Indonesia cargo ships left idle amid weak economy

With approximately half of the nation’s cargo ships left to sit idle against a backdrop of weak economic activity, ship-owners have beseeched the Indonesian government to expedite spending and revive the shipping industry.

Domestic ship utilization has been low, with 60 percent of coal-carrying ships and 40 percent of general cargo ships currently idle, according to data from the influential Indonesian National Shipowners Association (INSA).

INSA chairwoman Carmelita Hartoto said that the shipping industry could be jump-started by tapping infrastructure development, which is a top priority for President Joko “Jokowi” Widodo’s administration.

“We urge the government to spend more on infrastructure, such as power plant development, ports, roads and ships,” Carmelita said recently, arguing that infrastructure construction will enable ships to carry construction materials, such as cement and steel.

The government has planned to construct 1,000 kilometers of new toll roads and to build sufficient power plants to provide an additional 35,000 megawatts (MW) worth of electricity. The Transportation Ministry furnished 91 ports across the country with investment reaching Rp4.26 trillion (US$317 million) over the past few years.

However, according to Carmelita, the government, especially the Transportation Ministry, has not acted fast enough.

Indonesia’s economic growth slowed to a six-year low of 4.79 percent last year due to an export slump and weak purchasing power. High hopes have been pinned on government spending to drive growth, based on an expectation that economic growth will reach 5.3 percent this year.

As of March, only 14.6 percent of the overall Rp1.3 quadrillion set aside for central government spending has been used, compared to 14.9 percent last year. Government spending has historically been slow at the beginning of the year and tends to speed up approaching year-end.

The data was confirmed by then newly appointed director general for sea transportation Antonius Tonny Budiono, who stated that the directorate general itself had only spent 20 percent of its budget as of May.

He admitted that it was still far from the 50 percent mid-year disbursement target, in accordance with an instruction from Transportation Minister Ignasius Jonan.

The ministry was allocated Rp 48.5 trillion in the 2016 state budget, down from Rp 65 trillion in the revised 2015 state budget.

“As of May, the disbursement was higher than 2015, when it had been below 20 percent,” he said, adding that this was due to the non-binding early bidding in October and November last year, emphasizing that construction progress had started in January.

The disbursement was focused on increasing port facilities and ships navigation tools, among other things.

Going forward, the ministry plans to build 100 new ships this year, adding to the 180 new ships, including navigation vessels and patrol vessels that were ordered for construction starting from last year.