Demand for vessels to support upstream oil and gas sector to rise

The demand for vessels that will be used to support offshore oil and gas activities will increase in line with a rise in various offshore activities, such as explorations, survey, etc, the head of National Shipowners Association (INSA), Carmelita Hartoto, said.

Carmelita was quoted by Kompas.com as saying that the demand for vessels to be used in upstream oil and gas activities through 2015 will reach 235 units. While, domestic shipyards would only able to meet about 20-30 percent of the demand. This is partly supported by the implementation of the cabotage policy ? a maritime term that prohibits foreign ships or foreign-flagged vessels to carry domestic cargo.

Carmelita said one of the problem behind poor development of domestic shipping industry is high tax and expensive price of vessel components. She said tax burden contributes about 17 percent to the cost of domestic vessel production, not to mention the imposition of 10 percent tax on imported vessel components.

Therefore, she called for the government to provide incentives to domestic shipyard sector. The positive development of shipyard industry will also benefit vessel owners as they can purchase vessels from domestic producers or for repairing and overhaul purposes. (roffie)