Government told to deregulate shipping further
Government told to deregulate shipping further
JAKARTA (JP): The government must follow up its recent reform measures with further steps if it wants to prevent national shipping companies from going out of business, an executive of the Association of National Shipping Companies says.
Association chairman Barens Saragih, while acknowledging the role of the reform measures to eliminate value-added tax on ship imports, said that without further deregulations, national shipping firms would remain on the brink of bankruptcy.
"Almost all shipping companies are at the stage of going broke," Saragih told The Jakarta Post yesterday.
But he acknowledged the government's new deregulation measures could at least encourage shipping companies to add to the number of their fleets.
The government last month announced its most recent reform measures which, among others, cuts back restrictions, tariffs and levies on imports for export-oriented businesses. It also eliminates the value-added tax on imports of fishing, freight and passenger vessels.
Last year, members of the Association of Indonesian Fishing Companies urged the government to lift the ban on imports of used fishing vessels. As a result of the ban, foreign fishing fleets, including those operating without local permits, dominate fishing activities in Indonesia's territorial waters and exclusive economic zone.
Saragih said yesterday that national freight companies faced a similar condition.
"Many freight companies cannot survive the high maintenance and operating costs -- including those incurred by port and government officials -- and others can't afford to buy new ships," he said.
In addition to this, he said, the ban on logs and the oil glut in the 1980s caused many shipping companies to go out of business. Up to 120 log carriers from 21 shipping firms had to close down, he said.
"The oil glut caused people to shift to non-oil exports and forced companies which operated oil-tankers to go out of business," Saragih added.
A 1985 presidential decree further pushed national shipping firms into the corner. The decree opened up national ports to foreign shipping lines and allowed national trading companies to charter foreign lines to do their business.
"Many companies prefer to charter ships rather than buy new ones," he pointed out.
Saragih said the situation caused the number of the shipping association's members to increase from around 300 to 1,600. "But many of them don't have their own vessels and only operate fleets on a charter basis under a foreign flag," he pointed out.
To follow up the recent deregulations, Saragih suggested that the government provide incentives, such as tax deductions, to encourage the use of domestic fleets.
The Malaysian government, for example, provides double freight deductions if traders use national shipping lines, and only a single deduction if they used foreign lines, he said.
In Thailand, the government allows free-of-tax sales for freight imported on national fleets, he added. (pwn)