INSA proposes new agency to lift ailing shipping industry

Rendi A. Witular, The Jakarta Post, Jakarta

The Indonesian National Shipowners Association (INSA) will propose that the government establish a special agency to resolve the various problems confronting the local ailing shipping industry.

INSA chairman Barens Th. Saragih said that the tasks of the agency would be to review the government's policies, which impede the development of the country's shipping industry, and if possible, to seek soft loans for the industry.

"Our proposal has gained the support of various stockholders, including local port operators and shipyards," Barens said.

INSA has several times proposed that the government should cut taxes on ship purchases and provide soft loans for shipping companies so that it can compete with their foreign counterparts, which currently control the shipment of goods to and from the country.

However, Barens said, the government had always rejected the proposals, saying that it either had no money or it sorely needed the taxes from the ship purchases to cover the budget's deficit.

Local shipping companies account for a mere 5.4 percent of the business of shipping goods in and out of the country. Foreign- owned ships transport the remaining 94.6 percent of the exported and imported goods, which amounts to an annual 350 million tons.

Barens said with the new agency, which will have representatives from the Ministry of Finance and the Ministry of Communications, the shipping industry and other related businesses, the government was expected to pay more attention to the industry and would be more willing to seek solutions to its problems.

He said the new agency could help seek and manage loans for the local shipping companies.

"Local shipping companies have been facing difficulties in obtaining loans from local banks," said Barens, adding that banks often asked ship owners for collateral much higher than the value of the loans they were seeking.

The agency is also expected to find a solution to the fiscal policy being applied to the shipping industry, which it considers too burdensome.

Under the current tax policy, a shipping company has to pay a 47.5 percent tax, a 10 percent value-added tax and a 37.5 percent revenue tax when it purchases an imported ship.

Analysts say the policy was initially aimed at encouraging shipping companies to buy ships from local shipyards, but locally built ships cost 30 percent more than imported vessels.