Indonesian shipbuilders lack capital

According to the Jakarta Post, high borrowing costs, a lack of available funds and the inability of local firms to produce the right materials are hampering the expansion of the Indonesian shipbuilding industry. This comes at a time when builders have the potential to benefit from new cabotage regulations requiring local ownership of vessels trading in Indonesian waters.
More than 600 new vessels may be needed to meet demand after the regulatory changes come into effect this year.
Harsusanto, president of PT Pal Indonesia, one of four main shipbuilders in Indonesia, said the industry required around IDR5.7 trillion (US$625 million) to increase capacity and improve its global competitiveness. He stated, however, that high local bank interest rates made production increases difficult.
Another problem facing the industry is that around 75 percent of basic shipbuilding materials are imported, and state-owned steel maker PT Krakatau Steel is still unable to produce the necessary 50-millimetre steel plates, which continue to be imported from China.