Deregulation of RI shipping too late

Deregulation of RI shipping too late

SINGAPORE (Reuter): The deregulation of Indonesia's shipping industry has come too late, prompting Samudera Shipping Line (SSL) to seek expansion funds in Singapore, company officials said yesterday.

The wholly-owned subsidiary of the Samudera Indonesia Group has obtained approval from the Stock Exchange of Singapore for a primary listing on SESDAQ, its second board, and is hoping to offer its Singapore-dollar shares later September.

"We don't have much of a choice in seeking to raise funds in Singapore...Indonesia is the last place to do shipping," SSL chairman Soedarpo Sastrosatomo told a news conference.

"Deregulation on the part of Indonesia is coming too late. A lot has been destroyed. It's rather unfortunate," Soedarpo said.

He said that as a result of Indonesia's restriction on its shipping sector, Indonesian shipping firms only have 2.5 percent of the international trade compared to 46-47 percent in the 1980s.

Among Indonesia's more inhibitive restrictions were the need for licenses to buy or sell vessels, which has since been scrapped and the taxes on spare-parts, he said.

Financing was also uncompetitive compared to Singapore due to the high interest rates.

SSL is seeking to raise funds in Singapore to expand its feeder and container fleet as well as chemical tankers and to open new routes into China, India and other parts of Asia.

"We are a regional shipping company. The region's trade is growing and we want to grow in line with the business. We see a lot of development in the chemical sector and want to serve them," chief executive officer Randy Effendi said.

Over 50 percent of SSL's earnings come from the feeder fleet of 21 vessels.

In fiscal 1996, SSL earned a net profit of Singapore $9.98 million compared to S$0.97 million in fiscal year 1994. Turnover quadrupled to about Singapore $194.5 million compared to S$45.9 million during the same period.

Randy said SSL would not see a 10-fold rise in net profit, but would grow in line with Asia's export growth which is "very strong".

Officials were unfazed by potential competition from bigger shipping companies as SSL concentrates on regional routes, not the long-haul routes.

"It's a different ball game. Shorter routes have to employ smaller ships," Randy said.

Asked about the potential impact of the Indonesian rupiah's fall against the U.S. dollar, Soedarpo said revenues were U.S. dollar-denominated while costs were partly in Singapore dollar, rupiah and Thai baht.

"There will be a small impact, but in the long term it is positive because the baht and the Sing dollar have weakened to the U.S. dollar," he said.