In October 2023, Indonesia’s logistics sector is facing some big hurdles. We’re talking about issues like slow transportation, digital complications, and uneven services. Plus, the cost of logistics in Indonesia is pretty high, it becomes increasingly important for businesses to maintain an exceptionally efficient operational process. But the government is actively addressing challenges to boost Indonesian competitiveness and attract domestic and foreign investors. There’s also a new rule for online businesses and exciting teamwork with China. Let’s dive in!
High Logistics Costs and Government Initiatives
Indonesia’s national logistics costs have soared to 14.29% of the GDP due to factors like inefficient transportation infrastructure and supply chain networks.
The government acknowledges the need for improved efficiency and integration to reduce these costs, make Indonesian businesses more competitive, and attract domestic and foreign investors. The government is actively implementing initiatives to optimize logistics and enhance the business environment.
Regulation for Electronic Trade Models
The Minister of Trade in Indonesia has introduced Regulation Number 31 of 2023, defining six business models for domestic electronic trade actors (PPMSE). These models include online retail, local marketplace, classified ads, price comparison platforms, daily deals, and social commerce. Notably, social commerce platforms cannot facilitate payment transactions, and there must be a clear separation between different business models.
While this regulation has garnered mixed responses, it represents a significant step in regulating and shaping Indonesia’s e-commerce landscape.
Support for Positive List Regulation
The Association of E-Commerce Logistics Entrepreneurs (APLE) supports Indonesia’s positive list regulation for Electronic Trading System Providers (PPMSE). This regulation permits direct imports of products below $100 through e-commerce, based on a list determined by the minister.
APLE Chairman, Sonny Harsono argues that an outright ban on such imports would be counterproductive. Instead, he emphasizes the need to combat illegal imports and predatory pricing by establishing logistics hubs in duty-free areas like Batam. All local platforms trading imported goods should go through these hubs, accompanied by official electronic import documents from the Ministry of Finance.
Economic Partnership with China
During the 3rd Belt and Road Forum (BRF) in October 2023, the Indonesia-China Business Forum led to cooperation agreements worth more than IDR200 trillion, with potential future cooperation reaching up to IDR455 trillion.
This partnership has grown significantly, thanks to China’s Belt and Road Initiative (BRI), which spans infrastructure projects across various regions. President Joko Widodo expressed gratitude for Chinese investments, predicting that Chinese investment in Indonesia will become a leading foreign direct investment contributor. China’s investment in Indonesia has surpassed USD8.6 billion, significantly contributing to the development of industries and economic zones across the country.
(Read more on REPUBLIKA)