Challenges, opportunities in RI shipping industry
Challenges, opportunities in RI shipping industry
Former Director General of Sea Transportation, Soentoro
The problems faced by Indonesian companies at the moment include a decrease in capital and the presence of competition. In the case of the shipping industry, competition takes the form of foreign shipping companies in possession of larger fleets.
The situation is one that will not disappear of its own accord, all the more so as we approach the so-called "free market era" due to commence in 2003.
At the moment, both the major issue and the major challenge for the industry is the fight for market share.
Deregulation
Efforts to improve the Indonesian shipping industry go back to 1995, when a series of steps aimed at deregulation were introduced.
Although a regulatory framework was established that made it easier to establish a shipping company, the industry is one that requires a solid capital base and efficient use of human resources.
At present, the acquisition of capital is extraordinarily difficult because of the high cost of borrowing from local banks. Raising capital through loans from foreign banks is an avenue that was closed to local entrepreneurs once the economic crisis enveloped the region in the middle of last year.
Now, foreign borrowings come with many stringent conditions and strings attached.
In the case of the shipping industry, strings include the requirement to sail "foreign", a practice in which the vessel is registered in another country, for example Panama.
This gives rise to the rather startling prospect of the national shipping company flying a foreign flag, rather than the familiar red and white flag of Indonesia.
Strategic Partnerships
Partnerships are needed to build a suitable bridge that is capable of spanning the needs of exporters, as well as providing a long-term optimistic vision for companies.
Once in place, appropriate partnerships lead to successful contracts, enabling shipping companies to grow in terms of trading and balance sheet activities as well as increase fleet sizes.
Pertamina, for example, has had a contract for over 12 years with one shipping company.
In the past two years, the volume of cargo shipped through this contract has increased to more than 500 metric tons per year.
The ability to produce increased cargo figures is important at this time because during the current economic crisis, the government is unable to offer any assistance to the industry. However, this does not preclude the possibility of entering into joint ventures with foreign shipping companies.