Kadin Indonesia's Transportation and Supply Chain Sector held a National Coordination Meeting (Rakornas) to identify the potential, contribution, and challenges in the transportation and logistics sector to national economic growth on Monday, (26/8/2024).
In the last two decades, the transport and logistics sector in Indonesia has become one of the main pillars in supporting national economic growth. The sector plays a vital role in facilitating the flow of goods and services, connecting production centres with markets, and ensuring smooth domestic and international distribution. With Indonesia's vast territory consisting of thousands of islands, the effectiveness and efficiency of the transport and logistics sector is key in optimising the national economic potential.
However, this sector still faces significant challenges. These range from uneven infrastructure, limited access to transport in remote areas, to inefficiencies in supply chain management. These challenges have hampered the transport and logistics sector's ability to contribute optimally to economic growth. At the same time, there are great opportunities to improve the competitiveness of the sector, especially with technological developments, increased investment, and the government's commitment to improving national infrastructure.
In addition, Indonesia's President-elect for 2025-2029, Prabowo Subianto, aspires to bring Indonesia's economy to 8% growth in the next 2-3 years. To achieve this goal, various strategic initiatives covering the development of key sectors such as infrastructure, manufacturing industry, and technology and innovation are planned.
In this regard, it is important for the government, the business world, and all stakeholders in Indonesia to work together to realise the goal of sustainable economic growth.
As a strategic partner of the government, Kadin Indonesia has initiated the preparation of a white paper on Development Directions and Policies in the Economic Sector for 2024-2029. Through a collaborative drafting process, this white paper is expected to become a forum that unites the aspirations of various business stakeholders and national economic development priorities for 2025-2029.
Kadin Indonesia's white paper will contain input for the next 5 years of development, as well as potential strategic priority programmes in developing the economy in the next five years, and focuses on providing strategic context, objectives, key initiatives and drivers, and key metrics across development priority themes. The final result of the preparation of this white paper is expected to be the basis for the government in formulating economic policies that are right on target and have a broad impact on society.
Kadin has identified 5 key challenges, namely:
- Uneven Infrastructure: Despite massive infrastructure development efforts, many areas in Indonesia still suffer from limited access. This results in high logistics costs and long delivery times, especially in remote areas and islands.
- Efficiency and Inter-Agency Coordination: Coordination between various government agencies involved in the logistics sector is expected to be more harmonised, as well as effective and efficient bureaucratic processes.
- Human Resource Capacity and Technology: The use of technology in the logistics sector is still lagging behind other countries. In addition, the shortage of skilled labour in logistics and transport management is a challenge in improving the sector's performance.
- High Logistics Costs: Logistics costs in Indonesia are still high when compared to other countries in the Southeast Asian region. This is due to factors such as inefficiencies in supply chain management, lack of multimodal transport, and high energy costs.
- Policy Instability: Frequently changing and inconsistent policies from the government make it difficult for businesses in the logistics sector to conduct long-term planning. This uncertainty results in low investment in the logistics sector.