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T Trada Maritime Tbk (TRAM), a floating storage and offloading (FSO) and liquid and dry bulk transportation service provider, will spend US$120 million to support its business expansion in 2011.

TRAM financial director Adrian E. Sjamsul told reporters at a conference on Friday that, out of the funds, $90 million would be raised from loans and the other $30 million from the company’s internal budget.

“TRAM will use the funds to buy six or seven new vessels this year and to support the maintenance and modification of the existing vessels,” he said.

He explained that the company had already accomplished part of the business expansion. In January for example, the company bought a Panamax-sized vessel, the largest capable of navigating the Panama Canal, of 72,000 deadweight tons (DWT) worth $30 million to strengthen its dry bulk fleet and a 64,239 DWT tanker in April worth $8 million. The tanker would be converted to an FSO vessel.

According to Adrian, TRAM has ordered construction of an accommodation barge to serve PT Berau Coal Energy, a coal mining company, and is planning to buy three or four Handymax-sized (typically 52,000-58,000 DWT) to Panamax-sized vessels that would be used as bulk carriers.

He added that TRAM, which currently operates 44 vessels including 38 of its own, would also expand its services to the international market this year.

“Only one of our current vessels is utilized by a foreign company, and we will expand our business in the international market while developing services for the domestic market,” he said.

When asked about the cabotage principle implemented earlier this year, Adrian said that TRAM welcomed the principle because it opened great growth opportunity for domestic shipping companies such as TRAM.

The government issued a shipping law in 2008 that included a cabotage principle requiring all vessels operating in Indonesian waters to be domestically owned. The regulation went into effect Jan. 1.

Adrian said the ruling created a possibility for domestic vessels to ship all export commodities, particularly coal.

“Indonesia exports around 250 million tons of coal every year, and if Indonesian vessels ship at least 25 percent of the amount, domestic shipping companies will grow better,” he said. “The government must gradually impose the regulation for Indonesian export commodities to be shipped only by Indonesian vessels.”

Adrian further said that TRAM would keep buying new vessels while waiting for the regulation to be realized.

During the conference, he also announced that TRAM recorded a 51 percent revenue increase in the first quarter of this year to Rp 143.6 billion ($16.8 million) from Rp 95 billion during the same period in 2010.

Along with the revenue increase, the company’s profit also rose 88 percent to Rp 61 billion in the first quarter of this year from Rp 33 billion during the same period last year.

“We are targeting to increase our revenue by at least 80 percent this year with our expansion strategy,” said Adrian.

He added that the company’s annual meeting approved the distribution of dividends worth Rp 42.36 billion out of last year’s Rp 105.92 billion. Shareholders would receive a dividend of Rp 4.8 per share on June 24. (msa)