RI logistics costs lower than Thailand, LPEM-UI, JBIC say
RI logistics costs lower than Thailand, LPEM-UI, JBIC say
The Jakarta Post, Jakarta
Logistics costs in Indonesia are significantly lower compared to
Thailand, in contrast to the wide-spread perception that the
country has higher cost compared to other Asian countries,
according to a report.
The report -- based on a joint study conducted by Institute
for Economic and Social Research, University of Indonesia (LPEM-
UI) and Japan Bank for International Cooperation (JBIC) -- was
released on Monday.
The study took 75 firms in Greater Jakarta, Makassar, Surabaya
and Medan as its respondents. The firms are exporters of textiles
and clothing, food and beverages, electronics and automotive
parts.
The study showed that total logistics costs in Indonesia
comprised 14.08 percent of total production costs, while in
Thailand the figure stood at 22 percent, as revealed in the
seminar "Enhancing Indonesia's competitiveness: Meeting the
Challenges for Industrial Development".
Indonesian exports have been suffering from low
competitiveness, due to low productivity and other problems at
the factory or firm levels. In addition, logistics inefficiency
increases transaction costs that in turn put more downward
pressure on competitiveness.
"Thailand may have higher logistics cost than Indonesia, but
they are strong (in terms of total) investment," M. Chatib Basri
of the LPEM-UI told reporters on the sidelines of the seminar.
The government needs to deregulate and simplify bureaucracy as
a short-term solution to increasing investment, as well as
improving institutions such as the tax office, customs and others
in the long term, said Chatib, who is also an economic advisor to
Coordinating Minister for the Economy Aburizal Bakrie.
The study further revealed a surprising finding that the cost
of logistics from suppliers to manufacturers was almost double
the cost from factories to port, contrary to the wide perception
that costs in ports were the major factor in reducing the
country's product competitiveness.
"One explanation is that Indonesia's export industries still
require more imported than domestic input, which has an
implication to the higher input logistics costs," it said.
The study said that logistics costs from input to manufacturer
contributes 7.22 percent of the total cost, in-house logistics
contributes 2.82 percent and logistics from factories to port
4.04 percent.
The main sources of the inefficiency in logistics in export
industries, based on respondents perceptions, were poor
infrastructure, illegal imposts along distribution chains, and
government regulations such as those for export procedures.