152
147
Comparison of Domestic Transportation Market Share in Indonesia Year 2007 – 2012
Source: Global Business Guide Report March 2014, prepared based on Ministry of Transportation Statistics, year 2012
Presented below is the comparison of Marine Transportation Market Share for Export-Import activities, where local players represent a mere 10 of the total market share. This condition create future opportunities for
national companies to enter the export import market following the beyond cabotage program that is continuously being proposed by the Indonesian National Shipping Association INSA
Comparison of International Transportation Market Share Year 2007 – 2012
Source: Global Business Guide Report March 2014, prepared based on Ministry of Transportation Statistics, year 2012
153
Shipyard industry
The following chart concludes that since the implementation of the cabotage principle, the quantity of shipping operation carried out by local players has increased, particularly in 2011. This increase occurs not only in terms of
marine transportation mode produced by domestic shipyard but also the amount of tonnage transported by sea.
Source: Global Business Guide Report March 2014, prepared based on Ministry of Transportation Statistics, year 2012
Total marine transportation modes in Indonesia that are produced in domestic shipyard continued to increase, reaching nearly 400 million DWT by the end of 2012. However, in reality, the figure is far behind other countries,
both in the Asian region and in the world. Based on data collected by IHS Fairplay, as quoted in one of the research report issued by Clarkson Report and presented in the research report issued by Global Business Guide
March 2004, it was noted that in 2011, the number of new vessels registered in the orderbook shipbuilding order of shipyards in Indonesia was only 125 units of new vessels, 19 of which were ready for handover.
Indonesia ranks seventeen out of 20 countries in the list. Indonesia is far behind China’s shipyard industry, which dominates the market with a total order book of 2,740 units of new vessels and 386 unit of vessels ready for
handover.
Summary of Total New Shipbuilding all types of vessels above 1,000 Gross Tons, in Unit
September 2011
No New
Shipbuilding Order Book
Completion Unit
GT million
Unit GT
million
1 China
2,740 91.830
386 11.170
2 South Korea
1,222 85.577
145 8.228
3 Japan
1,013 37.943
144 4.794
4 Philippines
87 5.191
10 0.566
5 China – Taipei
53 2.509
6 0.239
6 Brazil
128 2.310
6 0.008
7 Vietnam
237 2.241
24 0.178
8 India
243 2.020
7 0.029
9 Other Countries
771 1.686
78 0.177
10 Germany
54 1.342
4 0.153
11 Romania
97 1.291
6 0.162
12 Italy
40 1.085
5 0.115
13 Turkey
156 0.623
13 0.089
14 Iran
33 0.536
15 Russia
100 0.418
10 0.027
16 Croatia
22 0.409
2 0.055
17 Indonesia
125 0.353
19 0.019
18 France
11 0.319
19 Netherland
79 0.282
10 0.033
20 Finland
11 0.235
Combination of several countries with relatively small shipbuilding order Source: IHS Fairplay, Global Business Guide Report March 2014, prepared based on Ministry of Transportation Statistics, year 2012
However, another look at the activity of Indonesian shipyard for the construction of smaller type vessels size below 1,000 GT – Gross Tons indicated several positive notes that the national shipyards have possessed the
capabilities to export small vessels to various countries. The following presented the number of ships sent abroad from Indonesian shipyards for the period from 2010 to 2013.
154
Indonesian Vessel Export Unit 2010 – 2013
Vessel Type 2010
2011 2012
2013
Motor Ship 500 GT 62
33 25
103 Barges, tug boats, dredgers
30 51
27 19
Motorless Vessels 500 GT 62
25 35
17 Floating submersible drilling production platforms
7 10
21 8
Up to the third quarter of Indonesia Source: Statistics Indonesia, prepared by Global Business Guide March 2014
The rapid growth of national maritime industry during the past few years is not yet followed by the increase in qualified production capacity of the currently existing and operating shipyards. This resulted in a deficit of unit
produced for each type of vessel compared to the number of vessels required. In 2013 estimated based on data as of March 2014, there was at least 457 unit of vessels that had to be imported, with total capacity of 981,847
DWT. The following table indicates that the capacity of national shipyards is only able to fulfill approximately 17 of total domestic demand in 2013 for the ten type of vessels stated.
Overview of Vessel Production and Import Plan Year 2013
No Vessel Type
Conversion Value
DWT Domestic Vessel
Demand Domestic Vessel
Production Vessel Import to
Indonesia Unit
DWT Unit
DWT Unit
DWT
1 General Cargo 2500 DWT
2,500 92
230,000 31
77,500 61
152,500 2
Container 750 TEU 4,000
7 28,000
2 8,000
5 20,000
3 Ro ro Vessels 700 GRT
515 4
2,060 2
1,030 2
1,030 4
Ferry 700 GRT 519
3 1,557
1 519
2 1,038
5 Bulk Carrier 12500 DWT
12,500 5
62,500 2
25,000 3
37,500 6
Tanker 15000 DWT 15,000
23 345,000
5 75,000
18 270,000
7 Barge 300 FT
3,000 151
453,000 6
18,000 145
435,000 8
Passenger 700 GRT 519
19 9,861
3 1,557
16 8,304
9 Tug Boat 2200 HP
350 153
53,550 25
8,750 128
44,800 10
Landing Craft 200 DW 200
22 4,400
5 1,000
17 3,400
11 Fishing Vessels 150 GT
111 63
6,993 8
888 55
6,105 12
Dredger 600 DWT 600
4 2,400
1 600
3 1,800
13 Cruise Ships 250 GT
185 3
555 1
185 2
370
Jumlah 549 1,199,876
92 218,029
457 981,847
Source : Global Business Guide Report, March 2014
4. Future Projection of Demand for New Vessels
As previously discussed, the number of vessels operating in Indonesia has rapidly increased within the last eight years, with an average growth rate of 6,9 2006 up to 14,1 2008. In reality, the number of vessels for
commercial shipping has surged by 46.4 in 2011 from 5,281 units of ships in 2010 to 7,880 unit of ships in 2011. This rapid growth is not only supported by the implementation of the cabotage principle to replace foreign-
flagged vessels operating in Indonesia, but also by the decline in prices of second hand vessels abroad as a result of the 2008 economic crisis. Therefore, the Company is able to benefit from high charter fee in the domestic
market with low capital expenditure for the purchase of second hand vessels.
The Ministry of Transportation recorded an average growth of the number of operating vessels for the period from 2006 to 2013 as presented in the following table. Future growth projection on number of ships based on the
figures presented is believed to be less than two digits compared to prior year. Based on data from INSA, which currently records approximately 13,000 units of vessels in Indonesia, the number of vessel is expected to
increase to 16,000 – 19,000 vessels by the end of 2018. This condition will strengthen Indonesia’s position to control approximately 20 of international shipping in 2020 current portion is approximately 10, see table
Comparison of International Transportation Market Share in Sub-chapter X, number 3. These projections are certainly closely related with the conducive domestic economic and social politic conditions and the world
economy in general.
Growth Rate of Indonesian-flagged Vessels Year 2006 – 2013
Type of Vessel 2006
2007 2008
2009 2010
2011 2012
2013
Commercial Shipping 13,6
9,8 15,9
10,4 6,5
46,4 10,9
- Small Scale Shipping
-10,5 3,8
0,6 0,5
0,6 1,0
1,1 -
SpecialPrivate Shipping 0,0
1,9 5,7
3,6 3,4
1,7 9,8
- Total Vessels
6,9 11,3
14,1 12,2
8,5 9,6
8,2 10,0
Up to November 2013 Source: Ministry of Transportation, prepared by Global Business Guide, March 2014.
155
010 011
012 13
62 33
25 103
30 51
27 19
62 25
35 17
forms 7
10 21
8
No version
Value stic Vessel
stic Vessel tion
port to nesia
Unit DWT
Unit DWT
Unit DWT
1 2,500
92 230,000
31 77,500
61 152,500
2 4,000
7 28,000
2 8,000
5 20,000
3 515
4 2,060
2 1,030
2 1,030
4 519
3 1,557
1 519
2 1,038
5 12,500
5 62,500
2 25,000
3 37,500
6 15,000
23 345,000
5 75,000
18 270,000
7 3,000
151 453,000
6 18,000
145 435,000
8 519
19 9,861
3 1,557
16 8,304
9 350
153 53,550
25 8,750
128 44,800
10 200
22 4,400
5 1,000
17 3,400
11 111
63 6,993
8 888
55 6,105
12 600
4 2,400
1 600
3 1,800
13 185
3 555
1 185
2 370
549 1,199,876 92
218,029 457
981,847
2006 2007
2008 2009
2010 2011
2012 2013
13,6 9,8
15,9 10,4
6,5 46,4
10,9 -
-10,5 3,8
0,6 0,5
0,6 1,0
1,1 -
0,0 1,9
5,7 3,6
3,4 1,7
9,8 -
6,9 11,3
14,1 12,2
8,5 9,6
8,2 10,0
The growth of number of vessels in Indonesia is mainly supported by the development of oil and natural gas production activities in Indonesia. The Ministry of Trade estimated that a minimum of 30 CNG Compressed
Natural Gas and LNG Liquefied Natural Gas carriers with 40,000 Cum capacity is required at present. However, in reality, Indonesian shipyards are only able to produce this type of vessel within the next three to four
years source:
www.bisnis.com , 11 August 2013. The demand for gas carrier vessels continues to increase, in
line with the increase in gas consumption that is parallel with the energy conversion program from oil to natural gas.
The distribution process of natural gas, which has reached approximately 20.1 TCF Trillion Cubic Feet in 2010, is estimated to increase by 13 to 22.8 TCF by the end of 2014. This volume is estimated to require
approximately 150 to 2000 CNG and LNG carriers within the next 5 years. The same applies for oil production and exploration activities, the number of oil tankers is projected to grow by
20 during the same period, assuming Pertamina Persero, with the support from oil distributors such as PT AKR Corpindo Tbk, PT Petronal Niaga Indonesia and PT Surya Parna Niaga, will intensify their distribution
operation in eastern Indonesia area.
Currently, there are 672 vessels supporting the oil and natural gas activities in Indonesia, and only approximately 3 mostly C Class consists of foreign-flagged vessels. Projection of the number of vessels required prepared
by SKK Migas for the period 2013-2015 is outlined in the table below. Global Business Guide predicts that the demand for offshore vessels in the next 5 years up to 2018 will be 460 units of new vessels.
Projection of Demand for Offshore Vessels Year 2013 – 2018
Exploration, Construction, Production
Type of Activity
Operational Support Offshore
Construction Oil Gas
Explorations Drilling
2013 – 2015 3 years 206
63 16
64 2014 – 2018 5 years
280 75
30 75
Source : SKK Migas
Global Business Guide Projection, March 2014
Several important points from Pertamina’s vessel procurement program summarized by Global Business Guide in its report as of March 2014 are as follows:
Pertamina operates around 190 units of vessel, 59 units of which are properties of this state-owned oil and gas company. The remainings are vessels chartered from several private companies, including the
Company, PT Berlian Laju Tanker Tbk., Samudra Shipping Services and Humpuss business group. Since November 2013 up to April 2014, Pertamina has carried out 39 time charter tenders, only a few were
tenders opened for spot charter method. Pertamina plans to increase the number of vessels by up to 40 units of vessel for the 2013-2016 period, as
stated in Pertamina’s Long-term Plan 2012-2016, with a total budget of approximately USD 2.5 billion. Pertamina intends to own one unit of LNG gas carrier with a capacity of 140,000 m3 before 2018.
5. Maritime Industry Competitive Landscape Shipping Industry
In general, the competition of shipping industry in Indonesia is fully protected by the cabotage principle: 1. Foreign-flagged vessels are prohibited from transporting Indonesia’s domestic cargo, therefore
competition is limited to other domestic shipping companies. 2. All Indonesian-flagged vessels shall be owned by Indonesian citizen. Foreign ownership in Indonesian-
flagged vessels is limited to a maximum of 49. 3. All Indonesian-flagged vessels shall be manned by Indonesian citizen, therefore operating the vessel
will be extremely difficult for foreigners, as they do not have skilled Indonesian crew. In practice, domestic shipping companies will only acquire a vessel and register the said vessel as an Indonesian-
flagged vessel if additional tonnage demand for ship transportation exists. In our experience, tenders for extension of existing vessel charter contract are commonly attended by a single participant, i.e., the existing
vessel, with no competition. Currently the annual increase in demand for oil and gas transportation in Indonesia is extremely high, therefore,
each national shipping company indirectly obtains sufficient individual portion for them to grow. Therefore,
