The ALFI Institute (Indonesian Logistics and Forwarders Association Institute) notes that although national logistics costs as a percentage of GDP have declined from 26% in 2014 to 14.3% in 2024, they are still higher compared to neighboring Southeast Asian countries such as Vietnam, Malaysia, and Singapore.
Chairman of the ALFI Institute, Yukki Nugrahawan Hanafi, said that high logistics costs can affect national competitiveness, especially in the context of seeking new market shares amid rising tariffs in today’s international trade environment.
“To continuously enhance competitiveness and strengthen domestic industries, lower logistics and supply chain costs must become a top priority for both the government and business players, so that Indonesia can become a more competitive and preferred global trade partner,” he explained.
Specifically, high logistics costs as a percentage of GDP are influenced by various expenses incurred by businesses, including transportation, warehousing, and logistics management administration. At a macro level, these costs are also linked to uneven and non-integrated logistics infrastructure and an inefficient supply chain.
“Increasing the quantity and quality of logistics infrastructure and supply chain management not only reduces logistics costs but also strengthens Indonesia’s position as a major hub for trade, services, and investment,” said Yukki.
Policy Focus Recommendations
To further drive efficiency in logistics and supply chain costs, the ALFI Institute encourages the government to work with industry players to reform the national logistics system, focusing on five policy priorities:
- Enhance the availability of logistics infrastructure across land, sea, and air.
- Improve fiscal and trade governance for logistics in a simple, efficient, and optimal manner.
- Harmonize regulations and streamline bureaucracy to reduce complexity and delays.
- Revitalize transport fleets to improve operational logistics performance.
- Increase capacity and skills of logistics and supply chain actors, particularly in digitalization and management of land, sea, and air logistics systems.
“ALFI Institute believes that reducing logistics costs is essential to improving Indonesia’s competitiveness. We consider these five policy focus recommendations to be crucial and they must be implemented comprehensively and in coordination,” concluded Yukki.
—
The article has been published and can be accessed here
