RI shipping at its worst condition

JAKARTA (JP): Indonesian shipping companies's share of the country's international cargo market has plummeted to an all-time low of 3.4 percent, the Indonesian Maritime Technology Association's chairman said yesterday.

Suleman Wiriadidjaja said here that local shipping companies were losing ground due to increased competition from foreign shipping companies.

"Local shipping firms' share in carrying the country's international cargoes could drop to zero in the future, he said.

Suleman said that about 97 percent of Indonesian cargo transported to and from international destinations last year was carried by foreign ships. Indonesia's international cargo exceeded 287.89 million tons last year.

"We also see a shrinking share of the domestic cargo market," he said.

Currently, about 84.3 million tons, or 54.5 percent, of domestic cargo is carried by Indonesian vessels and 70.3 million tons, or 45.5 percent, by foreign vessels.

He said it was remarkably different in the 1950's and 1960's when Indonesia had a strong shipping industry.

Suleman said the shipping industry needed to be assessed.

"I see no serious discussion yet on how to deal with the worsening condition," he said.

He said the situation was getting worse because of an unclear shipping policy, and because banks were not supporting the development of the country's shipping sector.

Interest rates, which are as high as 22 percent per annum, are too high for local shipping companies.

In Singapore, for example, shipping firms can get bank loans with an interest rate of six percent, he said.

"Due to this, it is very difficult for local shipping firms to buy new ships," he said.

Every year, Indonesian shipping companies need at least four or five new ships with a dead weight of 40,000 tons to compete with their foreign rivals.

He said the government pledged to improve the local shipping industry but it was unclear whether a new policy would be introduced.

Minister of Finance Mar'ie Muhammad promised recently to make structural deregulations to the shipping sector so it could contribute more to the country's economy.

The government also needed to provide a subsidy to the Indonesian shipping sector, he said. "Even a developed country such as Germany still subsidizes its shipping industry," he said.

He said the subsidy problem would be discussed at the international maritime conference in Jakarta from Sept. 9 to Sept. 11. (bnt)