Shipping reforms sought

Shipping reforms sought

JAKARTA (JP): A University of Indonesia economist says the
nation must reform its shipping industry and improve its
transportation infrastructure in order to maintain economic
growth and effectively face international trade liberalization.

"Not only must Indonesia liberalize its shipping industry, the
country must also revamp its ports and land transportation
infrastructure," Dorodjatun Kuntjara-jakti told a seminar on sea
transportation and trade liberalization here yesterday.

Dorodjatun warned that efficient transportation is required to
maintain the export progress and growth in foreign investments
needed to balance out Indonesia's debt burden and current account
payments, as well as to help control inflation.

Government figures show that the country's debt service ratio
in the last fiscal year (1994-1995) was estimated at around 32
percent.

The government has said that it wants to reduce the debt
service ratio to 20.6 percent by 1998-1999.

"By 1998, some of our foreign debts (a total of US$87.6
billion) will reach maturity. We must increase our foreign
exchange earnings to keep the debt service ratio in check,"
Dorodjatun told the seminar, which was sponsored by Bisnis
Indonesia daily.

"This can be done by having an efficient transportation
system, which is needed to support our non-oil exports," he said.

Containers

Dorodjatun also said yesterday that Indonesia must anticipate
the dominant trend in the international shipping industry towards
the use of increasingly larger and more powerful container ships.

"Quite soon, in the near future, those who cannot deliver
their goods and services with the least defects and in the
fastest and cheapest ways will be left out of international
trade," he said.

"Consequently, we have to revamp our shipping sector, our
ports, our trucking regulations and even our railway networks,"
he said.

Many analysts and businessmen have noted that Indonesia's
container terminals and trucking regulations are inefficient
because of complicated regulations, as well as poor
infrastructure.

Congestion was reported at Jakarta's Tanjung Priok and
Surabaya's Tanjung Perak ports.

Minister of Transportation Haryanto Dhanutirto said recently
that the government will institute a three-month trial period for
the improvement of management systems and hardware facilities at
Tanjung Priok seaport.

Government figures indicate that since the authorities
introduced the 1988 deregulation of the shipping sector, which
allows greater freedom of entry into different types of shipping
services by foreign chartered vessels of various types, domestic
shipping firms have carried an average of only around three
percent of Indonesia's exports and imports.

Shipping tycoon Soedarpo Sastrosatomo made a similar point
yesterday by saying that "most Indonesian shipping companies have
become mere shipping agents for foreign liners."

Soedarpo said that the situation could be remedied if the
government warranted protection for domestic shippers.

"If the government protects the cement and paper industries,
why don't they protect the shipping sector as well?" he said,
while presenting his paper.

Responding to the businessman's plea, Dorodjatun said that
under increasing trade liberalization, protection of industries
would no longer be relevant.

"The most relevant factor will be improvement of efficiency.
This is why domestic shippers must adopt mergers or strategic
realignment to increase their efficiency rather than seeking
protection," he said. (hdj)