Tuesday, 1 July 2014


Linkages between sectors that support the development of the national shipbuilding industry is important, given the fact that in the country, there is already a good market in the development of the national shipping industry. After the inauguration of the management of the Indonesian Shipbuilding and Offshore Companies Association (IPERINDO) in Jakarta, on Monday (June 16), Deputy Minister of Industry, Alex S.W Retraubun, stated that based on the information obtained, so far the shipbuilding industry has grown and flourished without being facilitated by government policy.

“Therefore, if among all of the relevant ministries, there is a uniformed policy synergy, then the industry will grow more optimally. Moreover, they see an opportunity for growth of the national shipbuilding industry, with market potential which already exists. Supported by the birth of the cabotage principle as stipulate in Presidential Decree No. 5/2005 on National Shipping Industry Empowerment, it has increased the number of national fleets. In 2005, the number of Indonesian-flagged vessels reached 6,041 units. After nine years, the number increased to 13 thousand units. This affects the development of the national shipping industry”, he said, accompanied by the Director General of High Technology-Based Leading Industries of the Ministry of Industry, Budi Darmadi.

One thing complained by the national shipping industry, particularly by Chairman of IPERINDO for the period of 2014 – 2018, Eddy Kurniawan Logam, is about import duty barriers. According to him, the import of ship components is still imposed with 10% VAT, and there are also a number of components which when they entered Indonesia, are subjected to import duties of 5%-12.5%. “This problem makes the Indonesian ship building products of Singapore, Malaysia, and China. Additionally, high bank lending rates, especially those who considered that the shipping industry is not bankable, makes this industry not regarded as a prima donna industry in Indonesia.

In fact, the shipping business is so attractive to be finances by the banks. Supposedly, even through it takes more than six months to build a new ship, but when the ship was completed, it is immediately handed over to the shipping company. If the ship can be divested, than it is a great opportunity for the banks. Thus, the income will be felt in the next 7-8 months. Shipbuilding industry is a long-term industry.

This is different from other industries, which quickly get a Return on Investment (ROI). By looking at the previous ROI, the government should create a conducive business climate. Because building a ship in the country not only requires long investment and large capital, but the licensing is a bit difficult. We will ask the government to review the policy on the imposition of import duty and VAT. Government was asked to not only see these policies in a short term, or not only see the decrease of revenue this year alone, but rather should view its long-term effect.”

As an illustration, the current installed capacity of the national shipyard industry to accommodate ships docking activities is only 12 million DWT per year, so there is a shortage of 1.5 million DWT docking facilities per year. With a shortage of 1.5 million DWT, there is an opportunity for new investors to invest in the shipbuilding industry.

In addition to dock repair activities, the main activity of the shipbuilding industry is the building of new ships and offshore construction. The installed capacity of the shipbuilding industry in the field of new ship building today is 900 thousand DWT per year and offshore construction at 25 thousand tons per year. Occupancy for new building activity is still about 50% - 60% of the installed capacity, while occupancy for dock repair is an average of 95%. (E) 

Business News - June 20, 2014

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