The lack of development in Indonesia’s maritime infrastructure has been a crucial factor in the country’s high logistics costs. Potential higher trade growth, lower external financing costs and a depressed oil price as well as infrastructure development should drive Indonesia’s logistics industry forward when the country recovers from the Covid-19 pandemic.
However, Indonesia’s logistics performance in international rankings remains weak. Based on the 2018 World Bank’s logistic performance index, Indonesia scored 3.15 out of 5, trailing behind other Southeast Asian countries like Singapore (4), Thailand (3.41), Vietnam (3.27) and Malaysia (3.22). The only country that Indonesia has a edge over, is Philippines which scored a 2.9 out of 5.
The seemingly less-than-stellar performance of Indonesia’s logistics system is preventing the country from fully participating in the global production network. And It is easy to say that Indonesia needs to adopt an integrated approach to realise efficiencies across the entire supply chain.
In reality, the country has an uneven population distribution, giving rise to regional disparities and preventing the country from realising its economic potential. Apart from infrastructure investments, the country also needs to tackle issues surrounding bureaucracy and customs clearances. All these work together to stall Indonesia’s advancement in the maritime sector.
Even so, if we were to look at the World Bank’s logistic performance index again and widen our perspective to include the historical data, we could see that in 2010, Indonesia was actually ranked at the bottom of Southeast Asia with a score of 2.76. The country remained at the bottom throughout the entire 2010 – 2013 period. Then in 2014, the country arrested the situation and managed to lift itself from the bottom pit and surpassed Philippines. Since then, Indonesia has managed to maintain a clear gap between itself and the Philippines. On the upside, it is slowly but surely closing the gap with Malaysia.
In another attempt to transform and uplift the sector, Indonesia is partnering Netherlands to provide scholarships to Indonesian students who are interested in furthering their academic ambitions in Netherland to study postgraduate degrees in the field of water management and technology, sustainable entrepreneurship and circular economy focusing on the fishery and marine industries. Aside from providing scholarships, the administration would also consider to send their teachers and lecturers to Netherland, to learn about agriculture, on top of water management and circular economy.
Both countries hoped that this cooperation could provide a platform to nurture the much-needed professionals in these fields, hopefully spark value-added innovations and improve the bilateral relations between both countries.
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