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According
to ASEAN Studies Centre, Indonesia's export
cost is the third highest among the ASEAN
countries, while its import cost is the
third lowest.
This
has caused an influx of imported products
into the country, and accordingly, the level
of manufacturing has not grown as fast compared
to other ASEAN nations.
"Although
Indonesia's GDP has dipped in Q1 2015, there
has been relatively stable economic development
in the country since 2013. We definitely
see room for economic growth in Indonesia,"
said Mr Sorensen.
"For
example, in export manufacturing which is
shifting from higher cost locations such
as China. The government's plans to invest
more in infrastructure will give a much-needed
boost. The upgraded logistics will also
come in handy for driving higher trade volumes
with the upcoming formation of the ASEAN
Economic Community," he said.
Infrastructure
developments to facilitate trade Indonesia's
current infrastructure lags behind many
of its neighbouring countries. It is encouraging
to see that the government has been placing
stronger focus on improving the infrastructure
to support economic development.
One
focus is to improve the condition of the
ports around the country. Short sea shipping,
is central to the plan of President Joko
Widodo, to enable more efficient flow of
cargo to different parts of Indonesia.
Currently,
trade in Western Indonesia is far more developed,
and one of the aims of 'Tol Laut" is
to reduce the cost of goods from the less
developed part of Eastern Indonesia.
"Tol
Laut" is expected to reduce Indonesia's
logistics cost by 10 per cent to 15 per
cent, contributing to higher competitiveness
of Indonesia's exports. The idea for "Tol
Laut" makes sense given the archipelago
nature of Indonesia, but there are several
challenges to overcome.
"Currently,
there are not many exports from the less
developed areas of Indonesia, so there will
need to be build-up of new infrastructure
and industrial estates in those areas, to
balance the domestic trade," Mr Sorensen
said.
But
it is encouraging to see that the government
directing a stronger focus on improving
the infrastructure to support economic development,
he said.
A
recent related development is the opening
of Teluk Lamong Port in Surabaya, East Java,
which adopts the green port concept. This
will serve as one of the ports among the
24 locations designated by the government
to support the "Tol Laut" concept.
The first "Tol Laut" dedicated
transport in the form of a roll-on-roll-off
vessel has also been launched in early May,
for sailing between Surabaya and Lampung.
"We
definitely see room for economic growth
in Indonesia, for example in export manufacturing
which is shifting from higher cost locations
such as China," said Mr Sorensen.
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