Indonesian President Joko Widodo inaugurated 11 bonded logistics centers on March 10 as part of Indonesia’s second economic stimulus package that was unveiled on September 30, 2015.
Next year Indonesian authorities want to see the opening of 50 more bonded logistics centers in the country.
These bonded logistics centers aim to curtail the country’s high logistics costs which make businesses in Indonesia less competitive and the general business climate in Southeast Asia’s largest economy less attractive, said a press release by Indonesia-Investments.
At a bonded logistics center, imported goods are stored for later distribution to industries.
Currently, however, the bulk of goods imported by Indonesian companies are stored in Singapore or Malaysia, pushing up logistics costs for these firms.
Unlike the bonded warehouse system which is only used by the owner, the bonded logistics center can be used by other companies.
The official opening ceremony for the 11 centers mostly located on the island of Java was held in Jakarta.
Jokowi, who led inauguration ceremonies, said he is hoping that logistics centers overseas, particularly those from other countries in the Association of Southeast Asian Nations (ASEAN), will relocate to Indonesia, said a report from Antara News.
According to the head of state, as a country with the biggest gross domestic product in the ASEAN, accounting for almost 45% of the population and the largest consumption of some 40% to 45% in the region, Indonesia should have had such logistics centers for a long time.
“But, in reality, we have to go to another country if we want to buy anything. For me, it should not happen again since the production is in Indonesia and the warehouse should not be in another country,” Jokowi said.
The establishment of these centers is expected to lower national logistics costs, reduce storage time at ports, and attract investments for the nation’s economic growth, he added.
Indonesian Finance Minister Bambang Brodjonegoro said the flow of goods at these centers will be closely monitored by the Tax Department in order to combat illegal activities.
Brodjonegoro added that these centers will be given tax incentives such as a moratorium on tax and import duty payments.
Entrepreneurs and other industry players have reacted positively to this news. The Indonesia Textile Association said these centers can curtail logistics costs for textile companies by 34%, while the Indonesian Food and Beverage Association said logistics costs in their sector can be cut as the supply of raw materials can be sped up.
Photo courtesy of Antara News
