Khairul Mahalli has had enough. He feels like the government has constantly hampered the growth of the logistics business among local players in Medan, North Sumatra, claiming that state firms monopolize and increase prices in the market for air and sea transportation there.
“Local businesspeople don’t stand a chance in competing with state-owned enterprises [SOEs], which control the logistics business in Sumatra, whether for export, import or even domestic trade,” he said loudly in front of fellow business players from across the country during a discussion at the Sheraton Airport Hotel in Tangerang, Banten, recently.
Khairul, the CEO of Medan-based logistics company PT Sahara Tranindo, attended the event as a representative of the Indonesia Logistics and Forwarder Association’s (ILFA) North Sumatra branch.
He was not the only one who spoke out against the alleged monopoly of state firms in the business.
ILFA chairman Yukki Nugrahawan Hanafi said logistics costs currently accounted for at least 27 percent of the country’s gross domestic product (GDP), much higher than in Singapore with 8 percent and Malaysia with 13 percent.
He attributed the figure to state firms’ dominance in the logistics business, particularly at airports and ports, that had made costs soar.
“[State] airport and port operators have started to enter the business by establishing subsidiaries that provide logistics services,” he said. “So how can we attract foreign investors if our own situation is still plagued by problems?”
Indonesia is indeed running behind its peers in terms of logistics. According to the World Bank’s 2016 Logistics Performance Index (LPI), Indonesia sits at 63rd position, falling from 53rd position in 2014.
Neighboring countries in Southeast Asia, like Singapore, Malaysia and Thailand, occupy higher positions at fifth, 32nd and 45th place. Such a low position highlights Indonesia’s lack of efficiency and effectiveness in logistics.
The Business Competition Supervisory Commission (KPPU) sees eye to eye with the ILFA on the issue. KPPU head Syarkawi Rauf said state firms had established their own dynasty in the logistics business.
State-owned enterprises (SOEs) are among the big players that are reportedly not afraid to violate business competition rules set by the KPPU due to the Rp 25 billion (US$1.91 million) maximum fine that is “too low and does not have a deterrent effect”, said Syarkawi.
The KPPU recorded several cases involving SOEs that were eventually found guilty by the commission. One case occurred at Tanjung Priok Port in Jakarta involving port operator PT Pelindo II, which was found guilty of monopolizing the cargo unloading business.
According to the KPPU, many parties have reported Pelindo’s unfair practices in the field. Shipowners, for instance, must unload their cargo using the operator’s heavy equipment.
If they want to unload the cargo using their own equipment, shipowners are required to berth the ships at a remote dock, which can incur higher costs in transporting the goods.
At present, the KPPU is investigating a case at Hasanuddin Airport in Makassar, South Sulawesi, where the airport’s operator, state-owned PT Angkasa Pura I (AP I), allegedly monopolizes ground-handling services through subsidiary PT Angkasa Pura Logistik (AP Log).
The commission is investigating whether AP Log has jacked up its fees arbitrarily due to a lack of competition. “It has increased the price to around Rp 1,050 per kilogram of cargo, up from Rp 550 previously,” Syarkawi said.
Faced with a vast number of violations, the KPPU is mulling imposing higher fines of 30 to 50 percent of a company’s total sales to put the brakes on violations.
Contacted separately, AP I corporate secretary Farid Indra Nugraha strongly denied the monopoly accusation, arguing that it had full authority to choose a third-party’s logistics provider and set the price using its own calculations.
“We welcome [KPPU’s] investigation because we haven’t violated any rule. AP Log is our subsidiary and we appointed it [to be the logistics services provider] because we have the right to do so.”
Pelindo II operation and information system director Prasetyadi said there had been no monopolistic practices within its operations because everything was controlled and supervised by port authorities. (vps)
Source: The Jakarta Post | 29 Julu 2016