Shipping Industry Hampered by High Costs
In a recent statement to Kompas, PT PAL Indonesia’s President Director Kaharuddin Djenod unveiled a significant opportunity for the national shipbuilding industry. Djenod highlighted the potential to secure shipbuilding orders exceeding Rp 1,500 trillion over the coming decade. To capitalize on this potential windfall, he emphasized the critical need to bolster production capacity, financing, and the domestic supply chain for components.
Potential Demand Spanning Various Sectors
The projected demand for shipbuilding services stems from the government and Danantara’s requirements across multiple sectors, including defense and security, food, energy, transportation, and connectivity. Djenod outlined the diverse needs, which encompass over 200 surface vessels and submarines for the defense sector, more than 20,000 fishing vessels and cargo ships for the food sector, nearly 600 vessels and floating facilities in the energy domain, and around 150 ferries and passenger ships.
Current Projects and Growing Contract Value
At present, PT PAL is actively engaged in the construction of various vessels, such as the Frigate Merah Putih, the Scorpène Evolved submarine, and several other projects for international clients. Notably, the contract value in hand has surged from IDR 2.5 trillion to nearly IDR 50 trillion. Djenod highlighted the efficiency gains achieved through modular production techniques, significantly reducing construction timelines for large warships and merchant vessels alike.
Challenges and Opportunities for Domestic Shipyards
While the potential for growth in the national shipbuilding industry is substantial, domestic shipyards face stiff competition from global players in countries like China, South Korea, and Japan. Djenod pointed out the advantages enjoyed by ship manufacturers in these countries, including robust financial support, export credits, government incentives, and advanced supplier ecosystems. Drawing a lesson from South Korea’s strategic industrial policies post the Asian crisis of the late 1990s, Djenod emphasized the importance of decisive industrial policy direction in fostering a competitive shipbuilding sector.
Call for Collaborative Support
In conclusion, Djenod stressed the need for collective efforts to enhance the competitiveness of Indonesia’s maritime industry. While PT PAL boasts significant capabilities, Djenod emphasized the indispensable role of various stakeholders in supporting the industry’s growth. He underscored the government’s pivotal role as a regulator and policy maker, providing the necessary certainty and continuity for projects to thrive.
As the national shipbuilding industry stands on the cusp of a transformative period, strategic collaborations and concerted efforts are vital to seize the abundant opportunities on the horizon. Indonesian Shipbuilding Industry Grows with Planned Long-Term Needs and Orders
In the bustling world of shipbuilding, Indonesia’s PT PAL has been making strides to strengthen the local industry by enhancing efficiency and localizing components. With the existence of planned long-term needs and orders, the shipbuilding industry and suppliers will have a foundation to invest, increase capacity, and develop technology.
PT PAL’s efforts include strengthening local suppliers through component mapping, certification assistance, and working capital support. For projects like the Merah Putih Frigate, nearly half of the components are now sourced domestically. However, some crucial elements such as main engines, gearboxes, generators, and weapons systems still rely on imports.
To further boost efficiency, PT PAL is also focusing on developing modular production and digitalization of shipyards. This initiative has significantly reduced the dry dock usage time for large ships from almost two years to approximately eight months.
In a strategic move to increase capacity, PT PAL is consolidating five shipyard assets across different regions by 2028. This consolidation, backed by an investment of around Rp 3 trillion, aims to revitalize the industry’s capacity to absorb orders, strengthen the supply chain, and increase the utilization of local components.
Moreover, the revitalization of shipyards in Surabaya, with an investment of approximately Rp 2 trillion, is on the horizon. These measures are expected to enhance the industry’s capacity and contribute to meeting the growing demand for vessels.
Indonesia currently boasts a vast maritime network, with 636 seaports and 132 crossing ports supported by various ship routes and a substantial fleet of passenger and cargo ships. However, the national fleet requirement is projected to reach 15,105 vessels by 2029, highlighting the need for further expansion and modernization.
Minister of Transportation Dudy Purwagandhi emphasized the importance of regulations that support industrial growth while ensuring safety, efficiency, and competitiveness in meeting the national fleet needs.
Despite the progress, challenges remain. Issues like supply chain disruptions, high costs of materials, and financing constraints pose hurdles for shipbuilding companies. However, with a concerted effort to address these challenges, Indonesia’s shipbuilding industry is poised for growth and success in the years to come. National Shipbuilding Industry in Indonesia Faces Challenges Despite Potential Orders Worth Rp 1,500 Trillion
JAKARTA, KOMPAS — The national shipbuilding industry in Indonesia has the potential to secure shipbuilding orders worth more than Rp 1,500 trillion over the next ten years. However, despite this promising opportunity, the sector faces various challenges that hinder its growth and competitiveness.
PT PAL Indonesia President Director Kaharuddin Djenod emphasized the need to strengthen production capacity, financing, and the supply chain of domestic components to seize the potential demand. Djenod revealed that the orders are expected to cover various sectors such as defense and security, food, energy, and transportation, with more than 200 surface vessels and submarines, over 20,000 fishing vessels and cargo ships, nearly 600 vessels and floating facilities in the energy sector, and around 150 ferries and passenger ships.
The current projects undertaken by PT PAL include the construction of Frigate Merah Putih, Scorpène Evolved submarines, Landing Platform Docks for the United Arab Emirates and the Philippines, as well as the Barge Mounted Power Plant and modernization of existing ships. The company has seen a significant increase in contract value, from IDR 2.5 trillion to nearly IDR 50 trillion.
Despite the potential for growth, the national shipbuilding industry is facing challenges such as high loan interest rates, regulatory disharmony, and low domestic market confidence. This has added to the cost burden of shipbuilding, especially when companies have to import key components. Anita, a sector expert, highlighted the need to address the high financing costs, limited bank guarantees, significant working capital needs, and relatively uncompetitive production costs faced by domestic shipyards.
Djenod stressed the importance of strengthening domestic shipyards not only to meet the national fleet’s needs but also to achieve technological independence and create economic value. He mentioned that the construction of a large ship can employ around 300-400 workers at the shipyard, stimulating various industries such as steel, machinery, electronics, logistics, and micro, small, and medium enterprises.
To enhance the competitiveness of Indonesia’s maritime industry as a whole, Djenod emphasized the need for support from various stakeholders, including the government. He noted that long-term low-interest financing, export credits, government incentives, and a mature supplier and technology ecosystem have contributed to the success of ship manufacturers in countries like China, South Korea, and Japan.
In conclusion, while the national shipbuilding industry in Indonesia holds immense potential with orders worth Rp 1,500 trillion on the horizon, addressing the challenges faced by domestic shipyards is crucial to realizing this growth and competing with global players in the shipbuilding market. Indonesian Shipbuilding Industry Gears Up for Increased Capacity and Technology Development
In a bid to meet the growing demand for vessels and strengthen the domestic shipbuilding industry, PT PAL Indonesia, a state-owned shipyard, is focusing on enhancing local suppliers, increasing capacity, and investing in technology.
Local Supplier Strengthening Efforts
PT PAL is actively working to bolster local suppliers through component mapping, certification assistance, and providing working capital support. These efforts have already shown results, with nearly half of the components for the Merah Putih Frigate project being sourced domestically. However, certain crucial components like main engines, gearboxes, generators, and weapons systems still rely on imports.
Technological Advancements and Capacity Increase
To improve efficiency, PT PAL is implementing modular production and digitalization of shipyards. This has significantly reduced the dry dock usage time for large ships from almost two years to approximately eight months. Furthermore, the company is consolidating its shipyard assets in five locations gradually until around 2028, with an estimated investment of Rp 3 trillion. Additionally, the revitalization of shipyards in Surabaya is also in the pipeline with an investment of approximately Rp 2 trillion.
Challenges and Opportunities
The Indonesian government has projected a national fleet requirement of 15,105 vessels by 2029, creating a significant opportunity for the domestic shipbuilding industry. However, challenges such as supply chain issues, financing constraints, and the need for specialized materials still pose hurdles for shipbuilding companies. Anita Puji Utami, Chairperson of the Indonesian Ship and Offshore Industry Association (Iperindo), emphasized that while certain ship materials can be produced domestically, the industry still heavily relies on imports for critical components like main engines, gearboxes, and propellers.
Looking Ahead
With a concerted effort to strengthen local suppliers, invest in technology, and address financing challenges, the Indonesian shipbuilding industry is poised for growth. By focusing on enhancing capacity, developing technology, and fostering a robust supply chain, Indonesia aims to meet its national fleet requirements and position itself as a key player in the global shipbuilding market. Title: Challenges Faced by the Shipbuilding Industry Highlighted by Expert
In a recent interview, Anita, a renowned naval architect, shed light on the challenges faced by the shipbuilding industry. According to her, this sector is grappling with high loan interest rates due to being perceived as high-risk. This situation creates an additional financial burden on shipbuilding companies, particularly when they have to import crucial components. Furthermore, regulatory inconsistencies could further escalate operational and production costs for the industry.
Low confidence in the domestic market was also emphasized by Anita in relation to the national shipbuilding industry. Despite advancements in production capabilities for various materials and components, the lack of trust from local markets poses a significant hurdle for the industry’s growth and sustainability.
