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.