Arpeni sees smooth sailing for years to come

Arpeni sees smooth sailing for years to come

The Jakarta Post, Jakarta

Armed with a recently issued presidential instruction forbidding
foreign vessels to transport cargo domestically in Indonesian
waters, local shipping giant Arpeni Pratama Ocean Line has
ordered eight more ships to anticipate a rapid growth in the sea
freight sector.

"If the presidential instruction is enforced properly, we will
have to rapidly expand our fleet," said Oentoro Surya, the
founder and president director of Arpeni.

The company's net income skyrocketed from Rp 22 billion
(US$2.31 million) in 2003 to Rp 77.3 billion in 2004 and it has
added seven more ships to its fleet in the first three months of
this year.

The government issued Presidential Instruction No. 5/2005 in
late March in a bid to rejuvenate the stagnant domestic shipping
industry by enforcing the "cabotage principle" on domestic
shipping routes, long dominated by foreign-flagged vessels.

Indonesia abandoned the strict application of cabotage, the
requirement that domestic loads be shipped by domestic vessels,
during the 1980s.

The abandonment has led to the current state where 47 percent
of domestic cargoes and 96.6 percent of export-import cargoes are
shipped by foreign vessels.

Oentoro said Arpeni, Indonesia's largest domestic transporter
of coal, had moved quickly to take advantage of the opportunities
offered by the new regulation.

With its 31 ships and almost 800 sailors, the company has a
capacity to freight 580,000 tons and wants to expand it to
800,000 tons within a year to keep in line with last year's
revenue growth of 51 percent -- from Rp 559.8 billion in 2003 to
Rp 845 billion in 2004.

Oentoro, who is also the Indonesian National Shipowners
Association (INSA) chairman, projected the domestic industry's
share of overseas freight activities would increase from the
current 3.4 percent to 20 percent by 2010 due to the new
regulation.

He said in line with that, Arpeni was poised to grab a
significant chunk of the export-import shipping business in
Indonesia, which was valued at US$11.3 billion last year.

Oentoro said the INSA anticipated that the introduction of the
regulation alone would lead to a 30 percent increase in the
domestic market share for Indonesian vessels this year.

He added that Arpeni, which was founded in 1975, was aiming
for an initial public offering of 30 percent of its shares later
this year. Earlier in 2003, the company issued five-year bonds
worth Rp 171 billion. (002)