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8. Vast vessel operational area, covering Indonesian domestic routes and South East Asia, India, and the Middle East routes.
Despite of the guarantee from the implementation of cabotage principle in Indonesia, the Company continuously strives to expand its operations to countries other than Indonesia as demonstrated by the opening of the
Company’s shipping routes to areas covering the Indonesian, South East Asia, India and Middle East waters.
3.2 Competitive advantages in shipyard business
1.
Highly strategic shipyard location
As previously discussed, there are several geographical advantages of the Company’s shipyard which is located in Tanjung Balai Karimun, Riau Islands as concluded below:
a. Total shipyard size of 219 hectares, which can accommodate simultaneous building activities of several ships with large size and capacity, up to 300,000 DWT. The average size of shipyards located in the
surrounding areas and in Singapore is around 50-60 hectares. b. Length of water face overlooking the sea of approximately 1.35 km. This condition is very helpful in
planning shipyard expansion and construction of the docking area for ship maintenance activities and new shipbuilding.
c. Depth of water draft of 12 metres, which allows for dockingbuilding of ships with large capacity up to 300,000 DWT in size. Field data indicated that the average draft of shipyards operating in Indonesia is
only around 5-6 metres. d. The location of the Company’s shipyard is situated in Malacca Strait, one of the busiest international
shipping lanes in the world, therefore ships repaired in the shipyard do not required significant amount of funds for mobilization and demobilization.
2.
FTZ Incentive
Tax, custom and excise incentives as the Company’s shipyard is located in the Free Trade Zone, which offers various convenience, for example, expeditious clearance or custom duties process for overseas, and cost wise, it
is lower for all type of works carried out in the shipyard. Cost of shipbuilding carried out in the FTZ will be lower compared to shipyards operation in non-FTZ. This
condition provides additional opportunities for the Company to compete with other shipyards in terms of ship construction cost and sales price.
3. The location of the shipyard which is in close proximity to Singapore.
There are other advantages from the shipyard’s close proximity to Singapore, i.e., easy access to reliable and experienced contractors to work on projects in the shipyards and time efficiency for the purchase of ship
components, which often need to be imported from the neighbouring countries, particularly Singapore.
4. The Company‟s Revenue in the Past 3 Years
in USD
Type of Revenue 30 June
31 December 2014
2013 2013
2012 2011
Vessel Charter Services
Time charter 37,223,934
27,720,128 61,696,073
52,783,473 44,778,512
Spot charter 12,493,191
18,340,390 40,801,995
18,172,124 20,353,255
Shipyard 5,053,909
221,904 3,906,506
435,876 -
Total Revenue 54,771,034
46,282,422 106,404,574 71,391,473
65,131,767 5.
Business Strategies
The Company’s business strategies in conducting its business activities are as follows:
a. Vessel chartering business expansion
The Company will strive to develop the vessel chartering business organically through carefully planned addition of vessels, based on several considerations, among others: 1 annual vessel procurement budget, 2
development of a market intelligence system, the main function of which is to capture all information concerning future vessel requirement plan, 3 optimalization of marketing and administration professional function in
participating in vessel charter tender, which often requires involves long documentation process.
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b. Obtain new contracts for MRO and new building for the Company‟s shipyard.
The Company will improve its capabilities to obtain new shipbuilding and docking contracts for its shipyard, which has become fully operational in early 2014. Proven track record in both MRO and shipbuilding of the Company’s
shipyard will be considered as relevant factor as key advantage in order to get better positioning in market competition.
c. Operational cost efficiency
Company has introduced several business initiatives that serve as a basis to improve cost efficiency include the synergy between shipping and shipyard, therefore the Company can set a target to reduce the waiting time prior
to docking and utilize the advantages from its close proximity to Singapore as well as from the tax and custom exemption.
d. Integration of shipping industry operational support information system
Improve operational efficiency through expertise in shipping, financial synergy and development of proper standardized systems in all areas. The Company is developing an integrated system that will facilitate better
internal control and process flow, which will result in lower operational cost.
e. Development of human capital
Continuously improve and develop human resources through training in order to improve the quality of the Company’s office staff and ship crew, with the final objective of providing high quality and reliable service to
customers.
6. Business Prospects
Shipping The demand for Indonesia’s domestic marine transportation will continue to grow in line with the growth of
society’s energy demand, new refinery constructions and discoveries of new oil and gas production fields. In addition to its large population, the growth of middle class in Indonesia ensures that future energy demand will
continue to grow. Pertamina itself projected that the demand for fuel will increase by 7 per year. The growing demand for energy will certainly be accompanied by the increase in demand for marine transportation, especially
considering Indonesia is an archipelago. In addition to the demand for energy, the demand for marine transportation will also increase as a result of the
new discoveries of oil and gas fields in Indonesia, which will soon enter the production stage, as described below:
1. Exxon Mobile in Cepu Block, which will soon produce 165.000 barrel of crude oil in early 2015. Up to the date this Prospectus is prepared, Exxon is constructing a giant Floating Storage Offloading facility, with
the size of a VLCC, in Singapore. The giant FSO is currently close to completion. Once the facility arrives at the location, Exxon plans to start production in Cepu Block. The additional crude oil will
require several aframax and MR types vessels for transportation from FSO to domestic refineries, and eventually vessels to transport refinery products.
2. Chevron IDD Project 3. Santos Ande Ande Lumut Bloc in Natuna
4. Husky Madura Block, which will produce gas and condensate. 5. BP Tangguh Train 3, which is an expansion of the currently existing LNG field.
6. Donggi Senoro LNG 7. And others.
In the refinery sector, in order to lower the national balance of payment reduce the fuel import amount, the Government is planning to develop new domestic refineries, in cooperation with foreign oil companies such as
Saudi Aramco, Kuwait Petroleum and others. Additional refineries will also result in additional demand for marine transportation.
Demand for marine transportation will also increase as a result of the state electricity company’s, PLN’s Perusahaan Listrik Negara, plan to use a new type of energy, that is Liquified Natural Gas LNG for its power
generators. Currently PLN has procured 2 units of LNG FSRU regasification facilities in West Java and Lampung, and is planning to procure additional units. This condition will increase demand for LNG carrier vessel from
production fields such as Bontang and BP Tanggung to FSRU location, and in the future there will be high demand for small LNG feeders to cater direct distribution to the small power generators in the regions.
