Home » Breaking News, Ports/Terminals » Indonesia’s economic growth hampered by high logistics costs—report

High logistics costs are a serious impediment to higher economic growth for Indonesia, according to a report launched jointly by the Bandung Institute of Technology in West Java and the World Bank.

“The costs of logistics across Indonesia account for some 24 percent of GDP [Gross Domestic Product], higher than in neighboring countries,” said Henry Sandee, a senior trade specialist at the World Bank.

“Cutting down costs and improving the quality of logistics and transport systems would vastly improve Indonesia’s access to international markets and increase trade,” he added.

The “Annual Logistics Report” provides an analysis and overview of the progress made in tackling the problem of logistics in Indonesia. It notes in particular the inefficiencies at Jakarta’s Tanjung Priok port, the country’s biggest port and the city’s primary harbor.

“The waiting time for containers at Tanjung Priok has increased from 4.8 days in October 2010 to eight days in 2013. This is creating more bottlenecks for Indonesia’s exports and imports,” said Sandee.

Other findings suggest that opening up the port to 24 hours a day, seven days a week, has not translated yet into faster processing of documents or of goods.

The report also shows that using Cikarang Dry Port—an integrated facility that supports Tanjung Priok in handling export and import shipments, as well as domestic transactions—may reduce costs and time. But it remains under-utilized due to infrastructural and institutional constraints.

The “Annual Logistics Report” is compiled by the Bandung Institute of Technology’s Research Center for Logistics and Supply Chains, the Indonesian Logistics Association, the STC Group, Panteia Research Institute in the Netherlands, and the World Bank Indonesia Office.

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