INDONESIA WILL STEP UP SHIPBUILDING TO END RELIANCE ON FOREIGN CHARTERS

INDONESIA WILL STEP UP SHIPBUILDING TO END RELIANCE ON FOREIGN CHARTERS

Government yards will start building 24 multipurpose ships to replace chartered foreign vessels early in the new year, officials said.

Marwoto, the government's director for shipbuilding, said the contract will be signed at the end of the year.It will be followed by contracts for multipurpose and full containerships of 20,000 deadweight tons each, part of plans to increase Indonesia's shipbuilding capacity.

The ships can be expected to be used on international routes since the vast majority of Indonesian lines run barely enough vessels to cover domestic routes, Mintarso, head of maritime services, told The Journal of Commerce.

Transportation Department figures show 96.6 percent of Indonesian exports are carried by chartered foreign vessels using Indonesian crews. About 30 percent of cargo moved on domestic inter-island routes goes the same way.

The 24 multipurpose ships are to be hired by the state-owned leasing firm PT PANN (Pengunbangan Amada Niaga Nasional) for Indonesian lines. This archipelago of some 13,000 islands has 1,379 carriers registered and licensed for oceangoing routes.

No foreign shipping lines are registered in Indonesia, and only three joint ventures have been formed with foreign firms.

There have been suggestions of some deregulation, Mr. Mintarso said, but none that shipping lines will be allowed to be fully owned by foreign investors.

Sukardi, a spokesman for the Directorate General for Sea Transportation, said: "Indonesia is closed. This isn't Panama or Liberia."

Indonesia, nearing the end of the second of three shipbuilding programs, is taking measures to increase capacity to meet growing demand for orders from abroad, Mr. Marwoto said.

A passenger ferry of 19,000 gross registered tons is under construction for a Swedish owner and due for completion next March, he said. The owner isn't being publicly identified.

The ferry, about 550 feet long, will represent something of a breakthrough for the Indonesian industry. Ministry figures show the largest ship built here had capacity of 12,000 dwt.

"Really, we have the capability up to 40,000 dwt. in Jakarta and Surabaya," Mr. Marwoto said.

Negotiations are under way with Iran and Norway to build containerships and feederships for Middle Eastern and European clients, Transportation Department and Industry Ministry officials said.

The negotiations "are still at a sensitive stage," they said, declining to give details.

Mr. Marwoto said the country's shipbuilding plans are constrained by "a lack of finance. We welcome foreign investment and technology."

The last four of 24 ships of 3,650 dwt. built in Jakarta, Surabaya and Balimbang in southern Sumatra in the second shipbuilding program, are scheduled for completion next month.