Indonesia launches warehouse-sharing scheme to cut logistics costs

[JAKARTA] Indonesia launched on Thursday a warehouse-sharing scheme aimed at improving competitiveness by reducing the cost of moving goods around the sprawling archipelago.

The scheme was inaugurated by President Joko Widodo, whose administration has announced a run of measures to revive the economy since September last year, including offering incentives to firms to share warehouses situated in bonded zones.

"We want our logistic costs the same with our neighbour or at least near theirs. If we don't manage to do that, don't even dream of competing," Mr Joko said, adding that current costs were 2.5 times those in Singapore.

Indonesia ranked 53 in the World Bank's latest logistics performance index, worse than neighbouring Malaysia, Thailand and Singapore.

So far, the finance ministry has given 11 companies permits to operate warehouses, or what the government calls logistics centres, including automaker Toyota's Indonesian unit, Dutch logistic company Vopak, Kuwait's Agility, and Jakarta-listed energy firm Petrosea.

Finance Minister Bambang Brodjonegoro said companies can store their goods in the shared warehouse for up to three years and still receive tax incentives, compared with only one year for goods kept in a normal warehouse in a bonded zone.

The logistics centres will also free up some space at warehouses in congested ports and help with efforts to speed up custom clearance, he added. "Next year we target to see 50 new centres and that in the next 2-3 years Indonesia will be the logistics hub for the region," he said.

REUTERS