Shipping industry welcomes new rules

Shipping industry welcomes new rules

The Jakarta Post, Jakarta

With a long-awaited presidential instruction on the
revitalization of the domestic shipping industry entering into
effect last week, Indonesian shipping firms are now preparing to
win back their former share of the country's shipping market.

"Now that there is a legal basis for the prioritizing of the
domestic shipping industry, we are targeting annual growth of 30
percent in our domestic market share," said Indonesian National
Shipowners Association chairman Oentoro Surya.

Oentoro explained that currently local shipowners held only a
54 percent share of the domestic shipping market, which amounted
to around 170 million tons per year. Meanwhile, they shipped only
5 percent of the country's annual 540 million tons of exports.

"The most important thing is the consistent application of the
cabotage principle, as is emphasized in the instruction," he
said.

The presidential instruction adopts the cabotage principal --
which says that domestic loads should be shipped by domestic
vessels -- as one of the ways of reinvigorating the industry,
which had been long dominated by foreign competitors, he said.

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

Data from the transportation ministry shows there were 3,717
Indonesian ships in 2003, of which 1,211 were general cargo
ships.

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

It is hoped that these policies will encourage business
players that rely on the shipping industry to trust domestic
carriers with the transportation of their goods.

Minister of Transportation Hatta Radjasa said on Tuesday that
as soon as the initial processes were completed, the government
would form a team to discuss the instruction's implementation.

The team would be led by the coordinating minister for the
economy and would include the minister of trade, minister of
industry, governor of Bank Indonesia and other interested
parties, he said.

"We will arrange spatial reorganization. The trade minister
will decide what commodities should have top priority and the
banking sector will decide on the incentives and financial
facilities that can be offered to the shipping industry," he
said.

"We also have to deal with the rules related to mortgages,
insurance and bonds first," Hatta said, adding that the rules on
mortgages were needed for the financing of ship renewal.

He said his ministry would also apply the "limited window
policy" by reorganizing ocean ports. It would also construct new
international hub ports in a number of places, including Sabang
(Aceh), Belawan (North Sumatra) and Dumai (Riau) for the western
part of Indonesia, and Bitung and Bojonegara (West Java) for the
eastern part of the country.

However, Hatta said the construction of the ports was a long-
term plan as it would need a lot of work and investment. (003)