IMO Watch Urges DPR Commission V to Review Foreign Fleets Causing State Losses
Jakarta (ANTARA) - The Indonesia Maritime Organization (IMO) Watch has requested Commission V of the House of Representatives (DPR RI) to review the use of foreign-flagged working vessels in wreck removal projects, which they claim is causing losses to the state.
“Many parties believe that the use of foreign fleets has the potential to reduce the economic benefits that Indonesia should obtain from projects conducted entirely within our national sovereignty,” said the General Chairman of IMO Watch, Capt. Anthon Sihombing, in a statement received in Jakarta on Friday.
He suspects that under schemes involving foreign-flagged ships, contract values may be paid directly by guarantors or international insurance companies to foreign ship owners or operators abroad. This bypasses potential domestic benefits such as agency services, the use of local companies as administrative partners, and potential revenue from the sale of scrap metal from shipwrecks if processed domestically.
Conversely, he continued, if the work is carried out by Indonesian-flagged ships operated by national companies, most of the contract value would circulate within the country. “This would certainly increase state revenue through various taxation instruments,” he noted. These instruments include Income Tax (PPh), Value Added Tax (PPN) in accordance with applicable regulations, revenue for national business entities, and multiplier effects on the workforce, the maritime industry, and the domestic supply chain.
Consequently, he stated that the implementation of the cabotage principle is intended not only to protect the national shipping industry but also to serve as an instrument to maximise economic benefits and state revenue. The cabotage principle is a maritime law principle stipulating that domestic sea transport (between ports within one country) must use nationally flagged vessels (the Red and White flag in Indonesia) and be crewed by Indonesian citizens.
Furthermore, Anthon highlighted the customs processes regarding the entry of foreign working vessels into Indonesian territory. “According to customs regulations, foreign ships performing work in Indonesia may be subject to import procedures in accordance with applicable rules, including customs obligations if required by law,” Anton said.
In practice, he explained, there are certain mechanisms that allow ships to be in Indonesia only temporarily before returning abroad, obtaining facilities or completing customs procedures, including re-exportation if requirements are met. He emphasised that the public has the right to know the legal basis, the types of customs facilities provided, the amount of obligations fulfilled, and the reasons for any fiscal facilities granted to foreign working vessels conducting projects in Indonesia.
He argued that such transparency is vital to avoid the perception of special treatment or discretion not based on legal provisions. If the entire process is conducted openly and in accordance with regulations, he continued, public trust in the governance of strategic projects, such as the KM Kuala Mas wreck removal project, can be maintained. However, he noted that if there are deviations or misuse of customs facilities that potentially harm state revenue, they should be promptly investigated by supervisory or law enforcement agencies.
In addition to examining shipping permits, he reminded that oversight of the KM Kuala Mas wreck removal project in the waters of Kupang, East Nusa Tenggara (NTT), should also consider taxation, foreign exchange, and customs aspects. “A comprehensive approach is required to ensure that every economic activity occurring within Indonesian territory truly provides optimal benefits to the state and is carried out in accordance with the principles of transparency, accountability, and compliance with applicable laws,” Anthon emphasised.
He also urged Commission V of the DPR RI to immediately summon the Director General of Sea Transportation of the Ministry of Transportation and other relevant parties regarding this matter. The summons of government officials and related parties aims to obtain explanations regarding any potential legal violations, both concerning the use of foreign-flagged working vessels and customs procedures. He emphasised that as a maritime nation, Indonesia must be self-reliant so that every economic activity within its territory provides optimal benefits to the state while adhering to the principles of transparency, accountability, and legal compliance.