State shipyards suffer declining business

State shipyards suffer declining business

Rendi A. Witular, The Jakarta Post, Jakarta

State-owned shipyards PT PAL Indonesia and PT Dok & Perkapalan
Kodja Bahari (DKB) said they are experiencing a business downturn
due to the lack of government support for the shipping industry.

During a hearing on Tuesday with the House of Representatives
Commission V for industry, executives from PAL and the DKB said
the government's refusal to provide loan facilities for shipping
operators to buy vessels had dented orders for building new
ships.

"The limited funds available to local shipping operators have
made them to turn to foreign shipyards, because these provide
soft loan facilities. Local shipyards cannot compete with this,"
said PAL president Adwin H. Suryohadiprojo.

He also said the absence of regulations requiring local
shipping operators to buy vessels from local shipbuilders have
also contributed to the decline in demand.

A case in point is the recent dispute between government
officials over the procurement of tankers for state-owned oil and
gas company PT Pertamina.

While the Ministry of Trade and Industry wanted Pertamina to
buy most of the tankers from local shipyards, the office of the
State Minister of State Enterprises urged the company to import
cheaper vessels.

PAL and the DKB also complained about the high interest rates
charged by local banks to shipping industry players.

The companies urged the government to provide support for the
shipyard industry like those adopted in other countries.

During the hearing, PAL said its operational revenue had
dropped by 23 percent last year because of the drop in orders for
new ships.

A report submitted to the commission showed that PAL's
unaudited shipbuilding revenues declined to Rp 735 billion (US$87
million) from Rp 906 billion in 2002, with net profits dropping
to Rp 29.3 billion from Rp 331 billion.

The sharp drop in net profits was due mainly to the lack of
the Rp 220 billion income the company gained in 2002 following a
successful debt restructuring program.

As for the DKB, the company said that losses before tax
increased to Rp 44.7 billion last year from Rp 43.4 billion in
2002, although it managed to book a 14 percent increase in
operational revenues to Rp 247 billion from Rp 216 billion.

The DKB also said its huge Rp 2 trillion debt hampered
expansion plans.

Several analysts said earlier that the government should merge
PAL and the DKB to improve performance and boost efficiency.

PAL currently employees 3,021 workers, while DKB has 2,864.