"Efficient maritime logistics are important for higher growth in the manufacturing, agriculture, and service sectors," World Bank Representative Chief for Indonesia and Timor Leste Rodrigo A. Chaves remarked in a statement in connection with the loan, received here on Saturday.
A better logistics system can improve competitiveness and help reduce the cost of goods and services in remote areas, especially in the eastern region of Indonesia, according to Chaves.
He said the loan was part of the Second Indonesia Logistics Reform Development Policy Loan to overcome obstacles faced in the flow of goods within and outside Indonesia`s borders.
At present, inefficient port operations, uncompetitive logistics service markets, and long trade procedures have hampered Indonesia`s competitiveness.
In addition, ports are often viewed as being an obstacle in the Indonesian logistics chain due to limited infrastructure, minimal regulation, and low productivity.
These obstacles contribute to higher logistics costs for Indonesia`s manufacturing sector as compared to Thailand and Vietnam.
Similar obstacles play a role in Indonesia`s lower logistics performance as compared to countries in the region, as measured in the World Bank`s Logistics Performance Index.
In the meantime, Senior Economist of the World Bank Massimiliano Cali stated that the loan could help Indonesia, which is currently the largest archipelagic country, with 17 thousand islands, to have a long and fragmented logistics chain.
"This loan project will help address some of the key constraints at various supply chain points," Cali noted.
The main focus of the project is to strengthen port governance and operations, foster a competitive business environment for logistics service providers, and make trading processes more efficient and transparent.