RI's shipbuilding industry set for fair weather

The Jakarta Post, Jakarta

The shipbuilding industry is recovering from a two-year-long downturn as shipbuilders benefit from an influx of both domestic and overseas orders.

"The industry is expected to grow by 9.5 percent this year and surpass 10 percent next year as shipbuilders have received major orders from both local and overseas customers," Julius Tangketasik, a senior official at the Industry Ministry's Directorate General of Transportation and Communications Industries, told The Jakarta Post on Tuesday.

Made up of more than 250 ship- and boatbuilders, the industry grew by 7 percent last year, higher than 2005's growth of 6 percent, according to the directorate general's figures.

The figures also reveal that the maximum capacity of the national shipbuilding industry is expected to reach a total of 450,000 deadweight tons (DWT) this year, with shipbuilders operating at 65 percent capacity.

These figures compare with 400,000 DWT and 55 percent capacity last year.

State-owned oil and gas producer Pertamina recently ordered three vessels worth US$81.82 million from state-owned PT Dok dan Perkapalan Kodja Bahari (DKB) and state-owned PT PAL Indonesia.

Julius said countries like Germany, Italy, Turkey and the Netherlands had also ordered ships from Indonesia, mostly vessels of more than 5,000 DWT.

"Those countries have placed orders here as producers in other countries like Japan, South Korea and China are fully booked," he said.

The increasing demand, he added, had also been supported by Presidential Instruction No. 5/2005 on the development of the domestic shipping industry, which stipulated that only locally made vessels carrying the national flag can transport freight through Indonesian waters.

The instruction has forced shipping firms to replace their 2,000 non-national flagged vessels with locally flagged ones, Julius explained.

He noted, however, that Indonesia was far behind Japan and South Korea, which jointly controlled the global shipbuilding industry with a combined 70 percent market share.

"The important thing is that we benefit from this peak before this 20-year cycle begins to wind down," said Julius.

Similar views were expressed by DKB general manager Tjahjono Roesdianto, who was attending a transportation industry exhibition running from Tuesday through Friday at the ministry headquarters.

"Shipbuilders will be able to continue benefiting from this business over the next 10 years only if the government fully enforces the instruction," he told the Post.

He said the industry had adequate human resources and produced quality vessels, but "unhelpful" local bureaucracy and the banks could prevent the industry from growing further.

"The instruction actually urges financing companies, including banks, to actively help fund the industry by, for instance, offering lower interest rates," he said. "Perhaps, they think shipbuilding is a risky business."

According to Julius, the lending rate is between 4 and 5 percent for the industry in Malaysia, and between 2 and 3 percent in Singapore.

Both are lower than Indonesia's above 13 percent. (06)
Jawawa.net: Indonesian Business and Investment News Aggregator