Logistics costs reduction: NLE implementation hindered by infrastructure
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Penurunan biaya logistic: Penerapan NLE terkendala infrastruktur
17 July 2024
By Lorenzo A. Mahardhika
Bisnis, Jakarta – The National Single Window Agency of the Finance Ministry revealed that the implementation of the national logistics ecosystem in Indonesia was still hindered by infrastructure issues at 46 ports and 6 airports.
Services, Data, and Partnership Management Director of the National Single Window Agency Ircham Habib revealed that infrastructure was one of the six pillars for the implementation of the national logistics ecosystem (NLE).
According to him, the implementation of the NLE is a mandate from Presidential Instruction No. 5/2020 on Arrangement of National Logistics Ecosystem that outlines an action plan for organising the national logistics ecosystem from 2020 to 2024. The implementation of the NLE will hinge on four key pillars, namely simplification of government business processes, collaboration on logistics platforms, payment systems, as well as system and spatial planning.
“The fourth pillar [that focuses on system and spatial planning] requires specific handling as it involves infrastructure. Hopefully, by the end of 2024, the implementation can be completed,” he explained at a seminar themed Digitalisation Achievement of Sea Transportation for Indonesian Logistics at the Transportation Ministry on Tuesday (16/7).
Habib further explained that the NLE has been successfully established at 46 ports and 6 airports. As of now, the first three pillars have been fully implemented by 100% at these locations. However, the fourth pillar is still in progress, with 75% completion. Therefore, the overall implementation of the NLE, which is based on Presidential Instruction No. 5/2020, has reached approximately 97%.
Even though several pillars of the NLE has been successfully established, Habib emphasised that the government is prepared for additional advancements to enhance the efficiency and optimisation of Indonesian logistics. For instance, he pointed out that future developments of the NLE would involve improving services related to ship arrivals and departures.
Habib said that this aligned with the government’s efforts to reduce logistics costs to 8% of the gross domestic product (GDP) by 2045.
Habib went on to explain that the implementation of the NLE has significantly improved efficiency in terms of time and costs within Indonesia’s logistics sector. According to a survey conducted by Prospera, the implementation of the NLE is expected to reduce delivery times by 44.5% and cut costs by 31.9%.
In 2023, thanks to the NLE, delivery times were reduced by 57.7% and costs were cut by 43.56%.
During the occasion, Transportation Minister Budi Karya Sumadi stated that the Inaportnet system that is part of the NLE has been implemented at 264 ports throughout Indonesia. With Inaportnet, he added that ship and cargo services at ports in Indonesia would be integrated in a single system.
The Transportation Minister continued that Inaportnet was part of the implementation of the NLE in Indonesia.
However, he believes that the implementation of Inaportnet needs to be communicated more effectively to relevant stakeholders, especially port service users, such as business operators.
“The question is do the users, such as cargo owners and mine owners who want to reach specific regions, know about [Inaportnet]. So, I am asking port UPTs (Technical Management Units) to continuously improve [the system] and inform the populace,” Budi Karya said.
The Transportation Minister also stated that the implementation of the NLE in Indonesia was attracting the attention of many other countries.
Budi Karya said that Inaportnet was a digital breakthrough of the Transportation Ministry to improve port services.
The Transportation Minister highlighted that several member countries of the International Maritime Organisation (IMO) have expressed interest in conducting a comparative study on the implementation of the NLE.
Therefore, Budi Karya is asking the Sea Transportation Directorate General to continuously develop the Inaportnet system and the NLE in a comprehensive manner.
He is urging all stakeholders to be involved and not to be trapped in a sectoral ego trap.
“Make the system better and make it known. I believe it can be more effective in the future,” Budi Karya explained.
Sea Traffic and Transportation Director of the Sea Transportation Directorate General of the Transportation Ministry Hartanto added that the implementation of a digital port service system in Indonesia through Inaportnet has garnered attention from international maritime players.
According to him, Indonesia is the only country that has tried to digitalise all of their port services through a single system.
He said that this attracted numerous countries to conduct a comparative study in Indonesia regarding the Inaportnet system. However, Hartanto did not go into detail about which countries have conducted this activity.
IMO appreciation
Hartanto also highlighted that Indonesia has garnered international recognition. A testament to this is that Indonesia was invited to showcase the implementation of the Inaportnet system to representatives of IMO member countries in London in 2023.
“Until today, there are still countries coming to Indonesia to exchange data on the implementation of the Inaportnet system. They even asked about the development of the Inaportnet system in London. Some even want to come again,” Hartanto explained.
He further noted that the implementation of the Inaportnet system has also generated non-tax state revenue (PNBP) for the Transportation Ministry. Importantly, he highlighted that the PNBP contribution from the Inaportnet system has been on a steady rise since its initial implementation in 2016.
Hartanto said that the PNBP received by the Transportation Ministry from the Inaportnet system in 2023 reached Rp2 trillion from 264 ports.
He pointed out that the realisation of PNBP has seen a significant increase compared to 2016. Back then, the contribution was recorded at Rp32.6 billion, when the Inaportnet system had only been implemented at 4 ports.
“The Inaportnet system could contribute significantly to PNBP. The growth is from billions to trillions,” Hartanto said.
He said that the contribution of PNBP from the Inaportnet system continuously grew from 2016 to 2023. This is in line with the increase in the number of ports that implement the system.
Hartanto explained that the contribution of the Inaportnet system to PNBP reached Rp286.6 billion from 12 ports. The following year, in 2018, the contribution rose to Rp415.4 billion, still from 12 ports. By 2019, the contribution had further increased to Rp460.7 billion, this time from 16 ports.
In 2020, PNBP contributed from the Inaportnet system reached Rp616.9 billion from 22 ports. In the next year, the contribution reached Rp778 billion from 26 ports.
In 2022, the number of ports that implement the Inaportnet system surged to 109 units, so the contribution surpassed Rp1.5 trillion.
Previously, as the effective period of Presidential Instruction No. 5/2020 was approaching, the National Single Window Agency of the Finance Ministry had devised a special plan.
National Single Window Agency Head Oza Olavia stated that various ministries and institutions under the Coordinating Ministry for Economic Affairs have already planned the subsequent steps to be taken once the effective period of the presidential instruction concludes.
“We are in preparation. Maybe there will be no more presidential instruction. We are preparing a related presidential regulation on logistics in Indonesia in the future,” he stated.
Oza said that the implementation of the NLE would be continued, despite plans to formulate a new presidential regulation. According to him, the implementation of the NLE is already in progress and responsibilities have been assigned to each respective ministry and institution.
