No. JAPAN INTERNATIONAL COOPERATION AGENCY (JICA) COORDINATING MINISTRY FOR ECONOMIC AFFAIRS THE REPUBLIC OF INDONESIA THE STUDY ON TRADE RELATED SYSTEMS AND PROCEDURES IN THE REPUBLIC OF INDONESIA FINAL REPORT SUMMARY March 2005 JAPAN PORT CONSULTANTS LTD., (JPC) PACIFIC CONSULTANTS INTERNATIONAL (PCI) ED JR 05-036 THE STUDY ON TRADE RELATED SYSTEMS AND PROCEDURES IN THE REPUBLIC OF INDONESIA FINAL REPORT SUMMARY March 2005 Preface The Government of Japan adopted a request by the Government of Indonesia to conduct a study on trade-related systems and procedure focusing on the capital area. Japan International Cooperation Agency (JICA) was mandated to undertake the study. A study team, consisted by Japan Port Consultants, Ltd (JPC) and Pacific Consultants International (PCI), was sent four times from February 2004 through March 2005. The team, headed by Mr. YAMASHITA Ikuhiko (JPC) held discussions with officials concerned in the Government of Indonesia, hearings from private sector, and field study including trade process time survey. This report was compiled by the team in accordance with comments raised by steering committee members of the Government of Indonesia. It is expected that the report is utilized for further trade facilitation. Lastly I would like to express my sincere appreciation to all those who participated in this study and hope this joint study promotes relationships between Japan and Indonesia. March 2005 IZAWA Tadashi Vice-President Japan International Cooperation Agency (JICA) LETTER OF TRANSMITTAL March 2005 Mr. Izawa Tadashi Japan International Cooperation Agency Vice-President Dear Sir It is my great pleasure to submit herewith the Final Report of “The Study on Trade Related Systems and Procedures in The Republic of Indonesia”. The study team comprised of the Japan Port Consultants Ltd. (JPC) and Pacific Consultants International (PCI) conducted surveys in the Republic of Indonesia over the period between February 2004 and March 2005 according to the contract with the Japan International Cooperation agency (JICA). Based on the findings derived from the surveys and the discussions and consultations with the officials of the related ministries and agencies, the study team formulated the recommendations to achieve the trade facilitation reform in the Port of Tanjung Priok and the Soekarno-Hatta International Airport together with the detailed action plan for the reform. The recommendations and the action plan emphasize not only the necessity of procedural improvements but also the importance of investments in transport infrastructures. On behalf of the study team, I would like to express my heartfelt appreciation to the Coordinating Ministry for Economic Affairs and other authorities concerned for their cooperation, assistance and heartfelt hospitality extended to the study team. I am also very grateful to the Japan International Cooperation Agency, the Ministry of Foreign Affaires, the Ministry of Economy, Trade and Industry and the Embassy of Japan in Indonesia for their valuable suggestions and assistance given to the team during the course of the study. Yours faithfully, Ikuhiko YAMASHITA Team Leader The Study on Trade Related Systems and Procedures in The Republic of Indonesia The Study on Trade Related Systems and Procedures in the Republic of Indonesia JICA Study 2005 [Final Report - Summary] TABLE OF CONTENTS LIST OF ABBREVIATIONS Trade facilitation at a Glance ................................................................................................. A-1 Executive Summary ................................................................................................................ ES-1 PART 1 Study on Improvement of Trade Environment 1. Introduction of the Study ............................................................................................ 1.1.1 2. Discussion on Present Conditions ................................................................................... 2.1.1 2.1 Present Situation of Import/Export Trade System ..................................................... 2.1.1 2.1.1 Legal and Administrative Efforts for Smoother Trade Developments ........... 2.1.1 2.1.2 Division of Administrative Function among Authorities Concerned............... 2.1.5 2.1.3 The Customs Procedures for Cargo Release ................................................... 2.1.6 2.1.4 The Customs Reform – now and future .......................................................... 2.1.9 2.1.5 EDI and Data Interchange among Ministries ................................................... 2.1.10 2.2 Present Conditions of Related Infrastructure for Trading............................................ 2.2.1 2.2.1 Overview of Export and Import Cargo Flow in Indonesia ............................... 2.2.1 2.2.2 Port System and Trade Volume through Indonesia Ports ............................... 2.2.4 2.2.3 Airport Infrastructure and Trade Volume through Airport ............................. 2.2.23 2.2.4 Inland Trade Infrastructure and Transport Volume Through Road Network ..... 2.2.33 2.2.5 Forwarding Industry ........................................................................................... 2.2.39 2.3 Survey on Time Required for Processing Import and Export Cargo and Related Documents ............................................................................................. 2.3.1 2.3.1 Design of Survey for Time Measurement ....................................................... 2.3.1 2.3.2 Implementation of Time Measurement Survey ................................................. 2.3.4 2.3.3 Analysis of Survey Results .............................................................................. 2.3.9 2.4 Results of Questionnaire Survey on the Customs Operations ........................................ 2.4.1 2.5 Characteristics of Trade Environment in Thailand and Malaysia .................................. 2.5.1 3. Analysis of Present Condition and Identification of Hindrance for Improvement ... 3.1.1 3.1 Legal and Administrative System in Import and Export Trade ................................. 3.1.1 3.1.1 Basic Objectives in Formulating the Improvement Strategy............................. 3.1.1 Page i The Study on Trade Related Systems and Procedures in the Republic of Indonesia JICA Study 2005 3.1.2 Menu of Trade Facilitation Actions and Measures............................................ 3.1.1 3.1.3 Improvement Plan by Respective Authorities Concerned................................. 3.1.1 3.1.4 Legal and Administrative Aspects Which Require Further Attention for Trade Facilitation ....................................................................... 3.1.3 3.2 Trade and Customs Related Issues and Problems ...................................................... 3.2.1 3.3 Process Improvements and Correspondence to Users ............................................... 3.3.1 3.4 Improvement Required in Port Infrastructure ............................................................ 3.4.1 3.4.1 Government Policy for Sea Transportation ....................................................... 3.4.1 3.4.2 Analysis on the Port Related Factors Impeding Trade Facilities....................... 3.4.2 3.4.3 Analysis of Present Conditions of Tanjung Priok Port .................................... 3.4.4 3.5 Improvement of Airport Infrastructure ...................................................................... 3.5.1 3.5.1 Hardware Field .................................................................................................. 3.5.1 3.5.2 Software Field .................................................................................................... 3.5.3 3.5.3 Institutional Aspects............................................................................................ 3.5.3 3.5.4 Operational and Organizational Aspects ............................................................. 3.5.4 3.5.5 Security Aspects.................................................................................................. 3.5.6 3.5.6 Investigation of Trade Environment in Third Countries ..................................... 3.5.6 3.6 Improvement of Inland Trade/Transport Infrastructure with Road Network ............ 3.6.1 4. Improvement Plan for Trade Facilitation ................................................................. 4.1.1 4.1 Thorough Reform of Administrative Function and Procedure ...................................... 4.1.1 4.2 Action Plan for Improvement of Port System and Infrastructure .................................. 4.2.1 4.3 Improvement Plan for Airport System and Infrastructure ............................................. 4.3.1 4.4 Action Plan for Improvement of Inland Trade Infrastructure and Road Network ......... 4.4.1 PART 2 Recommendations and Action Plan 1. Background ................................................................................................................. R-1 2. Materials for Recommendation ................................................................................. R-1 3. Recommendation ....................................................................................................... R-9 4. Diagrams Showing Trade Facilitation Structure ........................................................... R-10 5. Action Plan .................................................................................................................... R-10 Page ii The Study on Trade Related Systems and Procedures in the Republic of Indonesia JICA Study