Investment in Indonesian Shipyards Dries Up in 2015
Jakarta. Slowing economic growth and a sluggish bureaucracy have been blamed for delaying investment in the country's shipyard industry this year.
"Indonesia's shipbuilding industry needs investments to the tune of Rp 20-30 trillion ($1.5-2.3 billion) but we haven't seen any new investment so far this year," said Hasbi Assidiq Syamsuddin, director of the maritime, aerospace and defense equipment bureau at the Ministry of Industry.
Indonesia Shipbuilding and Offshore Association (Iperindo) Chair Eddy Kurniawan Logam said further investment in the sector was unlikely this year because of the slowing economy.
In the first quarter of 2015, the Indonesian economy expanded at its slowest rate in five years — 4.7 percent — due to weak commodity prices and slackening export demand. In turn, shipping companies have responded by holding off new ship orders and shipyards have little incentive to build more dry docks.
The government now expects a 5.4 percent growth rate this year, down from the 5.7 percent assumed in the 2015 Revised State Budget.
In 2014, the government issued several policies to boost investment in the shipyard industry, including exemptions from value-added and import taxes for components, as well as tax allowances.
Still, the government has not yet finalized a list of ship components that will be eligible for import tax exemptions, Hasbi said. This will further delay the implementation of the tax-exemption incentives.
Hasbi added the government expected up to Rp 10 trillion ($760 million) of foreign investments in the shipyard industry next year.
Investor Daily
Tags: Keywords: