Indonesia: Ministry to promote ship component industry abroad

The Industry Ministry plans to reinvigorate Indonesia’s ship component industry with a roadshow that is scheduled to meet potential investors from several East Asian countries, including Japan, China and South Korea.

The ministry’s director general for transportation, telecommunications and IT industries, Budi Darmadi, said on Thursday that a strong domestic ship component industry was needed to improve the nation’s shipbuilding industry.
He said that the country’s shipbuilders were slower in assembling ships when compared to companies in other countries that also produced domestic ship components such as doors or windows.
“Our shipbuilders can assemble one ship every 18 months on average. But in South Korea, for instance, a ship only takes between 5 and 6 months to be assembled,” he told reporters at the ministry in Jakarta.
He added that to speed ship assembly, shipbuilders should concentrate on only assembling ships and let other companies produce the components. He said that spinning off the work would cut assembly time to less than a year.
Several companies from China and Korea had shown positive responses to engage with local businessmen to develop ship component industries, Budi said. He did not specify the companies’ names or the amount of their planned investments.
Indonesian Offshore Industry and Shipping Association (Iperindo) secretary-general Wing Wirjawan said Friday that the domestic ship component industry has failed to show progress due to a lack of incentives.
“The government has burdened ship component producers with high import duties on raw materials, ranging from 5 to 15 percent,” he said over the telephone.
He added that almost all shipbuilders in Indonesia imported components such as compressor pipes, machines and chains because it was cheaper than buying domestic components. This makes the country less appealing to investors, he said.
Wing said that the government should lift import duties on raw materials to help ship component makers reduce production costs and make sales prices more competitive. “This policy will potentially attract foreign investors.”
He said that if more ship components could be produced in the country, it would cut the time to assemble a ship, because the components would be easier and faster to get.
Industry Ministry M.S. Hidayat said in earlier report that he expected that the country’s shipbuilding industry would grow by 15 percent this year.