Indonesian maritime issue got wider attention: Better late than never?
Indonesian maritime issue got wider attention: Better late than never?
Ronald Nangoi, Corporate Secretary, Indonesian Survey Institute (LSI),
Jakarta
Being the largest maritime country in the world, Indonesia
should have a comparative advantage in the maritime
transportation services industry. Yet, the industry has not made
a significant contribution to the country's national income.
Indonesian ship owners tend to blame the inconsistent policies on
maritime transportation, causing the country's loss of foreign
exchange of around US$11 billion a year. They have not encouraged
vessel ownership, leading to a limited-sized Indonesian fleet.
Therefore, the very recent gesture shown by the Coordinating
Ministry of National Development Planning/National Development
Planning Board, the Department of Communications and the
Indonesian National Ship Owners' Association to empower the
maritime transportation services is a good sign for maritime
development. Maritime issues now get wider attention in the
country.
In fact, the issue of maritime transportation is not new, but
handled by sector. Despite aims to promote trade, deregulation
policies introduced in the 1980s have a share in the weakening of
the Indonesian shipping industry. Government bodies other than
the Department of Communications have not shown their concerns
over the industry by giving no incentive on fiscal and tax, and
no low interest rates, and letting the use of FOB terms of
shipment for exportation and C&F for importation. It is as if the
maritime issues, such as the small share of cargo, carried by
Indonesian vessels, are not economic ones.
What has really upset the Indonesian ship owners is the
Government's inconsistency in law enforcement. The Indonesian
maritime regulation, known as PP 82/1999 on maritime
transportation was introduced seven years after the issuance of
maritime law UU 21/1992 on Indonesian shipping. Yet, the
regulation had not been fully implemented for a transitional
period of two years. Then two years after, a ministerial decree,
Kepmen 33/2001, was introduced, again with a transitional period
of two years, giving a chance for shipping agents to meet the
requirements for vessel ownership. And the Government has made no
direct firm policy on the implementation of the regulation when
its transitional period is overdue. One may argue that it has
been reluctant to make a stand as being suppressed by agency
firms.
Yet, one should be aware that shipping has its wider
perspective due to its social and economic effects. It's
undeniable that trade and industry require logistics and shipping
services.
As being included in the World Trade Organization (WTO)
agenda, maritime transportation is acknowledged to be part of the
world trade system, despite the slow progress of maritime
liberalization. Yet, the WTO has not ignored a country's right
for cabotage, but has its member countries negotiate on
liberalization on maritime transportation services. Maritime
transportation has even been playing a strategic role in the
integration of world trade.
The cabotage principle has even been undermined by free trade
principle. Argument on them is academically useful. But a country
is ostensibly allowed to apply cabotage principle in respect of
national sovereignty. By definition, cabotage is the restriction
of transport within a country to its own shipping and aircraft.
In international law, cabotage is identified with coastal
trade so that it means navigating and trading along the coast
between the ports thereof.
To what extent a member country liberalizes its maritime
transportation services depends on its schedule of commitment at
the WTO. On its schedule of commitment, Indonesia still has
limitations on national treatment, as "a foreign shipping company
is obliged to appoint an Indonesian shipping company as its
General Agent."
Such a limitation is subject to the Indonesian maritime
transportation regulation (PP 82/1999), among others, stipulating
that a foreign shipping company, which vessels have to carry
cargo to and from Indonesian ports for foreign trade, is obliged
to appoint an Indonesian shipping company to be its general
agent. And a general agent has to own an Indonesian flag
vessel(s) with the total capacity of 5,000 gt in minimum.
Therefore, the argument that ship agents could operate without
owning a vessel at the consent of WTO is misleading.
The call to agents with no vessels for taking up a merging
policy is an effective solution. By so doing, they could
contribute to the enlargement of the country's fleet capacity.
They could even have a bargaining position in dealing with their
foreign principals. And together with Indonesian ship owners,
they could gain a larger share of cargoes to carry within
domestic as well as international waters.
It's part of the dream of minister Kwik Kian Gie that, in the
years to come, the shipping business grows, in which thousands of
vessels, largely with Indonesian flags, are getting crowded in
domestic water territory.
By assigning the national ship owners to be their general
agents, foreign shipping principals are making cooperation with
reliable partners and contributing to the growth of Indonesian
maritime industries.
The growth of maritime transportation could certainly benefit
many in view of its multiplier effects to other relevant
industries, such as dockyard/shipyard, and freight forwarding.
Then, the enlargement of shipping and related industries will not
only benefit domestic but also foreign business firms, since
foreign investment is required for such a capital and technology
intensive industries.
And above all, doesn't a good cooperation based on fair-share
principle in cargo carrying serve for the so-called "win-win"
instead of "win-loss" solution? Isn't it fair enough for a
country with maritime endowment to have a proportionate cargo
sharing, as far as it provides a favorable environment for the
growth of a strong maritime transportation industry?