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Indonesia mulls over incentives to boost national shipping dock industry

Xinhua, June 24, 2015 Adjust font size:

Indonesia's Investment Coordination Agency (BKPM) mulled to provide tax allowance incentive for foreign firms planning to invest in the country's shipping dock industry, saying that the policy was related to President Joko Widodo's plan to stop acquisition of ships from foreign countries.

According to BKPM Chairman Franky Sibarani, Indonesia has received pledges of five foreign shipping firms from China, South Korea, Japan and Australia to invest in national shipping industry with a total value of 9.34 billion U.S. Dollars.

The pledges were received from October last year to May this year, Franky said.

"The moratorium policy has a great consequence as there were more than 5,000 foreign ships operating in Indonesia at present. This would be the right time to fill the domestic ship demands for national producers," Franky said here on Wednesday.

Citing results of a survey on shipping dock industry in the region carried out by a Japanese agency, he said that Indonesia's shipping dock industry was highly competitive compared to those operating in the region.

Indonesia's high competitiveness in the industry lies in its labor cost, land leasing, procurement and electricity cost advantages compared to those in Laos, Myanmar and Vietnam, Franky cited the results of the survey.

He said that the tax allowances would be provided for the production of various ships including ferry ships, tankers, sailed ships and fishing boats using steel, fiber glass and woods.

"We believe that the tax allowance and moratorium policy would make Indonesia an interesting place for shipping investors to invest their business here," he said.

Franky said the production of national shipping dock takes only 40 percent of their actual production capacity due to massive orders on foreign ships to operate in national waters.

The tax allowance policy was also expected to boost up national ship production which now only slightly supplies 0.3 percent to global ship market at the moment, he added.

He furthermore said that the tax allowance was also eventually expected to increase adoption of domestic components in the industry which now only uses 30 percent for their productions with the larger portion of 70 percent were now still imported from foreign countries.

Indonesia has prepared Tanngamus in Lampung province and Lamongan in East Java province to accommodate shipping dock yard industry areas, but investors are eyeing areas in Gresik, East Java, Bitung in North Sulawesi and Makassar in South Sulawesi province as their investment sites.

President Widodo said on Monday that he would issue a decree that bans state-run firms and foreign firms operating in Indonesia to import ships from foreign countries as he believes that national shipping docks were capable to supply the needs of ship for domestic market. Endi