Asia Business Channel: What have been the recent improvements in the logistics sector in line with President Jokowi decision to modernize infrastructure?
Mr. Zaldy Masita: In the last 3 years one of the major decisions that impacted the industry is President Jokowi decision to remove subsidies on fuel. It was a very brave decision as it was hurting our national budget. There is still limited subsidies for solar fuel. The second thing has been the development of infrastructure. Basic infrastructure has been built. It is hard to say at this stage if it will reduce the logistic cost or not. It opens new options for airports, ports and rail. The Government also issued new regulations for bonded logistic centers (PLB) with new facilities as it gives incentives for the industry to move their warehouses to Indonesia. These new PLB are expected to reduce logistics and transportation costs and support the growth of domestic industries including small and medium ones, also increase foreign and local investment and assist in the development of Indonesia as a logistics hub in the Asia Pacific region. The free trade zones in Singapore or Malaysia are limited to specific areas like ports or airports. With PLB you can import anything during two years without tax and then you can export during that time. We can save on cash flow as we can release goods without tax during two years.
As the biggest market in South East Asia, it makes sense to move to Indonesia, now that they are better facilities.
Asia Business Channel: What would you like to more specifically stress to foreign investors?
Mr. Zaldy Masita: We need more technical assistance and expertise. We have no time and need to learn the best practices. BKPM and the Government needs to open more to foreign investors by providing better regulations and in some case give 100% ownership in ports or airports as the state own company cannot fulfill the requirement of providing a better service level at a better cost. The Government needs to invite more participation from the private sector. Every port is Pelindo and every airport is Angkasa Pura. There needs to be a big political will to change that. New regulations will simplify certain processes.
Asia Business Channel: E-commerce is growing and having a huge potential. What does it change in the logistics sector?
Mr. Zaldy Masita: E- commerce opens new perspectives and new routes. From what I see, in the next 2-5 years, the growth will become even bigger. Some products are now of basic necessity for people like rice or cooking oil and not only cosmetics or fashion accessories. If basic products started to be traded, then the impact and volume will massively increase. We need to increase our capacity of logistics. The switch from off line to on line sales will impact everyone. It gives more opportunities to local products.
Asia Business Channel: Before we finish, could you tell us about your new company Paxel?
Mr. Zaldy Masita: It s a challenge and at this stage our logistic capacity is limited. We need to provide a response to the increase of logistic necessity due to the increase of e-commerce. Operation costs are high as minimum wages increase 10% every year but the price of e-commerce is going down.