Indonesia managed to rise sharply in the ranks of the World Bank's latest Logistics Performance Index (LPI). In the 2018 edition, which was released on Tuesday (24/07), Indonesia ranked 46th, up from 63rd in the preceding edition (released in 2016).
Based on a worldwide survey of global freight forwarders and express carriers, the World Bank's Logistics Performance Index (LPI) is a benchmarking tool developed by the Washington-based institution that measures performance along the logistics supply chain within a country. Allowing for comparisons across 167 countries, the index can help countries identify challenges and opportunities and improve their logistics performance. The World Bank conducts the survey every two years.
The LPI is based on six indicators namely:
- Customs; the efficiency of the clearance process (including speed, simplicity, and predictability of formalities)
- Infrastructure; the quality of trade and transport related infrastructure (including ports, roads, railroads, and IT)
- International Shipments; the ease of arranging competitively priced shipments
- Logistics Competence; the competence and quality of logistics services (including transport operators and customs brokers)
- Tracking & Tracing; the ability to track and trace consignments
- Timeliness; the timeliness of shipments in reaching destination within the scheduled or expected delivery time
It is interesting to note that Indonesia made significant progress in all six indicators. This performance is in line with the Indonesian government's push for infrastructure development and other related matters, such as the improvement of dwell time in Indonesian ports (which has now fallen below four days).
• Indonesia Investments' Research Report (edition July 2018) will be out on Monday 6 August 2018
However, if we compare the ranking and score of Indonesia to other lower-middle income economies in Asia, then there is no room for complacency. Indonesia still ranks below Malaysia, Thailand, India and Vietnam (in fact Vietnam overtook Indonesia in the latest LPI). This is a problem because weak connectivity causes relatively high logistics costs, thus implying that Indonesian products and services are not as competitive compared to its regional counterparts.
Ranking of ASEAN Countries in the Logistics Performance Index:
Source: World Bank
Indonesia's Performance in the LPI per Indicator:
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Source: World Bank
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