The Indonesian government has scrapped a regulation that requires the use of Indonesian ships to export and import certain commodities.
Trade Minister Enggartiasto Lukita said his ministry has revoked Trade Ministerial Regulation No. 82/2017 on the “Terms of Use of National Shipping and Insurance Companies for the Export and Import of Certain Goods.”
The policy, which prescribed the use of national sea transportation and national insurance for the export and import of coal, crude palm oil, and rice, met with strong opposition from the business community over the difficulties in fulfilling the requirement.
Earlier this year, Enggartiasto said he had met with members of the Indonesia National Ship Owners Association to find out about the readiness of the country’s shipping companies to take over the export-import operations of the three commodities.
However, it became apparent the national shipping companies were not ready to do so. Considering Indonesia’s domestic shipping capacity is largely insufficient to handle all coal, crude palm oil, and rice shipments, it would seriously damage Indonesia’s export performance, according to industry watchers.
In the coal mining industry, for example, more than 90% of export shipments are done by foreign vessels.
The regulation was intended as an encouragement to develop domestic shipping capacity. However, it requires a more gradual process rather than a sudden break, said analysts.
Before revoking the regulation, the Trade Ministry issued Trade Ministerial Regulation No. 48/2018 to revise the contents of Regulation No. 82/2017 and postpone the requirement to use Indonesian ships for export and import of the three commodities.
Regulation No. 82/2017 was originally scheduled to be implemented in May 2018, but its execution had already been postponed before then.
Photo: Australian Embassy Jakarta
