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.