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)