National shipping industry hoping for a brighter future
P.C. Naommy, The Jakarta Post, Jakarta
In an effort to strengthen the domestic shipping industry, the Directorate General of Sea Communications has submitted a proposal on the issuance of a presidential decree requiring that inter-island shipping of key commodities must be handled by national flagged vessels.
According to the proposal, which has been submitted to the National Development Planning Agency (Bappenas), the ruling would apply the shipping of seven selected commodities including crude palm oil (CPO), fertilizer, rice, rubber, lumber, coal, and oil.
"We need fleets that are owned and operated by Indonesians," said Director General of Sea Communications Tjuk Sukardiman late last week, pointing out the "cabotage rights" (the rights to carry domestic cargo and passengers on domestic vessels with local crews) as stipulated under international law.
According to the Secretary-General of the Indonesian Maritime Council, Son Diamar, about 96 percent of export-import shipping and about 50 percent of domestic shipping in Indonesia is handled by foreign flagged vessels.
In order to facilitate the development of domestic shipping fleets in the country, the draft decree also requires that the government gives tax relief to maritime industries, such as sea transportation companies, dock companies, port service companies, and vessel spare part companies.
An ongoing study conducted by the Japan International Cooperation Agency (JICA) in cooperation with the Ministry of Communications and the Ministry of Industry and Trade indicates that these clauses in the draft are necessary elements to boost the shipping industry in Indonesia.
The study on the Development of Domestic Sea Transportation and Maritime Industry in the Republic of Indonesia (STRAMINDO) was initiated in December 2002 and led by Kumazawa Ken.
The JICA study team submitted the draft of the final report to the Indonesia Steering Committee on Jan. 13, 2004 and has formulated a master plan up to 2024, including procurements to increase the domestic fleet.
According to the master plan, the government would need to secure funds of up to Rp 54.5 trillion for the fleet procurement during the period of 2004-2014, and another Rp 75,3 trillion for the next period of 2015-2024.
The fleet procurement plan projects 4,617 vessels could be attained during the 20-year period of the master plan with a total cost of up to Rp 130 trillion (US$15.3 billion), or equal to 8 percent of Indonesia's gross domestic product in 2002.
Since the government's budget is limited, Sasunuma Mitsuhiro of JICA has recommended the government seek a loan worth Rp 2.8 trillion from Official Development Assistance (ODA) through its inter-island shipping development program to meet 10 percent of the domestic investment during the period of 2005-2009.
According to JICA, if the master plan can be well applied, it could help create a multi flyer effect on the Indonesian economy up to Rp 251.3 trillion by 2024.
At present the government has finished building eight new vessels with a capacity of up to 200 passengers each and worth Rp 461 billion in a total.
The new vessels consist of three 350 DWT vessels, with two units to operate in NTT and another in Papua, three 500 DWT vessels with two units to operate in North Maluku and the other in Ambon, and two 750 DWT vessels to operate in Papua and North Sulawesi.