JAKARTA: Indonesia government is planning reforms in the pre-customs clearance process at major seaports as President Joko “Jokowi” Widodo seeks to reduce the nation’s notoriously high logistics costs.
Transportation Minister Ignasius Jonan said here the other day that he would undertake efforts to improve efficiency at Indonesian seaports, so that the government would meet the new dwelling-time target set by the President.
Speaking to reporters at the Presidential Palace Jonan pledged that he would need only three months to meet the dwelling-time target of 4.7 days demanded by Jokowi, from the current six days.
“The biggest challenge that we face [in reducing dwelling times] is improving efficiency in the pre-customs clearance process, as this involves many institutions,” the minister said on Wednesday.
Dwelling time indicates the average length of time a container spends in a seaport terminal. It is a measurement of efficiency at a seaport, with shorter dwelling times translating into a more efficient shipment process and, therefore, lower logistics costs.
As a first step to improving efficiency, the government would cut red tape in the pre-customs clearance process where containers’ documents are checked and verified, Coordinating Economic Minister Sofyan Djalil said here the other day.
“For example, goods arriving here are verified by the customs office first before they are passed to be put into quarantine. We may reverse the process,” the minister said after his meeting with Jokowi.
At seaports, the pre-customs clearance process normally involves layered procedures, as certain goods — especially edible products — must first receive verification from institutions such as the Trade Ministry, the Agriculture Ministry, the Environment and Forestry Ministry and the Food and Drugs Monitoring Agency (BPOM) before they can get clearance approval from the Finance Ministry’s customs and excise office.
The average dwelling time in Tanjung Priok port, the nation’s busiest seaport, stands at nearly six days, data from the Transportation Ministry show. The previous government, under the leadership of former president Susilo Bambang Yudhoyono, had aimed to cut the dwelling time to four days by the end of last year.
Indonesian ports are among the most inefficient in Asia. Dwelling times in Singapore stand at only 1.5 days, in Malaysia three days, while loading and unloading containers in Thailand takes four to five days.
Also, in Indonesia, logistics costs account for approximately 24 percent of the country’s gross domestic product (GDP), among the highest in Asia, with the inefficiency attributed to red tape.
If the government succeeded in reducing logistics costs to below 20 percent of GDP, the economy could make savings of around Rp 700 trillion (US$53.8 billion), according to Coordinating Maritime Affairs Minister Indroyono Susilo.
Indroyono said the President was currently formulating a Presidential Instruction that would integrate responsible ministries and government institutions to improve coordination and boost efficiency in local seaports.
“Within the past week, I’ve noticed that the responsible ministries and government institutions already have a keenness to implement the reforms,” the minister stated after a plenary Cabinet meeting here the other day.
