D

omestic shipping companies are seeking financial support from local banks to help them take advantage of growing business opportunities following the cabotage principles implemented by the government earlier this year.

Indonesian National Shipowners Association (INSA) deputy chairman Lolok Sudjatmiko said in Jakarta on Friday that the lending requirements imposed by local banks on local shipping companies were still too rigid for the shipowners to meet.

He said that the banks, for example, required shipowners to have a long-term contract from their customers and to be at least 20 percent self-financed to be able to get a loan to purchase a ship.

“Banks are only willing to give loans to companies that hold long-term contracts such as of three or four year periods, while in fact, such contracts are rare in the maritime transportation sector,” he told The Jakarta Post on the sidelines of the INSA general member’s meeting in Jakarta.

Lolok cited examples that contracts for shipping services for offshore oil and gas exploration operations mostly ranged from three to six months, while those related coal transportation lasted generally no more than one year.

According to Lolok, the government should also help establish better access for shipowners to bank financing by issuing a regulation enabling it to seize a ship if the owner defaults on the loan payment.

“If a shipping company defaults on their debt payment, the banks can directly report the case to the government, which later can confiscate the ship purchased using the loans,” he said.

Lolok said that to make that happen, the government needed to ratify the international convention on ship arrests as mandated by a 2005 Presidential Instruction.

He said that ratifying the convention would also give Indonesian shipping firms more access to loans from domestic as well as foreign banks that might offer competitive interest rates. Under the cabotage principle included in the prevailing 2008 Law on Shipping, all vessels operating in Indonesian waters must be domestically owned. The regulation for general shipping vessels has been in effect since Jan. 1 this year.

— JP/Linda Yulisman