Business operating in the maritime industries are expected to enjoy easier access to capital next year as authorities predict a near-doubling of bank loans in the sector, thanks to robust growth and a crackdown on illegal fishing.
The Financial Services Authority (OJK) targets to increase next year’s committed loans to Rp 10 trillion (US$713.50 billion), nearly twice this year’s committed loans of Rp 5.37 trillion.
“I think it [the target] is double, since the financial industry is more confident on the maritime sector now”, Slamet Edy Purnomo, the OJK’s permit and banking information head, said in Tuesday at a discussion in Jakarta hosted by business daily Kontan.
The maritime sector showed improvements in fish production, Edy said, adding that “the government is also developing infrastructure to support distribution.” In May, the OJK launched a social safety program called Jaring to help fishermen get access to low-interest loans. So far, eight banks are participating in the program.
“We expect 14 banks to take part next year,” said Edy, who also chairs in the program. The participating banks are Bank Negara Indonesia (BNI), Bank Mandiri, Bank Rakyat Indonesia (BRI), Bank Tabungan Pensiunan Nasional, Bank Danamon Indonesia, Bank Permata, Bank Bukopin, and BPD Sulselbar.
As of September this year, those banks channeled Rp Rp 4,41 trillion to maritime industries, or 82 percent of the Rp 5.37 trillion committed for this year.
According to Edy, the lenders set to join the scheme next year are Bank Central Asia (BCA), Bank Maybank Indonesia, CIMB Niaga, Bank Sinarmas, BPD Jawa Timur and one unnamed non-bank institution.
The OJK expressed optimism that the program would perform better next year based on higher loan growth and an improved performance of the maritime industry this year. Credit funding for maritime and fishery businesses grew by an average 9.5 percent this year, outpacing national private-sector loan growth of 7.7 percent.
As of September this year, non performing loan (NPL) in the sector stood at just 2.1%, compared to an average NPL across all industries of 2.7 percent.
Indonesian fishers have caught more fish this yearm thanks to the government’s tough stance on illegal, unreported and unregulated (IUU) fishing. Since the beginning of her tenure as minister, Maritime Affairs and Fisheries Minister Susi Pudjiastuti has taken drastic measures to reform Indonesia’s fisheries industry. She introduced a moratorium on all foreign built fishing vessels, enabling the ministry to review 1,132 fishing permits and ascertain whether they are subject ti misuse.
The audit found that all 1.132 fishing vessels had in some way violated applicable laws and regulations, with the most common violation being license duplication. As a result, the ministry revoked 291 permits, suspended 61 and issued notices for another 95 licences.
“After the ‘war’ against IUU fishing, we estimate that our fish catch potential has increased to 10 million tons a year from 7.3 million tons recorded in 2013 and 6.5 million tons in 2011,” the ministry’s fishing port director Syafril Fauzi said.
The ministry is now focusing on the maritime supply chain to improve the distribution of fish. “The problem now is not the lack of fish but a lack of markets to absorb the supply and better logistics and cold storage to keep fish fresh.”
Indonesian Fish Canneries Association Chairman Ady Surya shares that concern. The group has seen canned fish exports frop by more than 50 percent due to a lack of equality.
“Yes, there is a lot of fish now, but the quality is not good, because we lack cold storage [facilites] near fishing ports,” he said.