National shipping industry hoping for a brighter future

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.