Ministry Explains Govt Efforts to Address Declining Logistics Performances


Ministry Explains Govt Efforts to Address Declining Logistics Performances

acting deputy of macroeconomics and finance at the Coordinating Ministry for the Economic Affairs, explained the government’s efforts in the logistics sector. This is as a response to the World Bank’s report on the drop in Indonesia’s Logistics Performance Index (LPI) in 2023 which dropped 17 places to 63rd position from the previous 46th position.

One of the government’s efforts, Ferry said, is making efficiencies in logistics costs by strengthening inter-regional connectivity with infrastructure development.

“Various government policies to strengthen regional connectivity have also been pursued as an effort to reduce price disparities between regions,” he said when contacted on Friday, July 21.

The government also has connectivity policies that support inflation control, which are included in the 4K key strategy—classified in the category of smooth distribution. These include, among others, the development of the National Logistic Ecosystem (NLE); as well as the construction of roads and bridges including the issuance of Presidential Instruction no. 3/2023 on the Acceleration of Increasing Regional Road Connectivity.

The government is also making airport improvements; rail line upgrades; and optimization of sea highways and air bridges.

“Regional connectivity is improved to reduce price disparities between provinces,” Ferry said, adding that good connectivity is expected to support the national economy, especially through the main logistics route, as well as increasing the accessibility of disadvantaged, frontier and outermost (3T) regions.

Efforts to achieve an adequate logistics system still require supporting work including encouraging digitization, in order to “support the smooth running of logistics which is currently not fully supported by adequate human resources.”

According to Ferry, the decline in the LPS value from Bank Indonesia was affected by supply chain disruptions that occurred during and after the pandemic, which caused the shipping process at ports to become inefficient.

“Another factor is global geopolitical tension which had gone high, hampering international trade transactions,” he said.

The World Bank’s measurements were carried out in 139 countries. LPI 2023 data places Singapore in first place with a score of 4.3, followed by Finland (4.2), Denmark (4.1), and Germany (4.1). In 2018, Germany ranked first with a score of 4.2, while Singapore ranked 7th with a score of 4.0.