159
ncluding
production
S
The implementation of cabotage principle is supported by the provision of the International Maritime Law with regard to coastal state’s sovereignty and jurisdiction over its territorial waters. The implementation of this
regulation follows the footsteps of the American government, who also implements the US Jones ACT, which stipulates that all domestic shipping in America shall be carried out by American-flagged vessels built in US
shipyards, and at least 75 owned by American citizen.
Economic wise, the purpose of cabotage principle implementation is to develop the economy of Indonesian society by providing business opportunities as wide as possible for national and local sea transportation
companies. The law is believed to be able to increase domestic ship production since all ships sailing in the Indonesian waters have to be Indonesian-flagged.
Other objectives of the cabotage principle implementation are to prevent or reduce the society’s dependence to foreign ships; expedite the flow of goods or services and passengers to all areas of the archipelago with
maximum services and reasonable price, including to remote areas; as an effort to provide job opportunities to the citizen; and lastly as the backbone and support of national defense and security system.
In addition, since the implementation of cabotage principle requires every commercial ship transporting domestic cargo to use Indonesian-flagged vessels, it will automatically increase the level of employment and reserve
Indonesia’s foreign exchange income as a result of the reduction in use of foreign ships for transporting domestic cargo and the increased role of national shipping companies and industry in transportation of export or import
cargo.
The cabotage principle, which requires the use of Indonesian-flagged vessels to transport domestic cargoes, particularly for oil and gas upstream and downstream business activities support services, was implemented by 1
January 2011, at the latest. Ships executing transportation contracts signed prior to the issuance of Law No. 17 Year 2008 are granted allowance until 7 May 2011 or 3 three years subsequent to the issuance of the
aforementioned law. Presented below is the mapping of cabotage principle implementation plan based on Law N. 17 Year 2008, Government Regulation No 22 Year 2011 and Minister of Transportation Regulation No. 48 Year
2011:
Roadmap of Cabotage Principle Implementation in Indonesia
No. Activity Vessel Type
2012 2013 2014
2015
1 Offshore Support Vessels AHTS Vessel≥5.000 bhp with dynamic positioning
√ √
√ Platform Supply Vessel
√ √
√ Diving Support Vessel
√ √
√ Offshore Construction
Diving Support Vessel √
√ √
2 Dredging Drug Head Suction Hopper Dredger
√ √
and Talling Suction Happer Drugger √
√ 3 Underwater construction activities
and offshore rescue Heavy Floating Crane, Heavy Crane
√ √
Barge and Survey Salvage √
√ DerrickCrane, PipeCableSub Sea
√ √
Umbilical Riser Flexible Laying Barge √
√ 4 Oil and Gas Survey
Seismic, Geophysical, and Geotechnical √
5 Drilling Jack Up Rig, Semi Submersible Rig
Deep Water Drill Ship, Tender Assist
The Government, through the Ministry of Industry has prepared a roadmap that will serve as a guidance for the implementation of Law No. 17 of 2008, which does not only cover the use of Indonesian-flagged vessels but also
implements guidance for the shipyard segment. By 2025, Indonesia is expected to be able to independently produce vessels with total capacities of 2 million DWT per year and to be able to carry out repair works up to a
capacity of 20 million DWT per year. The specification of vessels to be produced independently are various tankers with total capacity of 400,000 DWT per unit or cruise ship with a capacity of 2,000 passengers.
160
Roadmap of National Shipyard Industry Production Capabilities and Capacities Plan
Class Indicator
2012 - 2015 2015 - 2020
2015 - 2025 A
Production facility capacity
New vessels DWT 85,000
300,000 300,000
Repairs DWT 150,000
300,000 300,000
B Production capacity capability
New vessels DWTyear 1,000,000
1,500,000 2,000,000
Repairs DWTyear 12,000,000
15,000,000 20,000,000
Type of ships produced Tanker variant of various
types and sizes up to 85,000 DWT
Passenger ship with a capacity of 1,000
passengers Battleships Landing
CraftLCT, Landing Platform DockLPD,Fast
Patrol BoatFPB, Corvette Tanker variant of
various types and sizes up to 300,000 DWT
Cruise ship with a capacity of 1,000
passengers. Battleships
LCT,LPD,FPB, Corvette, Frigate
Tanker variant of various types and
sizes up to 400,000 DWT
Cruise ship with a capacity of 2,000
passengers. Battleships
LCT,LPD,FPB, Corvette, Frigate,
Submarines.
Source: Ministry of Industry, Road Map for the Shipyard Industry, 2014
6.2 Limitation of foreign ownership
Presidential Regulation No. 39 Year 2014 concerning Investment Negative List limits foreign investment in Indonesia’s Overseas and Domestic Sea Transportation business at a maximum of 49. The regulation will have
positive impact on the Company’s business growth prospects, since competition, particularly from foreign competitors, can be minimized. Foreign investors may perceive the shipping industry as less attractive
considering the ownership limit which prevents them from being majority shareholders maximum 49, therefore rendering them difficult to control business development policies andor profit distribution.
The substantial investment required to acquire vessels is a barrier to entry for the shipping industry, the existence of the Presidential Regulation referred to above will add the barrier to entry for competitors, particularly foreign
investors. Foreign investors will consider the limitation in business development prospects of shipping industry, in terms of the maximum business scale to be developed considering the capability of local partner to
simultaneously provide capital contribution. Local partner may experience financing problems in the event that the planned business expansion is substantial in scale. The foregoing will indirectly create multiple problems for
foreign investors intending to massively and aggressively develop shipping business in Indonesia. In addition, competitors intending to provide services for the offshore oil and gas industry will experience the
greatest impact from Presidential Regulation No. 36 due to vessels costs that are the highest among other type of vessels.
161
Class 20
25 A
B 2,000,000
15,000,000 20,000,000
arious f
ariant of
156
XI. EQUITY
The following table sets forth the Companys consolidated equity position presented based on the consolidated statements of financial position of the Company as of 30 June 2014, 31 December, 2013, 2012 and 2011, and the
consolidated statements of comprehensive income for the six months periods ended 30 June 2014 and 30 June, 2013, and the years ended 31 December 2013, 2012 and 2011. The consolidated financial statements of the
Company as of 30 June 2014, 31 December 2013, 2012 and 2011, and the consolidated statements of comprehensive income for the six months periods ended 30 June 2014 and 2013, and the years ended 31
December 2013, 2012 and 2011 were audited by the Public Accountant Firm Kosasih, Nurdiyaman Tjahjo Partners a member of Crowe Horwath International, which expressed an unqualified opinion in its report dated 9
October 2014.
in USD
Description 30 June
31 December 2014
2013 2012
2011 Equity
Share capital - par value of Rp100 per share as of June 30, 2014, December 31, 2013 and 2012, and Rp1.000.000
per share as of December 31, 2011 Authorized - 23.000.000.000 shares as of June 30, 2014,
14.000.000.000 shares as of December 31, 2013, 4.000.000.000 shares as of December 31, 2012, and
200.000 shares as of December 31, 2011 Issued and fully paid - 6.000.000.000 shares as of June 30,
2014, 3.572.081.001 shares as of December 31, 2013, 1.072.081.001 shares as of December 31, 2012, and
50.050 shares as of December 31, 2011
57,064,356 36,831,698 11,494,716
5,567,297
Additional paid-in capital
65,141,276 65,112,248
- -
Proforma equity arising from restructuring transactions of entities under common control
- -
- 23,097,110
Difference in value from restructuring transactions of entities under common control
- - 65,110,210
21,615,527
Retained earnings Appropriated
7,284,280 -
- -
Unappropriated
44,727,195 36,421,401
6,202,071 3,450,487
Total equity attributable to owners of the parent entities
174,217,107 138,365,347 82,806,997
53,730,421
Non-controlling interests
147,109 151,991
118,700 12,251,120
Total Equity
174,364,216 138,517,338 82,925,697
65,981,541
Up to the date of issuance of the Prospectus there is no change in the capital structure and share ownership of the Company.
162
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163
XII. TAXATION
Taxation for Shareholders
Income tax on dividends is levied under the law and regulations in force. According to Article 4 paragraph 3 item f of the Law of the Republic of Indonesia No. 7 year 1983 as most currently amended by law No. 36 year 2008 on
Income Tax entering into force on 1 January 2009, dividend or distribution of profit earned by limited liability companies as domestic taxpayers, cooperative, state-owned or local government owned enterprises, as result of
equity investment in any business entity established and domiciled in Indonesia, shall not be liable on income tax if the following requirements are fulfilled:
The dividends derived from retained earnings; and In the case where the recipient of dividends is a limited liability company or a state or local government
owned enterprise, its ownership in the enterprise paying the dividend must not be less than 25. Pursuant to the Regulation of the Minister of Finance No. PMK 234PMK.032009 dated 29 December 2009 on
Certain Investment Sectors of Generating Income for Pension Funds Excluded as Income Tax Object, then the income of a pension fund foundation approved by the Minister of Finance shall not be subject to Income Tax if
such income was received or acquired from investment in, among others, stocks being traded at the Indonesia Stock Exchange.
In accordance of Government Regulation No. 14 of 1997 on Amendment of Government Regulation No. 41 of 1994 on Income Tax on Proceeds from Sale Transactions of Shares at the Stock Exchange, and Circular of the
Directorate General of Tax No. SE-06PJ.41997 dated 20 June 1997, regarding the Application of Income Tax on Proceeds from Share Sale Transactions at the Stock Exchange the following provisions are stipulated:
1. On any income received or earned by any individual or entity from a sale transaction of shares on a Stock Exchange, a final income tax will be imposed at 0.1 of the gross value of the transactions.
Payment of the related withholding tax is to be made by the Stock Exchange organized through stock brokers at the time of payment of the sale transaction of shares;
2. Founding shareholders shall be charged with additional final income tax of 0.5 of the value of shares in the Company at the time of the Initial Public Offering;
3. Founding shareholders are given an exemption of fulfillment of their tax obligations by their own calculations in accordance with the above provisions. In this case, the founding shareholders for tax
purposes may make a final calculation using their own assumptions that proceeds have been generated. Payment of additional Income Tax is carried out by the Company in the name of the
founding shareholders by no later than 1 month following the trade of the shares at the Stock Exchange. However, in the event the shareholder declines to take advantage of such exemption,
calculation of the Income Tax shall be based on the applicable Income Rate in accordance with Article 17 of Law No. 7 of 1983 as most currently amended by Law No. 36 of 2008 on Income Tax
Pursuant to Government Regulation No. 19 of 2009 on Income Tax Applicable to Divided Received or Acquired by Domestic Individual Taxpayer, income in the form of dividend received or acquired by a domestic individual
taxpayer is subject to a final Income Tax of 10 of the total gross value. Dividends paid to a Domestic Taxpayer including Permanent Corporate Entities which does not meet the
qualifications stipulated under Article 4 paragraph 3 item f of Law No. 7 of 1983 as most currently amended by Law No. 36 of 2008 above shall be subject to a deduction for Article 23 Income Tax at the rate of 15 of the
gross value, as provided under Article 23 paragraph 1 and 1a of Law No. 7 of 1983, as most currently amended by Law No. 36 of 2008 on Income Tax, and if such Taxpayer does not have a Taxpayer Registration Number, the
rate will be 100 higher, or 30 of the gross income. The magnitude of the rate imposed on the income in the form of dividends received or obtained by the private
Taxpayer in the country is based on the provisions of article 17 paragraph 2 c Law No. 36 year 2008 about income taxand the tariff imposed on income in the form of dividends to be distributed to taxpayers of a private
person in the country which can be as high as 10 ten per cent and shall be final. The stipulation concerning the amount of the tariff based on the provision of article 17 paragraph 2d shall be regulated by government
regulation no. 19 2009 on income tax on dividends are received or obtained taxpayers a private person in the country.
In accordance with the Regulations of the Director General of Tax No. PER-64PJ2009 on the application of the approval procedures of the Double Tax Avoidance, as amended by by-24PJ2010. Dividends paid to Foreign
Taxpayers will be subject to a 20 rate of cash being paid out in terms of cash dividend or 20 of the par value
164 in terms of share dividends or a lower rate in terms of dividend payments made to those who are residents of a
State that has signed Double Taxation Avoidance P3B with Indonesia. In order for such foreign tax payer to benefit the rate stipulated under the Agreement on Avoidance of Double
Taxation, then pursuant to the provisions of the Regulation of the Director General of Tax No.PER-24PJ2010 dated 30 April 2010 on Amendment to the Regulation of the Director General of Tax No. PER-61PJ2009 on
Procedure to Invoke Agreement on Avoidance of Double Taxation, such Foreign Taxpayer is required to file a Certificate of Domicile of Non Resident for Indonesia Tax Withholding, namely:
1.
Form-DGT 1 or; 2.
Form-DGT 2 for banks and Foreign Taxpayers receiving or acquiring income through a custodian with respect to income derived from a share or bond transfer traded or listed at an Indonesian stock exchange
other than interest and dividend, and Foreign Taxpayers having the form of a pension fund foundation which was established by virtue of the laws of the state party and in which the taxpayer is located.
3. SKD Form issued by the state party, in the event the competent authority of such state party declines to sign
the Form DGT-1DGT-2. The SKD form is issued in English. The DGT-1DGT-2 form needst only be signed by the Foreign Taxpayers, and will constitute an appendix to the SKD Form of the state party with the
following terms:
The SKD form is issued in English; Published on or after January 1, 2010;
Original document or copy of the document that has already been legalised by tax services office where one of the tax collector is listed as a taxpayer;
At least include information about WPLN name ; and Include the signature of an authorized officer, his Deputy, or the official of the Office of the tax authorities
in the P3B partner countries, or an equivalent of a sign [or signature?] that matches with the customary of P3B partner countries
In addition to the requirement of filing a Form-DGT1 or Form DGT-2 or SKD Form of the State Party, then in accordance with PER-25PJ2010 dated 30 April 2010 on Amendment to Regulation of the Director General of
Tax No. PER-62PJ2009 on the Prevention of the Misuse of the Agreement on the Avoidance of Double Taxation, a Foreign Taxpayer must meet the Beneficial Owner requirement.
Tax Obligations of the Company As Taxpayers, the Company has tax liability for income tax PPh and land and building tax PBB. The company
has fulfilled its tax obligation in accordance with the taxation regulations. The companys tax liabilities for the fiscal year 2011 for the income tax Article 21, 23, 26, 4 2, 29 and VAT have
been fulfilled by the company. The companys tax liabilities for the fiscal year 2011, has been paid at the time of submission of SPT in April 2012, thus the company has no outstanding tax liabilities for fiscal year 2011 nil.
The companys related parties transactions with related parties have been reported in accordance with the provisions of article 18, paragraph 4 of law No. 7 Year 1983 as amended with law No. 36 Year 2008 regarding
income tax and regulations of the Director General of Taxes No. 43 in 2010, which was modified by the regulations of the Director General of Taxes No. 32 in 2011 on the application of the principle of reasonableness
and the customary effort of transactions entered into between taxpayers with a special relationship.
PROSPECTIVE BUYERS OF SHARES IN THE INITIAL PUBLIC OFFERING IS EXPECTED TO CONSULT WITH THEIR RESPECTIVE TAX CONSULTANT ABOUT THE TAX CONSEQUENCES THAT MAY ARISE
FROM THE PURCHASE, POSSESSION AND SALE OF SHARES PURCHASED THROUGH AN INITIAL PUBLIC OFFER.
165
ONSULT
160
XIII. DIVIDEND POLICY
New shareholders with regard to this Initial Public Offering will have equal and similar rights in all respects with the holders of the Company’s existing issued and fully paid-up shares, including the rights to receive dividend
distributions. Based on Law No. 40 of 2007 on Limited Liability Company, dividends are distributed based on the resolutions of
the Annual General Meeting of Shareholders Annual GMS. Before the end of a financial year, interim dividend can be distributed as long as it is allowed by the Articles of Association of the Company and the distribution does
not cause the net asset of the Company to become less than the issued and fully paid capital and also taking into consideration the mandatory reserves of the Company as stated in the Limited Liability Company Law. Interim
dividend is distributed by the Board of Directors after being authorized by the Board of Commissioners. In the event that the Company suffered from loss after the distribution of interim dividend at the end of the financial year,
the interim dividend that has already been distributed must be refunded to the Company. The Boards of Commissioners and Directors shall be jointly and severally responsible for the refund process by the
Shareholders. The Company has no plan to distribute cash dividends for the financial year of 2014, considering that in line with
the Company’s financial projection, the entire profit generated in the financial year of 2014 shall be used to support the Company’s plan to expand the business of its Subsidiaries, to pay a portion of bank loan of its
Subsidiaries or to provide additional working capital as set forth in Use of Proceeds from Initial Public Offering.
The Company’s management plans to distribute cash dividends to the Company’s shareholders at a maximum amount of 30 thirty percent of the Company’s consolidated comprehensive income starting for the book year
2015 and will be paid start in 2016, without disregard to the Company’s financial health and without prejudice to the right of the AGM of the Company to determine otherwise in accordance with the Company’s Articles of
Association. Payment of cash dividends in the future will depend on a variety of factors, including the retained earnings,
operational and financial performance, financial condition, liquidity, future business prospects, cash requirements, business opportunities and compliance with laws and regulations as well as other factors deemed relevant by the
Board of Directors. Cash dividends will be paid in Rupiah. Shareholders, who are registered as of the record date, are entitled to the
full amount of paid dividend and subject to the applicable withholding taxes in accordance with the prevailing tax regulations in Indonesia. Dividends received by foreign shareholders will be subject to income tax in accordance
with the prevailing tax regulations in Indonesia. AS OF THE DATE OF ISSUANCE OF THIS PROSPECTUS, THERE ARE NO NEGATIVE COVENANTS
IMPOSED WHICH MAY ADVERSELY AFFECT THE RIGHTS OF THE PUBLIC SHAREHOLDERS.
166
[●] [●]
[●] [●]
[●] [●]
[●] [●]
[●] [●]
[●] [●]
[●]
between Rp● ●Rupiah up to Rp● ●Rupiah of Rp● ●Rupiah per share is determine
• •
• •
• •
• •
•
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167 161
XIV. UNDERWRITING
1. INFORMATION ON THE JOINT LEAD UNDERWRITER
Under the terms and conditions of the Deed of Underwriting Agreement, the Underwriters whose names are identified below shall jointly or severally agree to offer and sell the Company’s Offered Shares to the public based
upon their respective underwriting portion with full commitment and are bound to purchase the Offered Shares that remain unsold at the close of the Offering Period.
The aforesaid agreement shall constitute the full and entire agreement which supersedes all arrangements that may have been previously made by the parties regarding the subject matter provided under the Underwriting
Agreement, which are in conflict therewith. After the Underwriting Agreement, there is no other agreement which was made by the Company and Underwriters.
The Joint Lead Underwriters participating in the underwriting of the Company’s shares have agreed to discharge their duties in conformity with Regulation IX.A.7 Decree of the Chairman of Bapepam and LK No. Kep-
691BL2011 dated 30 December 2011 on Ordering and Allotment of Securities in Public Offering. The composition, underwriting portion and percentage of the members of the syndicated Underwriters in the
Company’s Initital Public Offering with full commitment are as follows:
No. information
Underwriting Portion Shares
Rp Percentage
Joint Lead Underwriter:
1. PT Mandiri Sekuritas
[●] [●]
[●] 2.
PT RHB OSK Securities Indonesia [●]
[●] [●]
Underwriter:
1. [●]
[●] [●]
[●]
Total [●]
[●] [●]
PT Mandiri Sekuritas and PT RHB OSK Securities Indonesia as the Joint Lead Underwriters and the Underwriters expressly represent that they do not have any affiliation, whether directly or indirectly, with the Company as such
term is defined in the Company Law.
2. DETERMINATION OF OFFERING PRICE IN THE PRIMARY MARKET
The Offering Price for the Offered Shares is determined based upon the mutual agreement and negotiations between the Company’s Shareholders and the Joint Lead Underwriters.
Based upon the result of the book building, the highest bid price received by the Joint Lead Underwriters is between Rp● ●Rupiah up to Rp● ●Rupiah per share. Taking into account the result of the bookbuilding as
mentioned above, upon the mutual agreement of the Joint Lead Underwriters and the Company, an Offering Price of Rp● ●Rupiah per share is determined. Such determination of price has also taken into account the following
factors: • The market condition at the time of the bookbuilding;
• Global investors demand domestic and international; • Qualified potential investors demand;
• Financial performance of Company; • Data and information on the Company, the Company’s performance, brief history, business prospect and
information on the cigarette industry in Indonesia; • The Company’s latest standing and development of Company;
• Factors as mentioned above in relation with market value determination and such valuation methods for companies which operates in the same industry with Company;
• Valuation based on PER comparison ratio between such public companies listed in comparable regional stock exchange; and
• Shares performance in the secondary market. It cannot be guaranteed or ascertained that following the Initial Public Offering, the Company’s share
price will continue to be above the Offer Price or that trading of the Company’s stock will actively grow at the IDX where the Shares are listed.
168
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