Higher Minimum Capital Requirement for Indonesian Logistics Companies
Through Ministerial Regulation No. 74/2015 on Freight Forwarding and Logistics Companies, the Indonesian government will raise the minimum capital requirement for logistics companies and freight forwarders from IDR 200 million (USD $15,384) to IDR 25 billion (USD $1.9 million). The new regulation was recently signed by Indonesian Transportation Minister Ignasius Jonan and is currently at the Law and Human Rights Ministry for further evaluation. However, the new regulation met resistance.
The Indonesian Logistics and Forwarders Association (ALFI) is considering to file a lawsuit against the new regulation as it claims that the regulation will jeopardize the existence of many small and medium-sized logistics companies in Indonesia. Currently, approximately 534,000 people are working in logistics companies throughout the archipelago. These people may lose their jobs if the government goes ahead with new regulation. Besides resulting in lay-offs, the ALFI also expects that the flow of goods will be disrupted by the new regulation, especially to the eastern part of Indonesia.
The ALFI previously proposed to the government to raise the minimum capital requirement for logistics companies and freight forwarders to IDR 1.2 billion (USD $92,307). Furthermore it advised that the government should not force the policy uniformly across all logistics companies active in Indonesia but should categorize these companies into ‘small’, ‘medium’, ‘large’, and ‘foreign’ companies and set separate minimum capital requirements for each category.
ALFI Chairman Yukki Nugrahawan Hanafi said that if the government would fail to reach a compromise then the institution is ready to file for a judicial review of the regulation at the country’s Administrative Court.
However, Indonesian Transportation Minister Jonan announced that the ministry is not willing to compromise about the matter as the new regulation aims to enhance the quality and reliability of Indonesian logistics companies. Jonan added that companies will be given a three-year period to comply with the higher minimum capital requirement.
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