The government is preparing a series of strategic incentives to revive the national shipbuilding industry, ranging from import duty exemptions on components to long-term financing schemes with tenors of up to 30 years.

Chairman of the Advisory Board of the Indonesian Chamber of Commerce and Industry (Kadin), Hashim Djojohadikusumo, said revitalising the shipbuilding and shipping industries is crucial, as the sector is considered capable of driving economic growth while absorbing a large workforce.

“The shipbuilding industry anywhere in the world is highly labour-intensive. A large number of workers gain employment, both in shipyards and in the shipping industry,” Hashim said in Central Jakarta on Tuesday, 10 February.

Hashim added that several government institutions are involved in the plan, including the Ministry of Finance, the Ministry of Trade, and the Ministry of Industry.

“These are government bodies that are directly related to the shipbuilding and shipping industries,” he said.

Hashim revealed that a shared understanding has been reached between the government and the business community regarding the need for incentives for shipyard operators.

“What kind of facilities are being discussed? Import duties could be reduced to 0% for many components. New ships ordered in the future will also be eligible for incentives,” he said.

In addition to fiscal incentives, discussions have also covered financing schemes. Ship investments require large capital outlays and have long operational lifespans, making more flexible credit tenors necessary.

Long-Term Financing Scheme

“It was conveyed earlier that there are domestic loan schemes with longer tenors, from seven years to 15 years, 20 years, and even 30 years. This will be discussed further with Danantara and the Minister of Finance,” Hashim said.

Kadin views financing support as a key factor in enabling domestic shipyards to compete with imported products, which have so far been cheaper and faster to produce.

However, Hashim has not yet specified when these plans will be implemented. The government is currently in the process of formulating a roadmap.

Kadin Chairman Anindya Bakrie said strengthening the shipbuilding industry requires consistent affirmative policies, similar to those implemented by Japan, South Korea, and China.

“Earlier, it was evident that the Minister of Finance is keen to take a supportive stance through policy measures, and the Ministry of Industry will develop a roadmap together with industry players,” he said.

Kadin has also proposed active involvement in government task forces to help resolve various bottlenecks in the field.

“We want to help with debottlenecking in the business sector. Essentially, entrepreneurs want to grow, develop, and create jobs,” Anindya said.

This article is published in partnership with Katadata 

Original article here