Banks not supportive of shipping sector: INSA

Banks not supportive of shipping sector: INSA

JAKARTA (JP): The Indonesian Ship Owners Association (INSA)
has complained that Indonesian banks are not supporting efforts
to develop the country's shipping sector.

"Many foreign banks offer credit for ship procurement. But due
to the absence of local bank guarantees, they cannot provide such
credit to Indonesian shipping companies," INSA chairman Firdaus
Wadjdi said here over the weekend.

He said that his association suggested to the Ministry of
Finance that it set up a financial institution to provide
financial guarantees for the association's members to acquire the
needed credit.

The credit is urgently required to help shipping companies
procure new ships, he said.

Speaking to reporters on the sidelines of the association's
two-day working meeting over the weekend, which was attended by
150 members, he said that such a financial facility would
support the efforts to reduce the increasing deficit in the
shipping sector.

Director General of Sea Transportation Soentoro estimated in
September that the shipping services deficit would account for
nearly 25 percent, or US$2.1 billion, of the country's current
account deficit, projected to reach US$8.7 billion this fiscal
year.

The deficit resulted from more than 97 percent of the
Indonesian cargo transported to and from international
destinations last year being carried by foreign ships. The
volume of Indonesia's international cargo exceeded 287.89 million
tons last year.

In the domestic cargo market, foreign shipping companies
controlled 48 percent of the total cargo volume of 154.7 million
tons.

According to Firdaus, the lack of ships owned by local
shipping companies caused the foreign domination.

"It is very difficult for us to procure new ships because of
the high interest rate," he said, adding that the local interest
rates were as high as 22 percent.

He said that his association was pursuing negotiations with
the government to allow local shipping firms to carry state-owned
companies' cargoes, which currently were mostly carried by
foreign shipping firms.

He also said that a number of Indonesian shipping companies
planned to set up a consortium as a way to break the foreign
domination of the country's cargo market. (bnt)