TEMPO.CO, Jakarta - The World Bank board of executive directors has approved US$400 million development policy loan for logistic industry reform in Indonesia. The loan will be used to enhance logistic industry and strengthen connectivity, which in turn can boost economic growth and reduce poverty.

World Bank Country Director for Indonesia Rodrigo Chaves said that the loan is aimed at addressing supply chain hurdles, such as long dwelling time and lengthy procedure for trade clearance.

Logistic reform can reduce cost of goods and services, particularly in remote and underdeveloped areas in Indonesia, Chaves said in a written statement on Thursday.

Logistic costs in Indonesia account for 25 percent of manufacturing sales, higher than that of Thailand with 15 percent and Malaysia with 13 percent. Chaves pointed to container shipment from China’s Shanghai to Jakarta which is cheaper compared to that of Jakarta to Padang, West Sumatra.

The loan will also help Indonesia to make transition from dependance on commodity to a more competitive manufacturing-based economy.

Expensive and unreliable logistics have been hampering Indonesia’s competitiveness, Chaves said.

Three main components of the loan are to enhance port performance, improve competition in logistic services and strengthen trade facilitation.

GHOIDA RAHMAH