Shipping decree ready for implementation

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.