JAKARTA: The Investment Coordinating Board (BKPM) is looking to book millions of dollars of investment realization in the shipbuilding industry by the year-end as domestic demand is expected to skyrocket following the government’s instruction to prioritize the utilization of locally produced vessels.
BKPM head Franky Sibarani said his office eyed Rp 500 billion (US$34.03 million) of investment realization in the industry.
He mentioned the target after securing commitments from several ministries, institutions, state-owned enterprises (SOEs) and private companies to absorb locally produced ships.
Industry Minister Saleh Husin was among the attendees. “The meeting is a follow up to President Joko “Jokowi” Widodo’s instruction to boost Indonesia’s ship industry,” said Franky on Friday.
As of June, he said, the BKPM had issued investment principle licenses for the industry worth Rp 1.7 trillion while the investment realization value reached Rp 153 billion.
The amount was higher than the industry’s total investment of Rp 1.62 trillion as of December last year and investment realization of Rp 210 billion. This year, BKPM hopes to book an investment-realization target of Rp 519.5 trillion from all business activities.
Franky expressed optimism about fulfilling the target in the shipbuilding industry as several investors had shown an interest and would likely start their projects this year.
“Chinese investors will invest around US$50 million, and around $150 million from Australia. However, the Taiwanese have not made final decisions yet as they are still determining their project locations,” he said, adding that investors from Italy were expected to follow.
The Italian investors hope to meet Franky some time in the third week of October.
Minister Saleh said at the same event that the shipbuilding industry needed to be upscaled because demand would be higher in the future. “Ministries, institutions, SOEs and private companies have agreed to fulfill their ship demand by prioritizing domestic production,” he said.
According to data from the Industry Ministry, the country needs more than 800 ships by 2019, which vary from small boats for traditional fishermen and passenger ferries, to utility vessels for the oil and gas business.
Franky said that currently several SOEs leased ships to fulfill their needs.
State-run oil and gas company Pertamina leased 70 percent of its vessels and owned only the remaining 30 percent, while state-run cement firm PT Semen Indonesia and the Upstream Oil and Gas Regulatory Task Force (SKK Migas), for instance, had to rent all of their ships, he said.
“They lease ships because maintaining them needs a particular competency,” he said, adding that docks for ship maintenance and repair should also be multiplied and spread around the nation by shipbuilding companies.
Saleh said the country had the ability to produce and maintain various kinds of ships to meet local demand. However, the government needed to encourage competitiveness.
The government has prepared incentives for the industry, such as government-paid import duty (BMDTP) for ship-component imports and the nullification of value added tax for docks.
Data from the ministry showed that the country’s shipbuilding industry had around 250 companies with a total production capacity of around 1.2 million deadweight tonnage (DWT) per year and repair capacity of approximately 12 million DWT.
The companies and their facilities could build ships of up to 50,000 DWT each and repair up to 300,000 DWT in each graving dock.
“The government has agreed to focus on the upstream industry producing ships to fulfill the future demand,” he said, adding that some new companies had started their businesses with maintenance and repair before expanding into shipbuilding.
