Indonesia Falls Behind Other ASEAN Countries in Logistics
Jakarta. Indonesia’s trade logistics performance is still lagging behind other ASEAN member states, and the government is blaming the country’s geographical traits for its underwhelming performance.
“We need to improve our logistics performance index [LPI], including the logistic costs that fail to compete with other ASEAN countries and emerging nations,” Finance Minister Sri Mulyani told a recent conference.
Indonesia is a geographically vast and an archipelagic country. This would make improving the country’s competitiveness from logistics —especially from a logistics or distribution standpoint— not an easy challenge to address, the minister said.
“It is not easy to compete with other ASEAN countries whose geographical traits are relatively compact, smaller, and not as complex as that of Indonesia. Their population is also smaller in size," Sri Mulyani added.
The World Bank has launched LPI: a benchmarking system that scores a country’s trade logistics performance on a 5-point scale.
In 2023, Indonesia ranked 61st out of 139 countries across the globe after getting a 3 in LPI score. Indonesia’s scores on the respective LPI parameters are as follows: customs (2.8), infrastructure (2.9), international shipments (3), logistics competence (2.9), tracking and tracing (3), as well as timeliness (3.3).
Singapore became the highest-scoring ASEAN member state with 4.3 in the 2023 LPI. Close neighbor Malaysia's overall LPI score stood at 3.6 this year. The World Bank gave Thailand 3.5. Followed by the Philippines and Vietnam with 3.3. Fellow ASEAN countries Laos and Cambodia earned 2.4.
The World Bank did not include Brunei Darussalam and Myanmar in the 2023 LPI scoring.
Indonesia’s 2023 LPI score is also lower than what the country recorded in 2018. The World Bank reported that Indonesia’s LPI score in 2018 stood at 3.15, placing the country in 46th place.
Indonesia today is banking on its national single window —the country’s customs clearance system that integrates information or documents related to export-import— to improve its LPI score. The national single window also integrates information on airports and seaports. Sri Mulyani also called for better synergy between ministries and government agencies for a more seamless process.
“Our LPI score depends on these ministries and government agencies because they have their respective requirements and processes that may burden businesses,” Sri Mulyani said.
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