Sunday, 11 October 2026
MEDAN | INDATANEWS.COM - North Sumatra's provincial government is proposing more frequent sea shipments and logistics subsidies to help small and medium-sized enterprises (SMEs) export their products to Malaysia at more competitive costs. The initiative aims to address high transport expenses, limited working capital and the large shipment volumes often required for international trade.
The proposal was discussed at a meeting between North Sumatra Governor Muhammad Bobby Afif Nasution and Malaysia's Ambassador to Indonesia, Dato' Muzafar Shah Mustafa, at the Tengku Rizal Nurdin Hall in Medan on Saturday, 10 October 2026. Both sides discussed ways to expand cross-border trade and improve access to international markets for products made by SMEs in North Sumatra.Bobby proposed shipping smaller quantities of goods at shorter intervals, potentially every five days or once a week. The provincial government also expressed its readiness to subsidise cross-border sea transport, while the Malaysian ambassador welcomed the initiative and offered to discuss its technical implementation with the government and private sector.
The proposal seeks to enable businesses with limited production capacity and working capital to enter the Malaysian market without having to accumulate large stocks before exporting. However, its success will depend on affordable shipping services, efficient cargo consolidation and practical support for businesses navigating export requirements."We propose shipping goods in quantities that are not too large but more frequently, for example every five days or once a week. This would mean businesses would not have to store their products for long periods, allowing their capital to be used more quickly and flexibly," Bobby said.
The approach could benefit businesses that lack the production capacity or working capital needed to fulfil large export orders. Regular shipping schedules would allow them to align production more closely with demand and reduce the need to hold substantial inventories.More frequent deliveries could also help Malaysian buyers receive products on a more consistent basis, enabling businesses in North Sumatra to develop longer-term commercial relationships based on their actual production capacity.
However, frequent shipments will not necessarily reduce transport costs per unit if vessels operate below capacity. The government and logistics providers would therefore need to establish a cargo-consolidation system that combines goods from several SMEs into shared consignments.Pooling shipments could spread transport costs across multiple businesses and make export services more affordable for smaller producers. Businesses would also need guidance on export regulations, product quality standards, packaging requirements and trade documentation to ensure their goods meet Malaysian market requirements.
The scheme could provide particular support for smaller exporters shipping limited quantities. To ensure the funds deliver lasting benefits, the government would need transparent eligibility criteria, clear allocation mechanisms and measurable performance indicators.
These could include changes in shipping costs, the number of businesses beginning to export, shipment frequency, growth in trade volumes and the ability of participating businesses to remain commercially viable after the subsidies end.Bobby said North Sumatra's geographical proximity to Malaysia offered a strategic advantage that should be translated into tangible economic opportunities. Connections towards Kuala Lumpur and Penang could support the development of regional distribution networks, provided reliable schedules and competitive transport services were available.
"Geographically, we are very close to one another. Some areas in North Sumatra can even be reached from Kuala Lumpur more quickly than from Jakarta. We must turn this geographical advantage into tangible economic opportunities for people in both regions," Bobby said.Shorter distances could improve distribution efficiency, but the practical benefits would also depend on available routes, sailing schedules, cargo-handling charges and efficient customs procedures. Shipping services would need to accommodate the specific requirements of SME products, including storage conditions and transit times.
Lower logistics costs could help businesses in North Sumatra expand their customer base beyond the domestic market. Processed food, handicrafts and other regional products could reach new consumers, provided they meet the relevant standards and regulations in Malaysia.Transport improvements alone, however, would not guarantee export growth. Businesses would also need to maintain product quality, reliable supply, adequate production capacity and competitive prices. The government could complement logistics support with export training, market intelligence, certification assistance and introductions to Malaysian distributors.
"Thank God, there have been no forest and land fires in North Sumatra this year that sent smoke into Malaysia. Although some light haze drifted in from other regions, rainfall in North Sumatra has been fairly good so far," Bobby said.
Malaysia's Ambassador to Indonesia, Dato' Muzafar Shah Mustafa, welcomed the proposal to strengthen sea connections and subsidise logistics costs for SMEs in North Sumatra. He said he was prepared to discuss the technical details, including regulatory requirements and potential cooperation with Malaysian private-sector companies.
Dato' Muzafar described North Sumatra as a strategically important gateway for Malaysia in Indonesia. He said trade between the two countries already had considerable economic significance but still offered opportunities for further growth.Bilateral trade between Indonesia and Malaysia is valued at nearly US$26 billion, with North Sumatra accounting for an estimated US$1 billion to US$2 billion. The figures underline the province's economic links with Malaysia while highlighting the potential for local businesses to participate more actively in cross-border commerce.
"North Sumatra is important to Malaysia in many respects, including trade, shipping, medical tourism and education. We value the excellent cooperation that has developed over time," Dato' Muzafar said.Malaysia's positive response opens the way for further discussions on the feasibility of the proposed shipping connections, demand for maritime services, regulatory coordination and partnerships with private companies. Businesses would need clear information on costs, schedules, export requirements and shipping procedures before the services could be introduced.
Cooperation between the two regions also covers human resource development, industrial estates, shipping, medical tourism and education. Progress in these areas could deepen economic ties, create additional investment opportunities and encourage the exchange of expertise.Beyond trade, Bobby and Dato' Muzafar discussed forest and land fires and the cross-border effects of haze. Bobby said weather conditions and efforts to tackle forest and land fires in North Sumatra had been relatively favourable in 2026.
Dato' Muzafar said Malaysia remained committed to regional cooperation in addressing environmental challenges across the Association of Southeast Asian Nations (ASEAN).The proposed export initiative will ultimately depend on whether the discussions lead to practical measures. The government will need a transparent basis for calculating subsidies, while logistics providers must deliver efficient services and businesses must receive sufficient support to meet market requirements.
Regular sea shipments and targeted logistics subsidies could make international trade more accessible to SMEs in North Sumatra. Their long-term success, however, will be measured by whether more businesses can sustain exports, increase revenue, expand production and establish competitive trading relationships with partners in Malaysia. (IDNC)REPORTER: Ahmad Zulfikar | EDITOR: Fik Sagala
