Improvements in Indonesia Logistics

Logistics has long been a predicament in Indonesia, where it is a major issue for a lot of businesses as well as companies themselves. In Indonesia, a country with 17,504 islands and the highest growth in Gross Domestic Product (GDP) in Southeast Asia,  there is a huge market and need for proper logistics and transportation to support shipments across the archipelago. In this article, we would be covering in depth as to what the current problems are with the logistics industry in Indonesia and how the local authorities (and businesses) are doing their part to solve the problem.  Click here to read our other articles related to international trade and logistics.

The problem with logistics in Indonesia

In the Indonesian logistics industry, several issues lie that prevent a smooth and seamless logistics process. Many of the problems in the Indonesian archipelago are because of two main issues, infrastructure as well as connectivity. The current state of infrastructure makes the logistics process long, complicated as well as expensive. This is because many areas are not properly connected by roads and even if there are roads bad traffic  in major cities like Jakarta  and Surabaya slow down the time of arrival. On the other hand, sea ports are also not well equipped to handle containers and this as such, makes it extremely long for ships to get through the containers as the current ports cannot handle the large volume.

The second issue is connectivity. As there are so many different islands stretching from the borders of Malaysia all the way until Australia, it becomes really expensive and inconvenient to transport the goods as they have to be multi modal. Therefore, businesses end up spending alot of money on logistics which in turn drive up the costs for products when consumers buy them from the shelves.

Improving Indonesia’s infrastructure is key to solve the high costs of logistics in the country

Current measures taken to solve the problem

Indonesian President Joko Widodo announced that he will improve the state of the country’s infrastructure, which in turn would make the costs of logistics lesser. For example, seaports, roads as well as connectivity between islands are expected to be improved. Currently more than 25% of Indonesian GDP are attributed by spending in the logistics industry. Therefore, indicating a dire need to upgrade the infrastructure and connectivity to bring down the overall costs of transporting goods from one Indonesian city to another.

What we can expect in the future of logistics in Indonesia

In the near future, we can expect an improvement in infrastructure to support the shipment of goods in the country. On the other hand,  the government is also planning to reduce logistics cost by removing payments for cargo licenses, documentation etc.

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