2013-10-13 12:06:19 - New Transportation market report from Business Monitor International: "Indonesia Shipping Report Q4 2013"
Reduction of Fuel Subsidies Will Lower Growth In Short Term
A key development in June has prompted BMI to revise its economic outlook for Indonesia this year. On June 22 the government raised the prices of subsidised premium petrol and diesel by 44.4% and 22.2% respectively. This led to an inflation spike (the annual rate of inflation rose to 8.6% in July) and to a tightening of monetary policy by Bank Indonesia (BI) which raised the benchmark interest rate by 25 basis points in June and by another 50bps in July. BMI's view is that both moves are a necessary and healthy response to some of the imbalances in the Indonesian economy. However, they will cool consumer demand and reduce economic
growth. Signs of a slowdown were already making themselves felt, with Q213 GDP growth decelerating to 5.8% year-on-year, down from 6.0% y-o-y in Q113. Political risk is also rising a little: the government of President Susilo Bambang Yudhoyono arguably should have tackled the costly fuel subsidies issue much earlier in its term, and now seems to be entering something of a policy paralysis prior to the 2014 general elections. As a result of all these factors we are reducing our GDP forecast for 2013 as a whole to 5.8% (down from 6.1% in our last quarterly shipping report). Given the underlying resilience of the Indonesian economy, we expect this to be only a transitory 'dip', with GDP recovering again to 6.0% in 2014 and 6.5% in 2015. Over the next five years annual GDP growth is set to average 6.2%, confirming the country's status as one of the top performers in Asia.
Full Report Details at
- www.fastmr.com/prod/689027_indonesia_shipping_report_q4_2013.asp ..
We have trimmed back our shipping and ports forecast to take account of slower GDP and foreign trade growth. On the medium to longer term we continue to think that the key to sustainable growth is investment in port infrastructure, including road and rail links in the hinterland areas. We are encouraged to see some evidence of progress on this front.
Headline Industry Data
* 2013 Tanjung Priok total tonnage forecast to grow 6.0% to 53.093mn tonnes, with average growth of 5.5% expected over our forecast period to 2017.
* 2013 Palembang total tonnage forecast to grow 5.9% to 12.403mn tonnes, with average growth of 4.3% over our forecast period.
* 2013 Tanjung Priok container throughput forecast to grow a strong 10.4% to 86.844mn twenty-foot equivalent units (TEUs), with average growth of 10.3% over our forecast period.
* 2013 Palembang container throughput forecast to grow 8.6% to 105,479 TEUs, with average growth of 6.5% over our forecast period.
* Indonesian foreign trade (exports + imports) expected to grow by 3.9% in real terms in 2013, down from 4.3% in 2012.
Key Industry Trends
Vegetable Oil Exporters Want New Ports: The Indonesian Vegetable Oil Refiners Association (GIMNI) has asked the government to build new seaports to handle rising commodity shipments as well as to eliminate additional expenses of some US$300mn attributed to port inefficiencies. The government needs to upgrade existing seaports as well as building a minimum of three new seaports equipped with special terminals for palm oil exports to enhance efficiency and establish the required capacity to handle future export volumes, according to a GIMNI spokesperson, Sahat Sinaga. Sinaga added that the new ports were preferably to be located in Mandailing Natal, North Sumatra; Pontianak, West Kalimantan; and Bitung, North Sulawesi, to easily supply palm oil output on each island.
Samudera Indonesia Posts Larger Losses In First Quarter: Samudera Indonesia registered a net loss of US$3.2mn in Q113, compared with a US$2.32mn loss in Q112. The fall recorded in the company's revenue was attributed to rising operating costs. The loss was also partly driven by an increase in the cost of fuel, the company's Chief Financial Officer Anwarsyah Batubara said. In the reported period, a sum of US$122.2mn was spent by Samudera Indonesia on costs of services. Meanwhile, the company is likely to reduce losses on business activities that witnessed low profit generation. Additionally, the company is to boost its focus on domestic-oriented business activities, including terminals and logistics, Batubara added.
New Oil Storage Facility Planned For Karimun Island: Commodity trader Gunvor Group and petroleum company Oiltanking have teamed up for the construction of a greenfield terminal, known as Oiltanking Karimun. The facility will be established at the island of Karimun, Indonesia because of its closeness to Jurong Island and to ship-to-ship operations off the coast. The facility, which will have an initial petroleum storage capacity of 760,000 cubic metres, has been designed to meet the petroleum storage needs of Greater Singapore. Under the terms of the partnership, Oiltanking will be accountable for managing and operating Oiltanking Karimun as an independent commercial storage facility. Gunvor will hold a minority stake and rent part of the capacity. The greenfield terminal is due to start operations by Q215.
Key Risks To Outlook
The main downside risk to our ports and shipping sector continues to be the possibility of renewed weakness in global credit markets, which might force a further tightening of interest rates at home. We believe Indonesia is particularly exposed to such a scenario. The authorities have relatively little room to manoeuvre in the face of tighter global credit conditions; this is because of the combination of persistent inflationary pressure at home and the weakness of the external accounts due to lower commodity earnings.
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