Newsmaker Interview: Mohamad Feriadi
The ASPERINDO chairman shares his views on how e-commerce and digitalization is impacting the deliveries sector
By Kamila Bain and Gilang Ardana
Monday, December 18, 2017
Indonesia’s e-commerce boom is inevitably affecting other connecting sectors, and delivery services are no exception. With growing demand for a vast array of products, delivery companies are in the spotlight as one of the key sectors in e-commerce.
AmCham Indonesia reached out to Mohamad Feriadi, the Chairman of the Indonesian Express Delivery Companies Association (ASPERINDO), to find out more about its role in e-commerce. The Association has 167 company members with 4,000 branches spread across Indonesia. Feriadi is also the President Director of JNE, one of key players in Indonesia’s delivery system. He shared with AmCham his views on e-commerce, digitalization and expectations for the delivery services sector here.
AmCham Indonesia: How do you see the role of your association in supporting Indonesia’s logistics needs?
Mohamad Feriadi: I think we need to share the same perception that the needs of delivery services are the needs of all: government, people and business. For instance, for the country and its government, delivery services play an important role to prevent certain areas from being isolated, improve the economy of the people, support government programs such as Indonesia Pintar [cash assistance for school children] and Indonesia Sehat [the Healthy Indonesia program] card distribution and logistics distribution after disasters and emergencies.
Delivering companies are part of a bigger ecosystem. The law itself [Law no 38 of 2009 concerning postal services] specifically mandated all delivery companies to provide a prime service to the Indonesian people. That’s where ASPERINDO plays its role, to ensure our members continue providing prime services to people. Indonesia has lot of islands, with three time zones, so ASPERINDO also continues to push for cooperation among companies so we can create efficiency and effectiveness in the delivery process. Aside from that, the Association is also a place for networking among delivery companies in Indonesia.
How do you assess the current condition of Indonesia’s logistics industry?
As Indonesia has already entered the digital economy era, it has impacted the logistics sector by boosting the delivery volume across the nation. We see rising delivery volume from all sectors, including health, tourism, education, agriculture, enterprises, banks and transportation. So there is big potential for logistics spending to further increase.
Specifically related to e-commerce, Presidential Regulation No. 74 of 2017 on E-Commerce [the e-commerce roadmap] projects e-commerce trade value in 2020 of $130 billion. I predict 10-13 percent of that will be logistics spending, and we are optimistic that this will be achieved.
A 2016 survey said the total trade value of Indonesia’s e-commerce was $26 billion. In 2017, it is predicted to be $39 billion, so by 2020 we can assume there will be growth at an average rate of 50 percent. This has big potential, and, of course, it will bring great benefits for all.
How do e-commerce and digitalization impact delivery companies?
For us, this is part of the development of the country’s digital economy. The digital economy can be visualized as a virtual space where business and transactions happen and value is traded and exchanged. The key for this is the massively increasing interaction of people with the Internet, media and IT [information technology]. Of course, for us the main consequence is for all the delivery service companies to adjust their business models and services to be Internet and become IT based.
We should be aware that even though the economy is shifting to digital, delivery services cannot be replaced by IT. Thus, the direct implication for companies is to anticipate the increasing volume of goods to be delivered in the local, city, regional and international levels.
What’s next for ASPERINDO? What are your proposed changes to further develop the sector?
We are working on goods delivery services. The orientation of the business should be based on speed, safety and accuracy. We hope that all stakeholders understand this mega trend [digitalization] is happening right now. All stakeholders we meet here are regulators/government, transportation providers, airports, harbors, terminal management, customs and excise, and the delivery service companies themselves. All of us should prioritize speed, safety and accuracy. We still see delays happening in some processes that can further prolong the total delivery time. This is not good for the sector.
We also hope that all stakeholders realize the importance of collaboration and sharing resources. It is not a good time to run a business with a monopoly or oligopoly strategy. We are in the era of the sharing economy. We still see airlines that want to monopolize their cargo transportation for their subsidiaries. We, as ASPERINDO, do not want such practices to continue.