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?