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Domestic shipbuilder able to produce warship.

April last year, the first war ship built by local shipbuilder has been delivered to the Ministry of Defence in Batu Ampar , Batam. The warship, , named KRI-Clurit-641 which is a rudal fast ship was built by PT Palindo Marine Shipyard using special steel plate produced by PT Krakatau Steel (PT KS). This ship has a total length of 43 meters and a maximum speed of 28 knots. The frame and hull is made of splate while the upper part is made of aluminnum. This ship is one of the two ships ordered by Ministry of Defence to PT Palindo Marine Shipyard. Valued at around Rp 56.95 b illion, this bulding of ships was 75% financed by Bank Mandiri. According to PT KS, the company is able to supply steel plate for building around 50 war ships similar to KRI Clurit 641 per year.

Indonesia is a maritime country, therefore the country has a great potential to develop the shipbuilding industry. However, the development is not optimal as Indonesia has not significant role in the world shipbuilding business.

The country practically started its shipbuilding industry in 1950 with the modernizations of several shipbuilding companies established during the Dutch administration in the country.

The country's shipbuilding industry has been capable to produce ships of various sizes and type from 100 DWT coastal cargo ships to 3,000/4,200 DWT inter-island cargo/semi container ships and 50,000 DWT ocean going bulk carrier for export. In the building of passenger ships, 500 passengers/90 m/4,000 GT passenger ships had been built.

As for oil tankers, domestic shipyards had the experience to build ship from small oil barges to Double Hull Oil Tankers of 30,000 DWT; also LPG tankers of 5,600 m3 and chemical tanker of 16,000 DWT.

The Indonesian shipyard has also had gained experience to building special type ships like Fast Patrol Boas of 57 m/ 400T30 knots, Tin Bucket Dredger of 12,000 T, Trailing Suction Hopper Dredger of 1,500 DWT, Multi-purposed Passengers Trailers Ro-Ro Ferry of 18,900 GT for export, floating docks 5,000 Tlc. Modern Fishing Boats up to 300 GT had also been built.

According to the Ministry of Industry's definition, the activities of shipbuilding companies cover the followings:

* New ship constructions

* Maintenance, repairs, conversion and recondition of ships

* Fabrication of offshore structures

* Manufacturing, assembling of marine machineries, equipment and component

* Shipbreaking

* Marine design, engineering, inspection and consultancy services

The capability of shipbuilding in Indonesia is presently:

* Number of companies registered by the Ministry of Industry: 253 companies (including 4 state companies & 60 companies in Batam)
* New building berth : 160 units
* Biggest capacity of new building : 50,000 DWT
* New building, annual capacity : 500,000 DWT
* Graving dock, floating dock,
 slipway : 208 units
* Biggest dock capacity : 150,000 DWT
* Docking, annual capacity : 6,000,000 GT
* Ship production : 5,600,000 GT in 2007; 7,250,000
 GT in 2008

Most of the above 253 shipbuilders are small and medium size companies with old-age production machineries. These ship building companies are located in Sumatera (81 companies with docking repair capacity of 3.7 million GT), Java (70 companies with 2.2 million docking capacity), Kalimantan (56 companies with 253,000 GT capacity) Sulawesi (18 companies -327,000 GT), IrianJaya (12 companies (58,000 GT) and Maluku (4 companies -22,000 GT).

Since 1970, the Indonesian marine offshore structure fabrication industry had been developed to support the rapid expanding oil and gas industry, especially in offshore explorations, exploitation and production activities. The range of product include jackets, platform, accommodation modules, single point mooring buoys, crane barges, oil/gas process equipment (separators, heat exchangers, pressure vessels, well manifolds). Many of those products are exported. There are now 19 companies registered by the Ministry of Industry with location on Java, Sumatera, Batam, Sulawesi and East Kalimantan. The total annual capacity is 35,000 tons steel.

In the meantime, the Associations of Indonesian Shipbuilders and offshore constructors (IPERINDO) registers only 108 companies as its members consisting of 80 shipbuilding companies, 4 offshore construction companies and 8 marine supporting companies. It is reported that several new investors from China, South Korea, Italy and Malaysia are interested to develop shipbuilding facilities in Indonesia with a total investment of around US$ 400 million.

Still many challenges to develop shipbuilding industry

Investment opportunities in the shipbuilding sector in Indonesia are still broadly available, in view of the high demand for commercial ship repairs as well as the construction of new ships. Until September 2011, the number of national commercial vessels reached 10,884 units, with its total repair capacity requirement of 17 million dead weight tonnage (DWT). In contrast, the available repair capacity is only 9.5 million DWT. According to Central Board Chairperson of the Indonesian National Shipowners' Association (INSA), Carmelita Hartoto, the high deficit level of shipyard capacity for ship repairs indicates the great potential for investment in the sector. The deficit is 7.5 million DWT only for repair works and larger for building new ships.

For the development of shipbuilding industry, INSA expects that the government to encourage the growth of ship components industry by accelerating investment in that sector. In addition the national banks and financial institutions should also contribute by providing low-interest financing as they have currently been giving it to shipping operators.

President Director of PT Daya Radar Utama, Amir Gunawan, explained that investment in the ship components industry needs to be enlarged in order to reduce components import dependence. He exemplified the components of lights, communications equipment and cables that still have to be imported, there are even some specific components that are already available in Indonesia, but they cannot be used because they have not been certified. The ship components industry has not been developed to support the marine industry. On the other hand, financial institutions still appear hesitant to finance this sector.

Meanwhile, the Chairman of the Association of Indonesian Shipbuilding and Offshore Facilities Companies (Iperindo), Tjahyono Roesdiyanto, stated that the shipbuilding industry requires the support of banks to set up working capital in 2012, which is estimated at Rp 5 trillion. He explained that banks and other financial institutions still see the shipbuilding industry as a high-risk sector, so that they are less interested to finance it.

Indonesian shipbuilders said the expansion of their industry is being held back by high borrowing costs and lack of funds, dependency on imported raw materials and never ending conflicts over land ownership. Although the shipbuilding industry is supposed to benefit from the full implementation of the cabotage principle this year, expansion is held back by these obstacles. The cabotage regulation requires that all ships trading in Indonesian waters must be owned by local companies.

A failure to address these obstacles, they say, will result in the bottlenecking of the flow of goods and services across the archipelago and with bilateral trading partners.

Funds circulated to reach Rp 25 trillion in 2012

The national shipbuilding industry association estimates that circulated funds in new ship building activities in Indonesia this year reach Rp 25 trillion, up 25 percent compared to 2011, which amounted to Rp 20 trillion.

The condition is driven by plans of PT Pertamina and BP Migas to provide long-term contracts to national vessel provider operators, hence allowing an increase in the orders for domestic vessels.

In 2012, PT Pertamina plans to place an order for 10 units of tankers with the national shipbuilding industry, while the Directorate General of Sea Transportation of the Ministry of Transportation (Kemenhub) will also order at least nine ship units
Major shipbuilding companies include:

 Company Shipbuilding Ship repair
 (GT/year) (GT/Year)

PT Dok Perkapalan Kodja bahari 60,000 2,200,000
PT Dok Perkapalan Surabaya (Persero) 10,000 300,000
PT PAL Indonesia 150,000 360,000
PT Jasa Marina Shipyard 12,000 130,000
PT Industri Kapal Indonesia(Persero) 7,000 112,500
PT Intan Sengkunyit 6,000 30,000
PT Samudera Marine Indonesia 25,000 600,000
PT Waruna Nusa Sentana 10,000 200,000
PT Bandar Victory Shipyard 21,000 90,000
PT DokPerkapalan Air Katung 7,000 70,000

Shipyard Facilities for Repairing Ships (DWT)

Class of Facility Total Capacity

Under 500 720,000
501-1,000 742,500
1,001-3,000 682,500
3,001-5,000 600,000
5,001-10,000 1,350,000
10,001-50,000 1,905,000
50,001-100,000 2,340,000
Over 100,000 1,200,000
Total 9,540,000

Source: Iperindo
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Title Annotation:INDUSTRY
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Oct 1, 2011
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