Faisal Maliki Baskro – Poor infrastructure has led to the skyrocketing cost of distributing goods, according to an influential business grouping.

The Indonesian Chamber of Commerce and Industry (Kadin), a high-profile industry lobby group, said the rate of infrastructure development was appalling considering that less than four years remain until an Asean Economic Community is supposed to come into effect in 2015.

It added that a long-awaited law that could speed up the expropriation of land for use in projects that "benefit development" had not yet been passed.

Natsir Mansyur, Kadin's deputy for trade, logistics and distribution, said that 9,000 pieces of heavy machinery were being wasted each year because they could not be transported to their destinations and the existing machinery was old and would need about Rp 30 trillion ($3.36 billion) to revamp. He added that an additional Rp 30 trillion would need to be spent on upgrading the country's aging commercial ferries.

Natsir said the land acquisition law was needed to speed up the construction of seaports, airports and toll roads. "Without the law, the government and the private sector should reorganize their infrastructure priorities," he said.

The government and private sector representatives will meet next Thursday to discuss state infrastructure and revise guidelines on construction, he said.

According to Natsir, the North Kalibaru seaport in North Jakarta should be a government priority, with Tanjung Priok port already overcapacity. Another priority, he said, should be a Jakarta-Surabaya rail route.

Tanjung Priok, Indonesia's biggest port, accounts for around 65 percent of the country's total exports and imports by sea.

Natsir said hub ports and new rail links would make Indonesia more prepared for regional competition ahead of the the Asean Economic Community in 2015.

"Building infrastructure requires a huge amount of investment and a lot of time," he said. "In the meantime, the government could improve regulations and information technology. It's not too late to act."

In the World Bank's 2010 Logistics Performance Index, which measures a country's goods distribution system, Indonesia ranked 75th out of 183 countries.

Edy Putra Irawady, the Coordinating Ministry for the Economy's deputy for trade and industry, said the government had set a target to reduce logistics costs by 10 percent, reduce distribution time and uncertainties like illegal fees or overlapping payments.

The stalled land acquisition law has been widely criticized by rights groups and communities who say it would lead to the legalization of evictions and land grabs by the state at the behest of private companies to make way for roads, mines and other business interests.