ORIX Indonesia to increase assets

The Jakarta Post, Jakarta

PT ORIX Indonesia Finance (ORIF), a provider of leasing services in Indonesia, hopes to increase its assets from Rp 2.7 trillion (US$282.13 million) to Rp 5 trillion over the next three years.

President director Yoshinori Matsuoka said one of the ways ORIF planned to achieve this goal was by expanding its ship leasing business.

"The new cabotage regulations provide a vast opportunity," he said, adding the company already leased tugboats and barges to coal transportation firms.

The government issued a regulation in late March to enforce the cabotage principle on domestic shipping routes. Cabotage, a term that originated from Spanish, is the requirement that sea cargo shipped within a country be transported exclusively on domestic-flagged vessels. Currently, over 47 percent of domestic cargo in Indonesia is shipped by foreign-flagged vessels.

Matsuoka said ORIF's approach of leasing mostly to corporations, which account for 80 percent of the company's lease business, was well grounded as the real sector of Indonesia's economy was continuing to pick up steam.

He said Indonesia's leasing market -- which grew 38.8 percent last year from Rp 38.4 trillion to Rp 53.3 trillion -- was far from saturated. "After all, leasing accounts for only 2.3 percent of the gross domestic product here, compared to about 7 percent in Japan."

Last year's growth was fueled by leases on consumer goods, such as cars and motorcycles, which accounted for 74.6 percent of all leases in 2004. Corporate leases for heavy equipment and industrial machinery grew by 24.3 percent from Rp 11.6 trillion in 2003 to Rp 14.5 trillion in 2004.

To keep up with growing demand for both corporate and consumer leases, ORIF recently increased its paid-up capital from Rp 100 billion to Rp 420 billion.

This will give ORIF -- which is 85 percent owned by Japan- based ORIX corporation and 15 percent by the Bank Indonesia Employees' Welfare Foundation -- more room to expand its leases by borrowing additional funds from banks.

ORIX CEO Yoshihiko Miyauchi, whose company injected the vast majority of funds into ORIF, said the added capital indicated ORIX's long-term commitment in Indonesia.

"We've seen tremendous economic growth over the 30 years we've been here," said Miyauchi, whose company has total assets of $6.5 billion from operations in 24 countries worldwide. "We have even stronger confidence that the economy will continue to grow." (002)