INSA proposes recovery fund

INSA proposes recovery fund

Adianto P. Simamora, The Jakarta Post, Jakarta

The Indonesian National Shipowners Association (INSA) has proposed to the government the establishment of a funding institution, the Maritime Recovery Fund (MRF), to boost the country's ailing shipping industry, said the newly-appointed chairman of the association, Barens Th. Saragih.

Barens said that, via the MRF mechanism to finance revitalization, foreign lenders would be willing to provide loans to obtain the Indonesian government's guarantee to protect their investment.

Association members "have talked with the government about this plan," he told The Jakarta Post Monday.

He said that foreign lenders from Japan, Germany, and the U.S. have expressed interest in providing soft loans to revitalize the shipping industry in Indonesia.

"But they wanted a government guarantee before investing here," he noted.

Barens added that the MRF would manage foreign loans, and that most of the funds would be used to finance the purchase of new ships. "We need to buy new ships to boost our market share," he said.

The association said earlier that local shipping companies had only a 4.62 percent share in the shipment of goods to and from the country, while foreign cargo ships transported 95.38 percent of the 354.3 million tons of shipped goods in 2000.

In the same year, local ships carried only 53.01 percent of the 152 million tons of goods transported locally, with the remainder transported by foreign vessels.

It said that the number of domestic ships owned by INSA members increased by 16.7 percent to 3.067 units in 2000, while their total capacity rose 3.6 percent to 4.2 million deadweight tons.

Elsewhere, Barens said that the local shipping industry had been facing difficulties in obtaining loans from local banks.

"The domestic banking sector is hostile ... to the shipping industry. So it is impossible for us to buy new ships," he said.

Barens also urged the government to treat local shipping companies the same way neighboring countries treat theirs so they can be competitive.

Barens said that some foreign cargo ships operating in this country were actually owned by domestic business players.

"They listed their ships overseas because of the government's policy to impose high tax on ship ownership," he said.

In 1999, the government scrapped value added tax on the purchase and lease of ships, docking and port services to help the local shipping firms.

Local shipowners hailed the move, but they said it was not enough as there were still excessive charges not imposed in neighboring countries, including 1.2 percent corporate tax and the mountainous levies imposed by the port authorities and related agencies.