Expediting goods flow

Tuesday, 2 February 2010

The Jakarta Post

                  President Susilo Bambang Yudhoyono’s inauguration last week of the National Single Window (NSW) facility at Jakarta’s Tanjung Priok seaport and international airport should be one of the most important, if not strategic, programs of action during the first 100 days of his government.

                  The NSW will dramatically expedite the movement of goods through seaports and airports because this facility is a clearance system that enables a single submission of information and data, single and simultaneous processing of the data, and a single point of decision making through close collaboration among the line ministries and other parties involved in the customs clearance process.

                  Instead of submitting different forms and information to numerous agencies (e.g. customs, ports, health, etc.) to get a shipment cleared, a trader only needs to submit all the information to one agency. Through synchronizing the intervention of the government agencies, traders, shippers, forwarders, transport operators and other parties, customs authorities can expedite containerized shipments.

                  Launching the new facility at Tanjung Priok, the Jakarta international airport, and simultaneously at three other seaports – North Sumatra’s Belawan, Surabaya’s Tanjung Perak and Semarang’s Tanjung Emas – is also strategic in nature because these ports handle almost 70 percent of Indonesia’s imports and more than 60 percent of non-oil exports.  

                  Most businesses have cited grossly inefficient clearance of goods out of ports as one of the main factors that has made the country’s logistics system among the most inefficient in the world.

                  In fact, the World Bank ranked Indonesia 75 among 155 countries surveyed for the 2010 Logistics Performance Index, even lower than most other ASEAN countries. The index assesses customs service, trade and transport infrastructure and other important factors which influence the time and costs of moving goods within a country and across borders.

                  Most business surveys cited inefficient logistics – caused by poor infrastructure and a corrupt, incompetent bureaucratic system – as one of the biggest factors that makes Indonesia’s exports not competitive.

                  High logistics costs also create wide regional price differences and hinder the full economic integration of the islands. Citing an example, the World Bank study shows that the shipping of a 40-foot container from Padang in West Sumatra to Jakarta costs US$600 while the same container can be shipped from Jakarta to Singapore – more than three times the Padang-Jakarta distance – for only $185.

                  An efficient customs service, the main component of the NSW facility, will greatly help improve the investment climate because efficient logistics arrangements have become the most important factor considered by investors in choosing the location of their investment. Yet more encouraging is the government policy of operating the NSW facility 24 hours a day for seven days a week. This could be a revolutionary measure in making industrial firms more competitive on the international market as the key to being connected to global manufacturing supply chains is the ability of companies to move goods across borders rapidly, reliably and cheaply to reduce distribution and inventory costs.

            The NSW will become part of the ASEAN Single Window which, when fully implemented in 2012, will speed up free trade in the region as part of its final step toward the development of an ASEAN economic community in 2015. (The Jakarta Post)