New Policy Package to Tackle Cargo Issues

March 30, 2017, The Jakarta Post

The government is close to finalizing a 15th economic policy package, which will address logistical issues, particularly the costly and controversial regulated agent (RA) requirement. A draft of the package is expected to be presented this week.

The Transportation Ministry’s director for aviation safety, Muhammad Nasir Usman, said the ministry was working on a revision of Ministerial Regulation No. 32/2015 on air cargo and supply chain safety, which stipulates the RA requirement, to be included in the upcoming economic policy package.

A regulated agent is an entity that provides obligatory security checks of cargo. Many countries appoint a state-run agency to carry out that task, but Indonesia has chosen a different path by appointing three private entities to handle the important job.

“There was turmoil after the issuance of the ministerial regulation. Business people think it isn’t fair. Thus, we are revising it,” he said over the phone on Friday.

A pivotal point set to be abolished, Nasir further explained, was the requirement for a freight forwader or logistics company to have minimum capital of Rp 25 billion (US$ 1.87 million) to act as an RA. In the original regulation, the paid-up capital is not limited to cash but can also be in the form or facilities, tools, land and human resources, among other assets.

He further said that there would no longer be base and ceiling prices for services provided by the RA. The existing regulation stipulates a base price of Rp. 550 per kilogram. “Let the market decide [the fair price]. The most important things is that the goods are safe,” Nasir added.

Express Couriers Association of Indonesia (Asperindo) chairman M. Feriadi expressed his hope that the forthcoming economic policy package would effectively address problems surrounding privates RAs, which have contributed to rising logistics costs in the country.

“The commercialization of x-ray screening by appointing private companies has burdened the logistics industry, as they surely maintain a profit-oriented approach in conducting the task,” he said during a visit to The Jakarta Post recently.

Indonesia has seen logistics costs skyrocket over the past two years, deteriorating its performance among the global players. Last year, the World Bank downgraded Indonesia to the 53rd position in its Logistics Performance Index, down ten ranks from 2014.

Infrastructure is the biggest contributor to the downgrade, with the other five factors being customs, international shipment, logistics competence, tracking and tracing and timeliness.

“The price increase imposed by RAs was extremely high, from Rp 60 per kilogram to Rp 800 per kilogram. Customs [procedures] are burdened by the new prices,” said Asperindo secretary general Amir Syarifudin.

He said he expected the minimum capital rule for RAs to be abolished, as the high paid-up capital requirement would eventually drive up the costs of RA services.

Asperindo executive director Syarifuddin said Coordinating Economic Minister Damin Nasution has asked Asperindo to recommend improvements on logistics to be incorporated in the 15th economic policy package.

“We hear that our recommendations have been considered in parts of the economic policy package to be issued this week,”. He said, adding that the deadline for providing input was Tuesday.

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