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.