If I want to do business with PT Sillo Maritime Perdana, what must I do?
Firstly there has to be a Memorandum of Understanding (MOU) between PT Sillo Maritime Perdana and your company. The MOU also comes with two exhibits (A and B). Exhibit A is a form of authorization which will be on the principal’s (owner) letterhead stating PT Sillo Maritime Perdana is authorized to offer the vessel(s) to the end user. Exhibit B is a back to back agreement stating that the Principal (owner) agrees to support PT Sillo Maritime being the contract holder and all the obligations and consequences of the contract.
Once my vessel(s) has/have been on charter to the end user, where is the monthly Charter Hire remitted to? PT Sillo Maritime bank account or my own?
As PT Sillo Maritime does not own the vessel(s) the Charter Hire is remitted directly to the owner’s bank account, minus applicable taxes.
How long does it take for me to receive the first on-hire payment for services rendered to an end user?
Realistically, the minimum period to expect payment is seventy five (75) days. This consists of thirty (30) days to perform the services, fifteen (15) days to collate the supporting documents to submit with invoices, then payment terms of thirty (30) days as set out by end user.
Who do I invoice for the charter hire?
Vessel owners Charter Hire invoices are sent directly to PT Sillo Maritime who are contract holders for the vessel. We then change it to PT Sillo Maritime letterhead and submit to end user.
What are the obligatory income taxes that must be paid for my vessels to operate in Indonesia? To whom are they paid and how are they collected?
There are basically two types of taxes related to income for the Indonesian shipping industry and they are as follows:
Withholding Tax (PPH) is withheld from the monthly submitted invoice by the end user to be paid to the government i.e. Tax Department.
Domestic shipping PPH is 1.2%, whilst for foreign flagged vessels PPH is 2.64%
Value Added Tax VAT (PPN) is 10%. PT Sillo Maritime adds the 10% PPN to the original invoice received from vessel owner and submits the invoice to the end user on PT Sillo Maritime company letterhead.
Owner’s vessel day rate is $100 per day.
Owner invoices PT Sillo Maritime for $ 100, PT Sillo will then add the VAT of 10% so the invoice then becomes $ 110 and is submitted to end user finance department.
End user deducts the VAT (PPN) 10% and the invoice then returns to the original $ 100.
End user then deducts withholding tax (PPH) in the case of foreign flagged vessels 2.64% and at the end of 30 days after invoice submission $ 97.36 is remitted directly to owners bank account.
Who is an end user?
The end user is the person who is contracting the vessel from PT Sillo Maritime Perdana, generally an Oil Company but can also be a diving / ROV / Survey / Mining companies.
Am I able to bid directly to an end user in Indonesia?
Yes you are, however withholding tax then becomes 20%.
What is the procedure for a vessel to begin operations (work) in Indonesia?
Firstly there must be a contract between PT Sillo Maritime (acting as disponent owner) and an end user here in Indonesia stating the area of operations and length of contract. PT Sillo Maritime then approaches the Department of Sea Communications (SEACOM) to apply for a sailing permit (PPKA) to enter Indonesian waters, to do this we must evidence the contract between PT Sillo Maritime and end user. Once the sailing permit (PPKA) has been issued PT Sillo Maritime applies to the Customs Department (Bea Cukai) for an Importation / Exportation Permit (OB23) showing the approved sailing permit from SEACOM to allow the vessel to be allowed into Indonesian waters.
Once these two documents have been received then the vessel is allowed to enter Indonesian waters to begin operations. The length of the contract determines the length of the permits to stay in Indonesian waters
If I bid in Indonesia are there any Bid Bonds?
Yes. As per Government regulations, it is 1 - 3% of total contract value and can either be in the form of a cash bank guarantee or in the form of an insurance bond from an acceptable insurance company in Indonesia. A list of acceptable insurance companies can be provided on request.
If I manage to win a tender do I have to post a performance bond?
Yes. A performance bond must be posted in the form of a cash bank guarantee of no less than 5% of the total contract value as per Government regulations.
Am I allowed to make exceptions to the contract contained within the tender documents?
As a general rule with Oil Companies operating here in Indonesia, exceptions are not allowed, however they are able to be negotiated from time to time.