LOCAL CONTENT & REGULATORY CHANGES IN INDONESIA By Sugiman Layanto - Asian OSJ Conference 8-9 September 2015

Transcription

1 LOCAL CONTENT & REGULATORY CHANGES IN INDONESIA By Sugiman Layanto - Asian OSJ Conference 8-9 September 2015

2 WINTERMAR OFFSHORE MARINE GROUP MILESTONES 1998 ISM Certified by ABS 2001 ISM Certified by BKI 2004 ISPS Compliance 2010 ISO 9001:2008 certified by LRQA (accredited by UKAS & ANAB) 2011 ISO 14001:2004 & OHSAS 18001:2007 certified by LRQA (accredited by UKAS) Ship management and ship owning Specialize in offshore marine vessels Established in Indonesia on 24 September 1970 Present fleet size of 78 vessels Various sizes and power ranging from platform supply vessels, anchor handlers, fast utility vessels, diving support vessels, utility vessels, crew boats, landing crafts, tugboats to barges.

3 CabotageRegulations (PM 10/2014) Closed to all non Indonesian flagged vessels except for all types of rigs. Ministry of Transportation may grant permission for certain types of vessels that are not available in Indonesia. Letter of recommendation from (INSA) shipping association is required for the above application.

4 Contractual Regulation Flow Shipowner Agent / Charterer End User / Oil Company Tax = 2.64 % if foreign entity has a registered Indonesian tax number (BUT) Tax = 20% for foreign entity without Indonesian tax number Tax = 1.2% for Indonesian flagged vessel Tax = 2.64% for foreign flagged vessel Foreign Entity Indonesian Registered Entity

5 Local Content Level (LCL) has been declining Source: Special Task Force for Upstream Oil and Gas

6 Increased Local Content Requirements for Marine Vessels Various government departments have issued new regulations / new amendments to promote local content Special Task Force for Upstream Oil and Gas (SKKMigas) PTK-007/SKKO0000/2015/S0 Book 2 Revision 03 Decree of the Minister of Energy and Mineral Resources No 15 of 2013 on The Use of Domestic Products in the Upstream Oil and Gas Business Activity Decree of the Minister of Industry No 02/M-IND/PER/1/2014 on Guidelines for Increased Use of Domestic Products in the Procurement of Government Goods / Services Decree of the Minister of Industry No 03/M-IND/PER/1/2014 on Guidelines for Increased Use of Domestic Products in the Procurement of Government Goods / Services Not Financed with the State Budget / Regional Budget Presidential Regulation No 70 of 2012 on Second Amendment to the Presidential Regulation No. 54 of 2010 on Procurement of Government Goods / Services

7 New Local Content Calculation! Contracts more than USD 5 million in value will be automatically audited for local content by an independent surveyor Source: Decree of the Minister of Energy and Mineral Resources No 15 of 2013 Description OLD PTK 007 Rev 02 Indonesian flagged vessels LCLvalue (goods & services) 100% Description NEW PTK 007 Rev03 Indonesian flagged vessels built in Indonesia Indonesianflagged vesselsbuilt outside Indonesia LCL value (goods& services) 100% 75% Source: SKKMigasPTK-007/SKKO0000/2015/S0 Book 2 Revision 03 came into force in April 2015.

8 New Local Content Calculation Local Company 51% Indonesian ownership National Company Indonesian registered company majority foreign owned Foreign Company Non Indonesian Registered Entity Equipment Indonesian Built Foreign Built Owner OLD PTK 007 Rev 02 LCL value Owner NEW PTK 007 Rev03 LCL value Local company 100% Local company 100% National company 75% National company 75% Foreign company 50% Local company 100% Local company 75% National company/foreign Company 0% National company 50% Foreign company 0% Source: SKKMigasPTK-007/SKKO0000/2015/S0 Book 2 Revision 03 came into force in April 2015.

9 Penalty for overstating local content Financial Sanction Penalty for Violation Administrative Sanction Source: SKKMigas PTK-007/SKKO0000/2015/S0 Book 2 Revision

10 LOCAL CONTENT PRICE PREFERENCE 7.5 % for services LOCAL COMPONENT LOCAL CONTENT LEVEL PREFERENCE TENDER AWARD RANKING LEVEL PRICE EVALUATION O E

11 Incorrect Assessment of Local Content Yellow Warning letter applicable for 6 months Administrative Sanction Red 2 nd Black Source: SKKMigas PTK-007/SKKO0000/2015/S0 Book 2 Revision Prohibited from participating in any tenders held by the involved PSC for a year Black Prohibited from participating in any tenders held by the involved PSC for 2 years Prohibited from participating in any tenders held by any PSC for a year

12 VESSEL SERVICES progressive target of LOCAL CONTENT SHORT TERM ( ) MEDIUM TERM ( ) LONG TERM ( ) 75% 85% 95%

13 Cabotage: crew + flag + built (?) Cabotage- Only Indonesian flagged vessels can carry goods and passengers from point to point within Indonesian waters. PM 10/2014 -Extension of cabotage deadline for certain vessels. Presidential Decree No. 39 Year Supporting national companies by restricting the activities of the company especially in the service of foreign oil and gas activities Indonesian flag Indonesian shipping company Cabotage principles How about Indonesian built Indonesian crew? Next phase = cabotageprinciples Indonesian built Is it coming?

14 Challenges Faced by Domestic Shipowners Building Vessels in Indonesia Local shipbuilding industry, with the exception of yards in Batam, is NOT ready to meet the demand for more advanced vessels Bad track record of late delivery of vessels Higher vessel cost Local banks high interest rates

15 Opportunities for Shipbuilders but NOT Shipowners Market s demand for younger highspec OSVs Weaknesses of the local shipyard industry Majority foreign ownership allowed Positive regulatory environment Opportunities for shipbuilders to establish Joint Ventures in Indonesia Government plans to build 100 vessels the next 3 years

16 Thank you!