Helping to make connections
SHIPBUILDING HAS BEEN THE CORNERSTONE OF DEVELOPMENT FOR THIS SCATTERED ARCHIPELAGO

ADWIN SURYOHADIPROJO President Director of Pal Indonesia

Ships are as essential to the development of Indonesia as highways, railroads and airlines were to the United States, says Adwin Suryohadiprojo, President Director of the country’s largest shipbuilding company, Pal Indonesia.
“If Indonesia is to grow, we need ships to connect the islands of the country, so that whatever economic activities are taking place they can be shared and used by a lot of people,” he says.
Pal Indonesia has also emerged as a significant force in overseas markets: about 40 percent of its output goes to export.

The company doesn’t have it all its own way in its own home market. Only about half the ships operating in Indonesia are actually registered in the country, and the company has to work hard to maintain its high profile in its own home market.
“It is hard to gain a competitive advantage in the shipbuilding business,” explains Mr. Suryohadiprojo. “Price is very important.” He adds that Indonesian shipowners don’t always have sufficient resources to buy ships. The solution is for Pal Indonesia itself to help raise loans and credits from financial institutions.

However, raising finance for new ships is not straightforward. “Shipping is a unique business and not so many people know about it,” he says, and the number of financial houses that really understand the industry is “very limited.”
Mr. Suryohadiprojo also spends quite a lot of his time identifying customers who need ships even if they don’t quite realize it themselves – for instance, to transport sugar, fruit and vegetables from islands in the east of the country to big metropolitan markets in Java. “For us, this is business,” he says. “You only need to know in what areas people need things.” He says the company is a provider of solutions for its clients. “We see different people and different solutions. Everybody has a different problem.”

PAL INDONESIA helps raise credit and loans from financial institutions for clients, and even makes an initial investment.

The message that he tries to convey to new customers is that “we’re prepared to do the groundwork” – even if that involves the company making an initial investment on its own. As for project partners, he urges them to take the long view. “Our timeframe for projects is 20 years, because otherwise they might never work,” he says. “Ships and infrastructure are slow-yield and rather risky, and if you don’t look at it in the long-term, the investment will never be recovered.”
Mr. Suryohadiprojo says that, along with the rest of the world, Pal Indonesia is coping with uncertain times, and he remains confident that the company is equipped to deal with whatever difficulties fate might have in store.

“The answer to this challenge, is to adapt,” he says. Emphasizing that Pal Indonesia’s future depends on change, he identifies three key requisites for the company’s survival: flexibility, endurance and the ability to maintain close connections with its business partners and clients.
All these principles have been incorporated into the company’s strategy and appear to be producing results. “In 2001, Pal Indonesia demonstrated its resilience against several upsets which threatened the operational activities of the company,” says Mr. Suryohadiprojo.

“A strong growth in net profit was achieved, even though sales growth was lower than expected. Several improvements in productivity were implemented, and marketing remained aggressive. In short, Pal Indonesia has been quite aware of what needs to be done to survive the uncertainties of the new millennium.”
Pal Indonesia has branched out into new lines of business, including the production of gas and steam turbines, compressor modules for the oil and natural gas industry, components for power plants, and heavy engineering.
On this side of the business the company established a presence in overseas markets, and sells stator frames for electricity generation plants in the US.
The company’s plans for business expansion are based on boosting sales and making new investments, opening the way for alliances with new partners. “Pal Indonesia is inviting potential partners to participate in our expansion activities, so that together we have the opportunity to pave the way for the future,” says Mr. Suryohadiprojo.