Fiscal Policy to Create Connectivity for National Logistic System and its Economic Impact

Abstract

Indonesia’s Balance of Payments for transportation services turned to deficit for past few years. The biggest share comes from deficit on transportation services for freight. This is one reason why the cost for transportation services in Indonesia is very high and at the end it will reduce the national competitiveness. Blueprint for The development of National Logistics System already regulated in Presidential Regulation No. 26 year 2012. The implementation of National Logistics System can create national competitiveness and support the implementation of the Masterplan for Acceleration and Expansion of Indonesian’s Economic Development (abbreviated MP3EI). National Logistics system is expected to be operationalized by the logistics service providers, and supported by the availability of adequate logistics infrastructure and reliable. Service providers for all across Indonesia will be needed in order to create connectivity for National Logistic System. Transportation service providers that came from domestic, can reduce the cost of transportation, and it will create national competitiveness for domestic production. The purpose of this study is to identify the appropriate fiscal policy to domestic service providers and to identify the economic impact of the increasing on services from domestic service provider. The methodology used in this research is analysis using Social Accounting Matrix (SAM) that can give an overview the impact of increasing production in one sector to factors of production, institution, and other sector. Economic impact analysis that came from SAM indicates that the increasing production in transportation services sector have an overall positive impact to factor of production, institution and other sector. The results of this research is expected to help policy makers in the field of fiscal policy in designing appropriate policies for domestic transportation service provider and at the end to help reduce the Balance of Payments deficit for transportation services.