Government Develops Infrastructure to Keep Logistics Costs Low

Infrastructure development is a priority for the administration of Joko Widodo and Jusuf Kalla, not only to reach equity, but also to boost national competitiveness and improve inter-area mobility. This strategy will result in keeping logistics costs low.

Public Works and Public Housing Minister Basuki Hadimuljono said that he's optimistic that by 2019, finished road construction can reduce logistics costs to 20% of gross domestic product (GDP). This year, logistics costs still make up 24% of GDP.

The government is set to finish the construction of 1,852 kilometers of new toll roads and 2,650 kilometers of new national roads from 2015 to 2019. The government also builds 500-km access roads to 24 main sea ports, 60 ferry ports, and roads supporting the development of 25 National Tourism Strategic Regions (KSPN).

According to Basuki, as cited from Liputan6.com, Thursday (August 23), these various efforts aimed to reduce travel time in main logistics routes, from 2.7 hours per 100 kilometers in 2014 to 2.2 hours per 100 kilometers in 2019.

Not only land route, Transportation Minister Budi Karya Sumadi explained that the government is also focusing on sea toll road projects. Of the 100 ships planned for sea toll roads, 84 have finished construction. "When they're all ready, the sea toll roads will be more effective," he said, as cited from Alinea.id, Wednesday (October 24).

The sea toll roads are the government's initiative to supply subsidized logistics to a number of places in eastern Indonesia.

In building the infrastructures for the sea toll roads, the government spends almost Rp400 billion every year. However, Budi said, the construction still faces some challenges, including the remote locations which result in weak control. Thus, the Transportation Ministry will involve other parties to monitor the sites through internet technology.

Other than sea toll roads, the construction of double-track railways between Bogor and Sukabumi is accelerated to increase the passenger capacity of trains, especially in the said route. Budi explained that with the infrastructure, the people will have an alternative means of transport to travel to Sukabumi from Jakarta.

The construction of the double tracks is also expected to shift bottled water distribution from roads to railways. Currently, the heavy traffic of cars passing by the Bogor roads has been damaging the roads. "We're attempting to shift bottled water distribution to railways," the minister told Bisnis.com, Sunday (August 26).

To build the 57-kilometer Bogor-Sukabumi double tracks, the Transportation Ministry prepares a budget of Rp2.4 trillion. Budi said that the construction is targeted to finish within the next two years. Currently only 10% of the construction has been completed.

Concerning logistics costs, Budi said that the government seeks to achieve the target of slashing them from 24% to 19.2% in 2019. He's optimistic that the reduction is possible, citing several big operators entering Indonesia as an indication.

According to Budi, the coming of big ships to Indonesia indicates the improvement of domestic economies of scale. Indirectly, the ships draw the goods that used to be shipped abroad to Jakarta. "With their coming, especially now intensively three times a month, it indicates that the economies of scale have begun from Priok," he said (Kontan.co.id, Wednesday, October 10, 2017).

Meanwhile, Indonesian Chamber of Commerce and Industry (Kadin) Logistics and Supply Chain Management Vice Chair Rico Rustombi said that the government must organize a feasibility study to reduce logistics costs and end price disparity. 

Rico said that the Kadin has carried out a study and found that there are six things that can keep logistics costs low. One of them is the construction of infrastructures that directly support the logistics sector. Clear regulations from the central and the regional governments are also needed.

SELOG, as a subsidiary of PT Serasi Autoraya (SERA) that deals in logistics sector, supports the infrastructure development program of the government. Even with the existing infrastructures, SELOG is committed to provide the best services of various kinds to the people.

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