Outlook & Plans In this period of financial turmoil in the global financial system, the full impact on the overall business environment and the Group's business is still unfolding.
The Group is taking a proactive approach and will continue to monitor the situation closely and keeping a close eye on its impact to various aspects of the Group's business. By being nimble-footed, the Group hopes to respond quickly and decisively, as and when required. In this turbulent period, the Group focuses in maintaining a healthy cash flow. It will also be vigilant and prudent in its fund placements. It will also adopt stricter and more conservative hurdle rates for any new investment projects. On the back of a slowdown in the world’s major economies, demand for transportation of cargo is anticipated to be affected accordingly. The Group expects to mitigate the slowdown in demand by rationalizing capacity on certain trades in cooperation with other vessel operators.
The Group is in a position to pursue this rationalization as it holds a number of short term chartered container vessels in its fleet, thereby has the flexibility to adapt to the changing market environment. Although regional container shipping is anticipated to experience challenging times ahead, demand for the inter-island shipping business in Indonesia is expected to remain relatively stable. For the inter-island container shipping business in Indonesia, the Group took delivery of 2 container vessels in September 2008. This will enable to the Group to grow its inter-island container shipping business more effectively.
In the industrial shipping business, the Group anticipates slowdown in the underlying demand for industrial product such as methanol. However, the demand for coal transportation in Indonesia is expected to remain stable. LNG Tangguh Towuti, a 145,700 cbm LNG vessel, in which the Group holds a 25% stake, is scheduled to commence operation in December 2008. The vessel is chartered out to BP Berau Limited for a 20-year period, and will be engaged in the transportation of liquefied natural gas (LNG) from Indonesia to North Asia and North America.