Transportation Minister Reveals Banks Hesitant to Finance Ship Purchases, Operators Opt for Used Japanese Ships

Proposal for a dedicated financing institution

Dudy also responded to proposals to establish a specialized financing institution for transportation equipment procurement.

He said the issue with ship financing is not the number of banks available but the ability to provide financing with long tenors.

“There are many banks, but who is willing to finance for a long period?” the Minister remarked.

Dudy added that special financing schemes for the transportation sector have been extensively studied. However, the large capital requirements and lengthy financing tenors make the sector difficult for banks to finance.

“I’m sure many studies have been conducted, but they are not bankable for them because the capital needed is very large,” he said.

According to Dudy, Indonesia’s banking conditions differ from other countries. The domestic banking funding structure limits the ability to provide long-term financing.

“Our banking system still depends on funding sources, including foreign loans, which generally have short tenors,” Dudy emphasized.