Shipbuilders likely to move from industrialized countries

Shipbuilders likely to move from industrialized countries

JAKARTA (JP): Shipbuilding companies in industrialized countries are likely to relocate their plants to developing countries for lower production costs, an official said.

Director General of Metal, Machinery and Electronic Industries Effendi Sudarsono said yesterday that the competitiveness of the shipbuilding industry in industrialized countries tends to decline due to the higher cost of production.

"Shipbuilding is a labor intensive industry and uses medium as well as high technology ... This industry will shift gradually to developing countries, including Indonesia," Effendi said at a Danish marine technology and equipment symposium.

Effendi said that because Indonesia has decided to build all new ships at local shipyards, it is inviting the cooperation of foreign partners as suppliers.

Indonesia, Effendi said, also opens its door widely for foreign investment in the shipbuilding industry as Government Regulation No. 20/1994 allows foreign investors to own full equity in a shipbuilding business.

"As we have comparative advantages available in our country, the industry is being developed in order to support our national economic growth and to impel exports forward," Effendi said.

Chresten S. Jorgensen of the Danish Export Group Association, who came here with executives of 17 marine companies, said that the Danish marine industry has long cooperated with Indonesian shipyards.

Indonesia currently has some 220 shipyards. However, most of them have the capability to only build ships of less than 1,000 dead weight tons (DWT), Effendi said.

He noted that a number of shipyards, which currently can make ships of up to 30,000 DWT, will improve their capability to build ships of 100,000 DWT within the next five years.

"Although our capacity is relatively small, this industry has been internationally competitive to a degree that we have been able to export ships to several countries," Effendi told the symposium without detailing the exports.

He noted that Indonesia used to export shipbuilding equipment worth US$10 million annually, while its annual imports of similar equipment stood at US$100 million. Last year's imports reached a record high of around $400 million. (rid)