India invests in technology and infrastructure to improve logistics performance, to be efficient, cheap, safe, reliable. As a result, India’s logistics performance has improved. Indonesia can learn from India.
In its latest release, the World Bank published the 2023 Logistics Performance Index (LPI) scores. This year’s LPI assesses 139 countries based on six main indicators, namely customs, infrastructure, international shipments, competency and service quality. logistics (logistics quality and competence), delivery time (timeliness), and tracking and tracing.
This year LPI Indonesia dropped 17 rankings and ranked 63rd, in 2018 Indonesia ranked 46th. One that attracts attention, India jumps six places in 38th place. Compared to other stagnant countries, the “Bollywood Country” has managed to prove to the world that its strategy has succeeded in boosting the 2023 LPI rating.
Indian Prime Minister Narendra Modi, in his interview article, has a vision of making India the third-largest economy in the world by 2030. The strategy undertaken includes the ambition to reduce logistics costs, which were previously 13-14 percent of domestic product gross (GDP) to 8-9 percent of GDP, or in other words to be top 25 in the LPI in 2030 (Indiatimes.com (2022).
If we detail how to reduce this vision into a road map, there are two key words embedded in India’s National Logistics Plan (NLP). These two keywords are technology and infrastructure that are considered to be able to improve logistics performance in India (which has at least been proven in the last five years).
Challenge
Based on an article written by Roy and Nanda (2023), the challenges facing India in achieving its ambition to become the top 25 Logistics in 2030 include infrastructure, logistics facilities, regulations, high and compartmentalized taxes. Similar to Indonesia, logistics challenges in Indonesia include efficiency, high logistics costs, geography, and fragmentation both in terms of regulation and temporary solutions.
Responding to this challenge, India issued a blueprint known as the National Logistics Plan (NLP) accompanied by the National Logistics Law (2022). In Indonesia, the National Logistics System (Sislognas) was already known, which was developed in 2012, but it seemed as if it was in a vacuum and stopped for some reason. Then only in 2020 was Presidential Instruction Number 5 of 2021 concerning the Development of the National Logistics Ecosystem (NLE) issued.
It is an ambition that is not playing games and is only spoken when it is able to see the vision for the future.
In India, the aim of making the blueprint is India’s ambition to become the world’s third largest economy by 2030 as stated by External Affairs Minister S Jaishankar so that from a logistical point of view Indian Prime Minister Narendra Modi dares to dream of reaching the top 25 in the 2030 LPI ranking. playful and only uttered when it is able to see the vision ahead.
India’s strategy is contained in the CLAP framework which includes, among others, Integration Digital System (IDS), Unified Logitsics Interface Platform (ULIP), System Improvement Group (SIG), building industrial estates, making ease of logistics (e-log), exim logistics, source improvement network, and standardization of assets (infrastructure). Several strategies have intersected with the NLE program in Indonesia. Several programs that are identical include IDS with a single submission program, ULIP which is identical to the NLE collaboration platform.
Furthermore, what needs to be considered is unique products that make each individual characteristic in carrying out its strategy. India is trying to evolve by building dedicated rail freight corridors for rail transport. Coupled with the frills of the electric train, it becomes a green technology narrative.
The green technology narrative is favored by investors and international funding agencies such as the Asian Development Bank (ADB). By shifting logistics from road to railroad, India also actually reduces logistical costs both in terms of pollution, congestion and other levies such as tolls, fees and so on.
However, the game changer of India’s logistics strategy lies not only in the construction of railroads. Other things that have also updated include the simplification of tax collections, which were originally different and had to be paid multiple times at different rates, to become just one and known as the Good and Service Tax (GST). GST has succeeded in reducing logistics costs in India because it provides clarity and efficiency for logistics players.
At this point it is clear that India is investing in two things, namely infrastructure and technology. Investments issued of course there are costs that must be incurred. Based on Deloitte research in 2014, the Indian government has implemented a 9.95 percent distribution of its gross domestic product for investment in the logistics sector and has not been added to loans or investment from outside.
Then is the LPI ranking that important for a country? According to Havenga (2011), a 10 percent increase in LPI for exporting countries, a 36 percent increase in trade and a 10 percent increase in LPI for importing countries, bilateral imports rose 54-69 percent.
Tree Analogy
From the lessons learned taken in this paper, several things can be conveyed. That the increase in logistics performance is due to a clear and measurable vision, clarity of priorities, clarity of policies, transparency of coordination, private collaboration, and budget support to support the initial development of keywords, namely infrastructure, investment and technology. Of course every country has different priorities, but if Indonesia also wants to have the same dream as India, then there is nothing wrong with the steps taken by India being the subject of our joint discussion.
As previously stated, the government of India is investing in information technology and infrastructure (government/roots intervention phase) in an effort to become a top 25 LPI 2030 score. This is in line with Hammant’s concept which also promotes information technology and infrastructure in a linear concept.
I will try to describe the key words for India’s development (information technology, infrastructure, investment) in a tree analogy because what happens in the logistics phase is very similar to what happens to a tree in terms of its philosophy of life. So, with that I name this as a tree analogy in the world of logistics, which consists of a phase of government intervention (roots), a phase of market attraction or what we call stem reaction to the ecosystem (stem), adjustment phase of market reaction (branching), and maturity or crown formation phase.
Improved logistics performance is due to a clear and measurable vision, clarity of priorities, clarity of policies, transparency of coordination, private collaboration and budget support.
In the seed phase, the government can intervene in priority logistics programs. This phase in the tree analogy will grow basic principles in the business ecosystem which will impact on the emergence of data transparency, business certainty (clarity), and joint monitoring (integrity). Infrastructure roots result in smooth flow (reduced delay), cost efficiency, and increased volume.
Good quality roots and seedlings with ecosystem intervention will grow a strong stem phase and grow where it likes (we interpret it as a result of the attraction of the market mechanism). Thus, if an imbalance occurs due to the process of market attraction or ecosystem environment, a tree will grow new branches for the balance of the tree in growing and developing (in this logistical concept we call it a new type of service) which will present new/novelty services. it drives innovation and investment.
The results of the growth of roots, strong stems, and aligned branches will produce growth which in logistics we will interpret as a process that produces efficient, efficiency, competitive, safety, and savings. In this stage, collaboration between the government and the market has entered and is called entering the maturity phase.
Growing healthy trees (in a logistics project) will attract the interest of investors (which we might describe as bees in a symbiotic mutualism with plants) by themselves.
The nature of a bee that only looks for flowers from healthy trees to extract its essence, trees produce fruit from the process of falling pollen onto the stigma of a tree’s flowers. In the case of India, it is described in the influx of outside investment such as ADB funding, private cooperation in logistics parks/rail development, as well as the emergence of private collaboration platforms as a synergy and the result of the government’s efforts in building a logistics ecosystem. All of that is done to realize the dream of logistics that is efficient, cheap, safe, reliable. We may see the fruits of growth in logistics in India together by 2030.
How about Indonesia?
If for now we focus on technology, returning to the tree analogy, there must be a strategy so that the seeds we choose (for example information technology is a priority) can grow and develop even though not yet with the infrastructure aspect (of course for now). The seeds that we carry and sow (information technology) must be able to adapt to the market we will face (where they will be sown). Because according to Jhawar (2015), basically logistics users/providers only want five things, namely cost, time, reliability, flexibility, and safety.
These monitoring features, such as the public dashboard and the national track and trace feature, are suitable for application in Indonesia as a quick win (assuming probis and regulations have been simplified) because digitization will foster transparency, clarity, and integrity (the roots of technology) and have an impact on user expectations, namely time, reliability, safety. If we can push the public dashboard feature and the national track and trace feature, it will provide three expected impacts out of the five logistical user expectations, namely transparency, reliability and safety (if indeed the remaining two impacts need infrastructure support).
Meanwhile, when the time comes to build infrastructure, the lessons from the Government of India can be used as a role model for how to identify modal needs, logistics networks, narrative issues, and investor funding. Hopefully Indonesia’s logistics can increasingly compete in the global world.
To imitate something good is a lesson, not an insult. Let’s admit past mistakes and learn better in the future. Hopefully we are among those who want to change in an effort to advance Indonesia. Thus, there is nothing wrong with studying, we don’t always have to go to China, as the saying goes. However, let’s also want to study in India.
Source : Kompas News
