PT PAL asks govt to pay its liability

PT PAL asks govt to pay its liability

JAKARTA (JP): State-owned shipbuilder PT PAL has requested
that the government pay its obligations to the company soon so
that the company can start making money.

PAL's senior executive vice president, Suleman Wiriadidjaja,
said yesterday that the company had not yet made a profit because
of its financial burden, mostly inflicted by the government.

He said the government owes the company over Rp 250 billion
(US$106.5 million).

"That's what's burdening us right now because we have to pay
Rp 36 billion per annum out of the business in interest on debts
inflicted by the government," Suleman told journalists at his
office yesterday.

PAL is controlled by the Supervisory Board for Strategic
Industries, which is chaired by State Minister of Research and
Technology B.J. Habibie. It produces a wide range of vessels,
from commercial boats to naval craft. Habibie is also the
president of PAL.

Suleman said his company could not force the government to pay
its obligations because the procurement contracts signed by both
parties stipulated that payments would be met according to the
government's financial capability.

"However, we call on the government to soon pay its
obligations so we can clean up all the extraordinary liabilities
in our book keeping," Suleman said.

He acknowledged that the government was still the largest of
PAL's customers, having purchased US$600 million worth of
vessels, mostly for naval ships, from the company.

Other large customers of PAL include state-owned companies
such as the shipping firms, Djakarta Lloyd and Pelni, the
Pertamina oil company and the PLN electric company.

Domestic private businesses are the smallest of PAL's
customers because no special credit is available to them from
government or financial institutions.

"Financing is the most crucial issue in marketing our vessels.
Local consumers always find it difficult to find sources of
finance when they want to buy our vessels," Suleman said.

He explained that two years ago his company signed a contract
with PT Pan Maritim to build a 17,500 dead-weight-ton (DWT)
container ship costing US$23.1 million. But the deal only
materialized last March after Pan Maritim secured finance from
the Export-Import Bank of Japan and the Sumitomo Trust Banking
Group of Japan.

"This is, of course, not good for us because we are still
committed to building the vessel at the same price as two years
ago," Suleman said.

Soft loans

To help local shipbuilders, Suleman suggested the government
or the central bank provide soft loans to those purchasing ships
built by local dockyards.

He warned that if the government did nothing to help, local
private businesses would continue to buy ships overseas,
especially since the government has allowed foreign-made ships to
be sold in Indonesia.

To help local dockyards, the government established PT PANN
Multi Finance. Its purpose was to buy locally-made ships and
aircraft, and lease them or sell them by installment.

PANN Multi Finance, with soft loans from the central bank,
bought 32 Caraka Jaya 4,180 DWT container ships from PAL and
leased them to local shipping operators.

"PANN Multi Finance does not buy and lease local ships anymore
because it cannot readily get soft loans from Bank Indonesia,"
Suleman said.

To support its finance, PAL is trying to sell its ships
overseas where finance facilities for purchasing ships are
available.

He said that his company has overseas orders worth US$1.01
billion for dozens of ships from customers in Germany, Britain
and the Netherlands.

"We can now compete with shipbuilding firms in Europe even
without the government's support," Suleman said.

He said the newest foreign order was from Reederai F. Laeisz
GmBH of Germany for two open hatch, 45,000 DWT ships. The German
company had earlier ordered two similar bulk carriers from PAL.

Seatrade Gron. B.V. of the Netherlands has ordered four reefer
ships of 500,000 cubic feet, with options for four more ships.
Stephenson Clarke of Britain has ordered one bulk carrier of
18,500 DWT, with an option for one more ship.
(rid)