Shipping services deficit estimated to reach $2.1b

JAKARTA (JP): Director General of Sea Transportation Soentoro estimates that the deficit in shipping services will account for nearly 25 percent, or US$2.1 billion, of the country's current account deficit projected to reach $8.7 billion this fiscal year.

"I don't have any data but I believe $4.35 billion or around 50 percent of the estimated current deficit will come from the deficit in sea and air transportation services alone," he said at a hearing yesterday with the House Commission for the national budget.

He said that half of the $4.35 billion deficit expected from sea and air transportation services is likely to come from shipping services.

Soentoro said that it would be difficult to reduce the high deficit in shipping services because most of the country's cargo ships are not only too small but also too old to halt the foreigners who dominate the transportation of Indonesia's exports and imports.

He said that the government will strengthen the fleet of PT Djakarta Lloyd, the state-owned cargo shipping company, to help gradually reduce foreign dominance.

"We hope that in the year 2000, the market share of domestic shipping companies will increase to 10 percent from less than 3 percent at present," he told commission members.

Deficit

The country's current account deficit, which nearly doubled to $6.9 billion in 1995/96, is expected to increase to $8.7 billion this fiscal year ending in March.

The service sector has been blamed as the main source of the increase in the current account deficit in the last three years.

Foreign shipping companies continue to dominate cargo services in the country despite the increase in the number of domestic shipping fleets, he said.

Soentoro said that more than 97 percent of the Indonesian cargo transported to and from international destinations last year was carried by foreign vessels.

The volume of Indonesia's international cargo reached 287.89 million tons last year, of which 281.39 million tons, or 97.6 percent, were transported by foreign shipping companies.

"Domestic shipping companies shared only 2.4 percent of the international cargo market," he told the hearing.

In the domestic cargo market, foreign shipping companies carried 70.3 million tons last year, or more than 45 percent of the total cargo volume of 154.7 million tons. The remaining 84.3 million tons, or 55 percent, were carried by domestic shipping companies.

Soentoro said that the government's deregulation measure in 1988 to simplify the procedures for the establishment of shipping companies resulted in a sharp increase in the number of domestic shipping firms, to 1,635 from only 543 before the shipping reform was introduced.

He said, however, that 45 percent of the domestic companies act only as agents for foreign shipping operators, and do not operate their own ships.

"That is the reason why the number of domestic ships increased by merely 16 percent to 6,206 as of June this year from 5,216 before the deregulation," he explained. (hen)