Shipping decree ready for implementation

Anissa S. Febrina, The Jakarta Post/Jakarta

With its supporting regulations to be made official this month, the long-awaited presidential instruction for shipping that is expected to boost the development of the national shipping industry will take effect as early as January, a progress report revealed.

The report from the Ministry of Transportation's Directorate General of Sea Transportation shows that Presidential Instruction No. 5/2005 -- made official in March -- will be fully implemented on Jan. 1, 2006.

The presidential instruction on the revitalization of the national shipping industry will apply the cabotage principle -- that requires domestic loads to be shipped by domestic oceanliners -- as one of ways to reinvigorate the industry which has long been dominated by foreign competitors.

Among the progress made was the ratification of the International Convention on Maritime Liens and Mortgages, the draft on law on maritime claims and ship mortgage, as well as a draft for the ratification of the International Convention on the Arrest of Ship.

The six working groups involved -- focusing on trade, finance, transportation, industry, energy, as well as education and training -- have reported that they were ready with the draft of the ministerial regulation needed for the implementation of the decree.

Previously, the Indonesian Shipowners Association revealed that local shipowners held only a 54 percent share in the domestic shipping market of around 170 million tons per year. Meanwhile, for exports, they shipped only 5 percent out of the annual 540 million tons of exported goods.

The instruction says that, within three years after it is issued, goods moved to and from the country's ports must be shipped by Indonesian-flagged oceanliners operated by national shipping companies.

Data from the transportation ministry as of September showed there were 5,111 national ships -- out of the total number of 6,521 ships -- in 2005, of which 1,420 were general cargo ships.

The total number of operating ships as of Sept. 28 increased by almost 8 percent as compared to the data compiled in March, with a total of 719 foreign ships entering Indonesia.

According to the same data, as of Aug. 9, some 128 foreign ships operating in Indonesia are now using the services of local shipping companies.

Aside from prioritizing domestic ships, the government, according to the instruction, will give incentives to state-owned companies assigning national-flagged ships to transport their exports and imports.

Separately, Indonesian exporters and importers criticized the government's lack of supervision on the implementation of the newly reduced terminal handling charge (THC).

Minister of Transportation Hatta Radjasa announced the new THC of US$95 on Nov. 1, lower than the previous fee of $150 for handling a 20-foot container.

Indonesian Furniture Producers Association chairman Sae Tanangga Karim said that without proper implementation the long- awaited regulation that would help reduce the country's high cost economy would be useless.