Over 1,000 shipping firms may lose operating permits

JAKARTA (JP): Over 1,000 shipping companies will lose their operating permits if they still fail to comply with a new shipping deregulation ruling which comes into force in October this year.

Director General of Sea Communications Tjuk Sukardiman said the local shipping companies had been given two years to adjust to the new ruling but most of them had failed to do so.

According to him, of the country's 1,762 shipping companies, only 736 have brought their operations into line with the new shipping policy.

The other 1,026 shipping companies risk being closed because it will be difficult for them to meet the October deadline, he added.

"This is the consequence that we have to accept in enforcing Government Decree No. 82/1999 ... This is a step towards the restructuring of the national shipping industry," he told a media conference at his office here.

The decree was issued by then President B.J. Habibie but it was stipulated that it would come into effect two years later on Oct. 5, 2001 to allow time for companies to adjust, Tjuk said.

Under the new shipping policy, domestic shipping companies must own at least one Indonesian-flagged vessel with a minimum volume of 175 deadweight tons.

The new regulation also requires a shipping agent to own at least one Indonesian-flagged vessel with a minimum volume of 5,000 deadweight tons.

The Ministry of Communication's Director of Ocean Traffic Harijogi said that of the 1,026 companies threatened with closure, 900 companies, or 51 percent, operated only as shipping agents without owning their own vessels. The other 126 companies owned and operated vessels that were below the minimum requirement of 175 deadweight tons.

"We hope that with the entry into effect of the decree the real condition of the national shipping industry will improve," he said at the media conference.

As of May 21, 2001, the Ministry of Communications recorded 736 companies as being in compliance with the new ruling, of which 607 owned vessels having a capacity of between 175 deadweight tons and 4,999 deadweight tons, while 129 others owned vessels with a capacity of over 5,000 deadweight tons and so therefore could become agents for foreign ships, Harijogi said.

The deregulation measure introduced in 1988 has resulted in a sharp increase in the number of shipping companies but most of them only operate as shipping agents.

"With the new shipping policy, we hope there will be no more shipping companies operating solely as agents for foreign ships," Harijogi said.

He explained that the 1988 ruling was originally intended to improve the professionalism of local agents by encouraging them to take advantage of their foreign partners' skills and technological superiority.

"But now, some have actually become the sleeping partners of foreign shipping companies," Harijogi added.

The Indonesian Shipping Agency Association (ISAA) has raised concerns that the new ruling will effectively kill the shipping agency business in the country.

"This need not happen as they (agents) could create joint ventures with companies that meet the requirements (under the new ruling)," Harijogi remarked. (tnt)