JAKARTA: Japan has offered a US$400 million (IDR3.4 trillion) loan to assist the development of Indonesia's domestic maritime shipping industry.The loan may be disbursed by October 2011 or after an agreement is sealed between Indonesia and Japan, said Soerjono, Director of Maritime, Aerospace and Military Defense Instrument at the Industry Ministry.The need to procure vessels to replace the aging ones within the next ten years is enormous in Indonesia, thus the domestic shipping industry must increase investment, Soerjono said. The industry has a significant shortage of funds to support investment.The government has earlier proposed Japan give US$150 million of low-interest loan to help spur investments in the industry.Indonesia will need a total 5,000 units of new and not-too-old vessels in the next ten years, requiring a total shipyard space of two million dead weight tonnage (DWT).In the meantime, Chairman of Indonesian National Ship Owners Association (INSA) Carmelita Hartoto said the association has been informed about the offered loan.She said that the shipping sector does require funds to accelerate vessels procurement program as mandated by the 2008 Shipping Law.Aging VesselsCarmelita, who is also head of marine transportation committee at Indonesian Chamber of Commerce and Industry (Kadin), said new vessels procurement is directed to replace old vessels currently amounting to 521 units.Such figure is from the study on public ship finance and shipping industry in March 2010.There are numerous domestic commercial vessels that are over 35 years, while domestic loads that must be carried by the Indonesian-flagged vessels continue to rise.According to Kadins projection, Indonesia requires around US$2.7 billion-US$3.38 billion to procure old and new vessels over the next few years.Those vessels are needed to replace old vessels and anticipate the growth of domestic loads.In 2010, the Indonesian-flagged vessels dominated domestic maritime transport, controlling 98.1% of the market, or equivalent to 303.1 million tons.The loan from Japan will be disbursed through banks or finance companies, which will then channel it to parties that procure vessels and build new shipyard space, an official who spoke on condition of anonymity told Bisnis.The source said the talks regarding this loan has been finalized thus the disbursement only awaits the government of Indonesia. (t02/msw)

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