline. From China, prices have also started to get a bit high,” said Fajar.
On the other hand, shipping uncertainty is making business players in the domestic market tend to hold back on decisions. They prefer to observe developments in transport costs, goods prices, and supply certainty before taking a position.
“But the local market seems to still be wait and see about taking a position or what, because the shipping cannot really be guaranteed, and secondly the prices are fluctuating so people tend to be wait and see,” he said.
From the legislative side, transport and logistics costs are considered one of the components that need to be reduced immediately. This is because these costs account for a fairly large portion of overall business costs.
“Then also the problem of transport, logistics transport. This is also too expensive. Even though it contributes around 30% to 40% to production costs,” said Member of Commission VII of the Indonesian House of Representatives Bambang Haryo Soekartono to CNBC Indonesia on Friday (28/6/26).
High logistics costs are not only a problem for industries that are already operating. Expensive distribution costs can also be a consideration for foreign investors when determining the location for building production facilities.
“This also needs to be done or regulated by the government, in the sense of being limited by the government, so that the tariffs are not too expensive and so on. So they are also made easier with smooth traffic on toll roads and so on,” said Bambang.
Transport costs must be reduced together with energy costs so that Indonesia has a more competitive cost structure. Cheaper logistics, electricity, and gas costs are considered capable of strengthening Indonesia’s position in manufacturing.
“Why is this? Logistics transport is cheap and fast. Then electricity and energy and gas are also cheap. Then the difficulty of the high-cost economy in terms of permits and so on can perhaps also be made easier and cheaper or shortened so there is no convoluted bureaucracy and so on,” said Bambang.