Banks reluctant to give loans to shipping firms

JAKARTA (JP): The reluctance of banks to provide loans for shipping companies has hampered the development of the country's maritime industry, a banking leader says.

"There is a substantial gap between supply and demand for sea transportation credits," chairman of the Advisory Council of the Association of Private Domestic Banks, I Nyoman Moena, told a seminar yesterday.

The seminar discussed changes in sea transportation after the implementation of Shipping Law/1992, which becomes effective this September.

"The gap likely occurs because banks apparently fear the risks faced by shipping firms," said Moena, who is also president of PT Surveyor Indonesia, a state-owned company.

He acknowledged that the current high interest rates are also discouraging to shipping firms, which in general operate on small profit margins.

Shipping business also generally have unstable cash flows and face problems related to complicated procedures and bureaucracy, he said.

"Nevertheless, the banking industry has as well several weaknesses such as its lack of approach to sea transportation businesses," he said.

According to Moena, related government institutions and business associations should cooperate to support the expansion of banking loans for the development of the shipping industry.

Measures

"The Ministry of Transportation, Bank Indonesia, the central bank, commercial banks, PT PANN Finance, the state-owned finance company, and the Indonesian Ship-owners Association (INSA) should establish measures to support financing for the maritime industry," he said.

"The quality, prices and delivery of domestic shipbuilding companies are now competitive with foreign firms," he said.

Meanwhile, Director General of Machine, Metal and Electronics Industries Effendie Soedarsono told the seminar that Indonesia currently has 200 shipyards, including 18 owned by the government, with a combined annual capacity to build ships of 140,000 tons and repair ships with a total weight of 2.5 million tons.

He said the shipyards are expected during the current Sixth Five-year Development Plan (Repelita VI) to construct new vessels worth Rp 3 trillion (US$1.39 billion). Some of their products, worth about $450 million, will be exported.(icn)