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Indonesian Shipbuilding Industry

Much of Indonesia's navy consists of aging castoffs from Western or Soviet bloc navies. Given the cost of new ships, Indonesia has opted in most cases for domestically built ships. In contrast to powerhouses like Vietnam, the Phillipines, and Singapore, which have world class top ranked shipbuilding industries, the Indonesian shipbuilding industry is relatiely undeveloped - this despite the fact that the Indonesian economy outranks that of every other country in the region, save China, Japan and India. Until recently, domestic production has largely consisted of patrol craft of no more than a few hundred tons. Recent exceptions were the final two Makassar class ships which were built at the PT PAL shipyards in Surabaya, medium sized amphibious ships, and underway replinishment tankers, and efforts are ongoing to transfer the capability to build small frigate sized vessels to the domestic naval shipbuilding industry.

As the world’s largest archipelago nation, Indonesia requires an extensive and well-developed maritime sector. In 2001, Indonesia has a port system comprising more than 1,800 ports, of which approximately two-thirds are “special ports”, used for the most part by individual industries, such as the petroleum industry, the fertilizer industry, the timber and wood products industry, the cement industry, and various mining industries. Approximately 100 ports are designated as “commercial ports”. Indonesia does not have a port that can attract substantial levels of direct transoceanic services. The port of Singapore serves as Indonesia’s principal port of transshipment. Transshipment at Singapore includes virtually all of Indonesia’s containerized and other general cargo exports and imports in trade with Europe and North and South America, and nearly half of Indonesia’s Intra-Asia trade as well.

The Government distorts the domestic cargo service and Singapore feeder service markets by providing vessels free of charge to the public shipping company Djakarta Lloyd. That is, it is difficult for other shipping lines to compete head-to-head with a company that can undercut their cargo tariffs, since the company had no charter costs or vessel purchase debt servicing to cover. The Government also provides passenger and RORO vessels free of charge to the two public companies that provide most of the sea transport passenger services in Indonesia, PT. PELNI and PT ASDP. On most of its passenger service routes, PELNI cannot fully meet demand, and its vessels are regularly and considerably overloaded.

The Indonesian Government is concerned about the extent of use of foreign-flag vessels in inter-island shipping. IPERINDO (Indonesian Association of Shipbuilding" Companies) was against the import of second hand vessels. The origin of the vessel chartering “problem” is government policy in the 1980s. The government first required, in 1984, that all vessels of 25 years or older be retired from service and scrapped. At least one shipping company had to retire its entire fleet of more than ten vessels. As a boost to the Indonesian shipbuilding industry, the government also forbade that vessels under a certain size (either 6,000 GRT or DWT) be imported. The shipbuilding industry, however, was only able to produce vessels at 2-to-3 times the cost of available second-hand vessels on the world market. This set of circumstances tended to contract the Indonesian-flag fleet.

Domestic shipping companies can acquire new vessels from domestic shipyards. The foreign exchange cost represents in the range of 50-55 percent of the purchase price, but the purchase price is currently much higher than in the cases of vessel acquisition opportunities offered by foreign sellers. Thus, the foreign exchange outflow effect of the foreign and local purchase options is roughly of the same magnitude. In the long term, the Indonesian shipbuilding industry might be able to substantially reduce the foreign content of vessels built in Indonesia, and bring down the relative price as well. For at least another decade, however, Indonesia has no real option for avoiding a high foreign exchange bill where the combined total cost of ship purchases, ship charters, and payments to foreign shipping lines is concerned.

In the early 1990s the Indonesian shipbuilding industry experienced a real boom in orders for ships, both within Indonesia as well as from foreign sources. This situation showed that the national shipbuilding industry has won national as well as international attention. In 1990 many foreign countries ordered ships to be built in Indonesia, including, among others, Sweden, which ordered two trailer roll-on/roll-off ships; Singapore, which ordered two tugs; and Iran, which ordered six tugs. The world shipbuilding market is rather large: annual requirements for shipping space amounted to 34 million tons. Indonesia also needed many ships to handle the recent increase in the movement of freight. Indeed, the shortage of shipping within Indonesia during the decade of the 1980's has not yet been met.

Indonesian commercial shipping companies imported ships, because the price of ships in foreign countries, particularly in China, was low, compared with the price of ships in Indonesia. In China the cost of a ship was $1,200 per ton, while in Indonesia the cost reached $1,900 per ton. What was pushing up the cost of ships produced in Indonesia is the system for handling the import of components and their marketing through a very long distribution network. That is, everything must pass through third parties, so that the price of components and ships is high.

Indonesia’s 2010 Law No. 17 on Shipping requires all vessels operating in Indonesian waters to be Indonesian flagged. However, the Indonesian shipbuilding industry does not have the capacity to build the variety of specialty ships its economy requires and is unlikely to have such capacity in the near to medium term. Full implementation of the law would be particularly problematic for foreign investors in Indonesia’s energy and telecommunications sector, which would no longer be permitted to bring in the sophisticated rigs and specialized vessels needed to develop large upstream projects. In response to concerns raised by the United States and others, the Ministry of Transportation issued Regulation No. 22/2011 allowing certain classes of non-transportation vessels to be eligible for a three-month renewable waiver from the domestic flagged vessel requirements when there is no suitable Indonesian-flagged vessel available. The three-month waivers are often not long enough to cover the duration of a project, adding to investor uncertainty.

  • PT Kodja Bahari
  • PT Dok & Perkapalan Kodja Bahari
    PT Kodja Bahari Dock & Shipping<

    PT Kodja Bahari Shipping & Doc (Persero) was founded in 1990 is a combination of four (4) an integrated shipbuilding company to improve performance. Companies that join are:

    • PT. Dok & Shipping Tanjung Priok (Persero) which was established in 1891
    • PT Kodja (Persero) which was established in 1964
    • Nautical Lamp-PT. (Persero) was established in 1964
    • Shipyard PT. Dok & Indonesia (Persero) which was established in 1964
    four (4) shipping companies merged into one company under the name of PT Kodja Bahari Shipping & Doc (DKB). A merger in 1990 was aimed at consolidating the synergy between shipyards, improving productivity and effectiveness. The corporate structure is composed of four (4) units of shipyards and Jakarta and six (6) branches with details as follows:
  • Dock Unit Jakarta I
  • Unit Shipyard Jakarta II
  • Dock Unit Jakarta III
  • Paliat-Building Units
  • Sabang Branch
  • Branches Of Palembang
  • Banjarmasin Branch
  • Cirebon Branches
  • Semarang Branch

    On 15 November 2012 Director of DKB, Mr Riry Seried Jetta delivering thanks to the Ministry of Defense of the REPUBLIC believes the DKB to build two units Kapal Angkut Tank [Tank Transport Ships] AT-I & AT-II. On November 14, 2012, was held Ceremonial events Keel Laying of Tank Transports (AT-I & AT-II) for Defense Ministry Orders RI held at DKB Shipyard II from Jakarta. Attending the event were officials of the Ministry of defence of the Republic of Indonesia and the INDONESIAN police headquarters-AL Kapuskon Baranahan, among others, Kadisadal, Kadisenlekal, Kadismatal, directors BKI, Harbour, Commissioner and Board of Directors of DKB and its staff and a number of other invited guests.

    The event marked the Laying Keel with keystrokes by Kapuskon Baranahan, Mr V. TNI Agus Purnomo accompanied by directors of DKB Wulan. This was followed by the signing of BA Keel Laying is carried out by a representative of the Ministry of defence, the Board of Directors and the Board of Directors of DKB BKI.

    In his speech the President Director of DKB, Mr Riry Seried Jetta delivering thanks to the Ministry of defence of the REPUBLIC of INDONESIA has been a member of trust to the DKB to build two units Carrier Tanks, delivered the second ship that according to the contract must be completed for 22 months, and explained that the pattern of development of the ships using Single Multiyard Construction Method of Hull Construction of Integrated System with Outfitting & Painting (IHOP). Where the execution of the construction was done in three Shipyards DKB Jakarta which Dock I, II and IV Dock Dock which is done in parallel.

    Construction Progress AT this moment to Ship-I had reached 25,27% and ship AT-II reached 27,20%. On that occasion the representatives of the Defense Ministry have been made in this Kapuskon RI Baranahan also delivered a speech at the intinnya request that both ships were completed according to the time schedule and technical specifications as well as the specified quality.

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