Djakarta Lloyd to buy five ships from PT PAL
JAKARTA (JP): The state-owned international freighter service company PT Djakarta Lloyd has ordered five container ships worth US$118.71 million from the state-owned shipbuilder PT PAL in Surabaya.
"We will sign the purchase contract with PT PAL later this month," Djakarta Lloyd's president, M. Muntaqa, said yesterday.
Speaking after a hearing with the House of Representatives Commission V for transportation, telecommunication, tourism and public works, Muntaqa said Djakarta Lloyd will partly finance the procurement with a loan of $89.28 million from the state-owned Bank BNI 1946.
"The other $29.43 million will be derived from an additional equity fund from the government," he said.
He said that the five ships will be completed in September 1998 and will be used for local and foreign shipping services.
Two of the container vessels will be of the 26,200 dead weight ton size, capable of carrying 1,600 twenty-feet equivalent units (TEUs), while three will be of the 5,700 dead weight ton (DWT) class capable of carrying 400 TEUs.
Muntaqa said that his company also plans to procure nine more ships between 1998 and 2004, though he did not say from whom the vessels will be bought.
He added that Djakarta Lloyd, which was in the red before 1994, has been profitable during the last three years.
Last year, the company saw its net profit increase by 382 percent to Rp 16.1 billion ($6.9 million). During the first quarter of this year it posted Rp 784 million in net profit.
Local share
Muntaqa said that the company, which currently operates only three full containers and three semi-containers, is trying to increase its market share of the international freight market.
"But we're facing a number of problems, including lack of capital and very old ships," he said.
"All of our ships are already old and no longer efficient. We, therefore, cannot compete with foreign shipping companies which have faster and more sophisticated ships," he noted.
He also cited the high lending rate in Indonesia, which has reached more than 20 percent per year, and an unconducive condition which is hindering growth in the shipping sector.
"The other local shipping companies are facing the same problems," he noted.
He said that it also takes a long time for local shipping companies to get bank loans.
Because the nature of the shipping industry is capital intensive, slow yielding and high risk, he suggested that loans to freighter companies be long term. "More than ten years if possible," he said.
According to Muntaqa, the government needs to further deregulate the shipping industry to enable local shipping companies to compete with foreign companies whose share in the domestic shipping services sector continues to increase.
He added that in foreign countries governments give preference to their shipping sector to stimulate development.
Currently, he said, local shipping firms only have a 3.2 percent share of the international freighter service market to and from the country.
The government is hoping that local shipping firms will have a 10 percent share at the end of the current Five Year Development Plan in 1999.
But Muntaqa said that to realize the target the local shipping companies will need at least 1.63 million DWT in new vessels.
"Currently the country's ocean-going general freighter fleet is only about 347,000 DWT, down sharply from 827,000 DWT in 1982," he noted. (13)